" Darling's Isle Of Man Must Be On Some Other Planet "

[Slim]

Can someone please explain why the reduction of VAT will cost the IOMG Millions? Do we recieve that VAT that we all pay back from the UKG?

 

We're basically in a customs union with the UK. Rather than run our own customs and excise, we use the UK's. We then get a share of the uk's total revenue based on some complicated and supar sekret ratio, based on things like population and visitor numbers.

 

This keeps things nice and simple, but does mean we effectively lose out vs places like jersey who don't run a common purse so can set up tax competition. This has over the last year made it hard for jersey to compete with the iom on zero rating company tax, because they don't have the vat revenue. This might be our future too, scrap the common purse, set our own vat, or abolish it, and raise the difference somewhere else.

[Mission]

And so it begins.

 

[When Skies Are Grey]

We also get a notional credit for zero-rated acquisitions on items such as yachts and aircraft....so a 2% drop in the VAT on those items is substantial in real terms.

[John]

Cheers

[oldmanxfella]

Can someone please explain why the reduction of VAT will cost the IOMG Millions? Do we recieve that VAT that we all pay back from the UKG?

 

You're a town councillor that does not understand that when VAT rates go down you somehow collect less VAT? I wonder how that happens?

 

I bet you can't wait for Xmas when you can get all of next years policy information off those little bits of paper you find inside the crackers.

[bishbashbosh]

I don't think the UK care whether the money is put offshore so long as it is declared and tax paid on it.

 

So what then is the point of shipping your money offshore if you are going to pay UK tax on it?

 

There must be a reason to put your money in the IOM. If it's not to avoid tax in your home country, then what is it?

 

S

 

The point is... It's strange how many people don't understand what a large swathe of the offshore finance industry does over here / what market it tries to serve. There are millions of British Expats around the world, most of whom are targeted by the retail banks and deposit takers based here. These are legitimate customers with legitimate reasons to bank offshore (many UK banks won't host accounts for those who live overseas). Customers get a safe bank, in a safe British jurisdiction and a name they trust (if you ain't heard of Kaupthing, maybe you shouldn't trust it with your money?)

 

Generally (and this may be even MORE true in a low interest rate environment) rates tend to be more competitive offshore, often by around 0.50% and people naturally try to make the most of their cash. You could have Mr and Mrs Joe Bloggs from Leeds who put their money here, believe they get a better service, a better rate and declare the interest they've received to HMRC - no problems what soever.

 

The whole 'tax haven' argument is practically null and void since the EUSTD came online in July 2005 - if you're from the UK and earn interest here, a local institution is required to tell the UK authorities of interest earned, unless they are exempt or opt for a withholding tax (in which case, tax is paid anyway). The days of en-masse British tax evasion offshore are long gone.

 

That's not to say there aren't ways around these things. But the bottom line is that there are large droves of genuine retail customers doing business in a well regulated jurisdiction with a good reputation (pre Oct 08) with brands they trust.

 

Small, nimble subsidiary companies often offer better service, are used to dealing with customers in numerous countries and offer currencies and services the UK retail banks just aren't interested in nor are capable of delivering.

 

If you're an expat oil worker in Saudi and your former UK bank doesn't want to know, where would you rather put your money?

 

It's a niche, but a genuine one.

 

P.S. You have the love the British Government sometimes - Offshore banking is SO useful for people leaving the UK, the Foreign & Commonwealth Office actively advise people moving abroad on the benefits of holding money offshore as part of their 'Know Before You Go' campaign (and the UK Government's conflicting point of view aside, rightly so!).

 

http://www.fco.gov.uk/resources/en/pdf/285...-to-live-abroad

[bishbashbosh]

From the Pre Budget Report:

 

3.55 Many crown dependencies and overseas territories are significant financial centres in

their own right and the financial sector plays a vital role in their economies. The Government

recognises the progress made by most offshore financial centres to improve financial

regulation and transparency, and tackle financial crime. However, crown dependencies and

overseas territories, like all offshore financial centres, face challenges and opportunities as

the world is changing. In particular, severe financial turbulence has raised questions for all

jurisdictions, while there is growing international pressure to line up standards of financial

regulation and meet international norms with regards to taxation.

3.56 The Government will shortly commission an independent review of British offshore

financial centres; their role in the global economy; and their long-term business strategies.

The review will not consider changes to the UK’s constitutional relationship. It will work with

the crown dependencies and overseas territories to identify current and future opportunities,

risks and mitigation strategies, including issues such as:

 

* financial supervision and transparency;

* fiscal arrangements;

* financial crisis management and resolution arrangements; and

* international cooperation.

