Why Isn't The Iom Going To Benefit...

[manxchatterbox]

this story looks like it might have a plus for the IOM but then you get to the last paragraph and no mention of IOM...how comes we don't get any benefit and 'competitor' countries do???

 

http://www.ft.com/cms/s/8651e646-4240-11db...00779e2340.html

[TerryMcCann]

They know you are reading. They do it to annoy you.

[Chinahand]

First point MCB, it isn’t impossible that we will gain.

 

Second point, however this is an EU ruling and guess what the IOM isn’t part of the EU.

 

Third point, also the ruling requires the entity in the low tax area to be carrying out a “proper economic function” … this requires large scale operations for it to be relevant for a multinational corporation. The IOM tends to thrive with paper entities where ownership is separate from activity … such as trusts etc. These types of entities will not be eligible for the new tax rule.

 

So I’m not that surprised the IOM wasn’t highlighted as gaining greatly from the court ruling!

[Gladys]

You are right China and have it it one, tax avoidance is not considered as a proper economic function, that was decided in a case in the mid 80s. However, some businesses may consider tax planning as an intrinsic part of their financial strategy but after that ruling unless there is a true commercial reason (other than a tax saving) for an offshore structure, the structure is vulnerable to attack.

[stookie]

paper entities where ownership is separate from activity … such as trusts etc. These types of entities

 

just for completeness, a trust is not an 'entity'

[Karellen]

The article says that "companies could have entirely genuine treasury operations involving very few people, so long as there was one individual qualified to make decisions."

 

That sounds perfect for the Isle of Man. Dont most of the big banks have treasury functions here already? So it wouldnt be a big step to see some big international companies establish treasury, or similar high value / low employee number functions here.

[John Wright]

Not only do we not belong to the EU whereas all the others listed in the article do, as has been pointed out, but there is nothing in Protocol 3 which allows financial service type business to be conducted into the EU from the IOM, except into England by later agreement. It is only manufacturing and agriculture.

 

So we are at a disadvantage. and will remain at a disadvantage, and likely be discriminated against unless we join.

 

Then as insiders we cannot be discriminated against and as long as our services meet a certain level of control from the IOM they will be able to take advantage of the benefit of that ruling and the EU cannot make us put up our taxes.

[Manxman In Exile]

In a similar vein I wonder why the IOM has to comply with the European Savings Directive if we are not in the EU.

[When Skies Are Grey]

So on the one hand you complain when the IOM is mentioned in the same breath as other tax efficient jurisdictions and on the other hand complain when it isnt.

 

I harldy think that those who are wealthy or shrewd enough to benefit from such tax planning would rely on a FT article for their research.

 

More non-news with a tenuous IOM link....NEXT!!

[John Wright]

Hello Manxman in exile.

 

It didn't in strict legal terms

 

However if it had not then it would have suffered penalty legislation throughout the EU which would have made thge IOM very uneconomic to invest in.

 

So we chose

 

exchange info or witholding tax

 

we went for info exchange as the better option because it was not just EU pressure but FATF pressure and seen as a tidying up of our act.

[Manxman In Exile]

Hello Manxman in exile.

 

It didn't in strict legal terms

 

However if it had not then it would have suffered penalty legislation throughout the EU which would have made thge IOM very uneconomic to invest in.

 

So we chose

 

exchange info or witholding tax

 

we went for info exchange as the better option because it was not just EU pressure but FATF pressure and seen as a tidying up of our act.

 

I am paying witholding tax on my accounts (IOMB and Nationwide OS) (which are there simply because I am Manx, not to avoid the English chancellor).

[stookie]

Hello Manxman in exile.

 

It didn't in strict legal terms

 

However if it had not then it would have suffered penalty legislation throughout the EU which would have made thge IOM very uneconomic to invest in.

 

So we chose

 

exchange info or witholding tax

 

we went for info exchange as the better option because it was not just EU pressure but FATF pressure and seen as a tidying up of our act.

 

Don't think it was quite like that.

 

Gordon Brown, in an effort to preserve the valuable London Eurobond market committed to obtain implementation of the Savings Tax Directive from the UK crown dependencies (or whatever the technical term is) - a bit of consitutional boloney and posturing later and the IOM has to jump on the bandwagon, albeit by following the Swiss example of offering account holders a withholding tax alternative to the disclosure route. The Cayman Islands were the only jurisdiction to show resistance and were brought back into line by threats from Whitehall that presumably actually were viable. Interestingly Mr Brown sought to secure co-operation of the UK's Caribbean territories and in so doing overlooked Bermuda!! If you were in Cayman, you might feel particularly curious what goings on in the EU have to do with you!

[John Wright]

It doesn't just relate to EU directive but our whole post Edwards report attempt to get ourselves off black lists. The EU directive negotiations threw all sorts of things into the pot, but in effect was to stop cross border tax evasion by EU citizenss

 

In fact I was wrong about application in IOM, but only in emphasis, The actual order provides for withholding tax at increasing rates up to 35% over next few years of which IOM keeeps 25% and hands over 75% to the country of residence tax authority but you can sign a form to allow the information to be passed over instead in which case you get paid gross. The eventual emphasis is undoubtedley information exchange.

 

The witholding tax is a sort of default mechanism at high rate to encourage agreement to disclose

 

Of course the IOM has an exchange of info agreement now with the US, all one way however, and is negotiating with others

 

They will eventually replace EU Directive.

 

As for Cayman and Bermuda

 

Cayman is a UK Overseas Territory and Westminster can kick ass. If it takes EU money it must expect to play ball or be blacklisted. The same will apply to Bermuda.

 

My understanding of the position of Bermuda is that they were inadvertently left off a list of trritories, felt jubilant and then realised that thye were losing business to Cayman because Cayman was within. Many Bermudan funds paid their income through Swiss paying agents who were operating under the EUSD any way. They have come up with a half way house for non domestic, ie comercial investors, which may or may not work.