 

That's a lot less doom and gloom! IOM, Jersey and Guernsey need to work together VERY closely on influencing this report!

[cheeky boy]

I don't think the UK care whether the money is put offshore so long as it is declared and tax paid on it.

 

So what then is the point of shipping your money offshore if you are going to pay UK tax on it?

 

There must be a reason to put your money in the IOM. If it's not to avoid tax in your home country, then what is it?

 

S

 

The point is... It's strange how many people don't understand what a large swathe of the offshore finance industry does over here / what market it tries to serve. There are millions of British Expats around the world, most of whom are targeted by the retail banks and deposit takers based here. These are legitimate customers with legitimate reasons to bank offshore (many UK banks won't host accounts for those who live overseas). Customers get a safe bank, in a safe British jurisdiction and a name they trust (if you ain't heard of Kaupthing, maybe you shouldn't trust it with your money?)

 

Generally (and this may be even MORE true in a low interest rate environment) rates tend to be more competitive offshore, often by around 0.50% and people naturally try to make the most of their cash. You could have Mr and Mrs Joe Bloggs from Leeds who put their money here, believe they get a better service, a better rate and declare the interest they've received to HMRC - no problems what soever.

 

The whole 'tax haven' argument is practically null and void since the EUSTD came online in July 2005 - if you're from the UK and earn interest here, a local institution is required to tell the UK authorities of interest earned, unless they are exempt or opt for a withholding tax (in which case, tax is paid anyway). The days of en-masse British tax evasion offshore are long gone.

 

That's not to say there aren't ways around these things. But the bottom line is that there are large droves of genuine retail customers doing business in a well regulated jurisdiction with a good reputation (pre Oct 08) with brands they trust.

 

Small, nimble subsidiary companies often offer better service, are used to dealing with customers in numerous countries and offer currencies and services the UK retail banks just aren't interested in.

 

If you're an expat oil worker in Saudi and your former UK bank doesn't want to know, where would you rather put your money?

 

It's a niche, but a genuine one.

 

P.S. You have the love the British Government sometimes - Offshore banking is SO useful for people leaving the UK, the Foreign & Commonwealth Office actively advise people moving abroad on the benefits of holding money offshore as part of their 'Know Before You Go' campaign (and the UK Government's conflicting point of view aside, rightly so!).

 

http://www.fco.gov.uk/resources/en/pdf/285...-to-live-abroad

 

 

Very well explained bish

 

Now all we have to do is get this message to Westminister

[bishbashbosh]

So is Bell going to be getting onto the larger UK news networks to set the record straight re: tax haven status and about gordon's deflection tactics? Its all well & good to have it on MR, but the message needs to get out to the wider world - like gordon manages to do when he is having his digs at the Island.

 

If Bell gets in quick he might even get top news item....I have not heard of any x factor or strictly outrage as yet for this week!

 

Indeed - get on the Politics Show WITH GB, or go to the Treasury Select Committee WHEN AD is giving evidence.

[La_Dolce_Vita]

I don't think the UK care whether the money is put offshore so long as it is declared and tax paid on it.

 

So what then is the point of shipping your money offshore if you are going to pay UK tax on it?

 

There must be a reason to put your money in the IOM. If it's not to avoid tax in your home country, then what is it?

 

S

 

The point is... It's strange how many people don't understand what a large swathe of the offshore finance industry does over here / what market it tries to serve. There are millions of British Expats around the world, most of whom are targeted by the retail banks and deposit takers based here. These are legitimate customers with legitimate reasons to bank offshore (many UK banks won't host accounts for those who live overseas). Customers get a safe bank, in a safe British jurisdiction and a name they trust (if you ain't heard of Kaupthing, maybe you shouldn't trust it with your money?)

 

Generally (and this may be even MORE true in a low interest rate environment) rates tend to be more competitive offshore, often by around 0.50% and people naturally try to make the most of their cash. You could have Mr and Mrs Joe Bloggs from Leeds who put their money here, believe they get a better service, a better rate and declare the interest they've received to HMRC - no problems what soever.

 

The whole 'tax haven' argument is practically null and void since the EUSTD came online in July 2005 - if you're from the UK and earn interest here, a local institution is required to tell the UK authorities of interest earned, unless they are exempt or opt for a withholding tax (in which case, tax is paid anyway). The days of en-masse British tax evasion offshore are long gone.

 

That's not to say there aren't ways around these things. But the bottom line is that there are large droves of genuine retail customers doing business in a well regulated jurisdiction with a good reputation (pre Oct 08) with brands they trust.

 

Small, nimble subsidiary companies often offer better service, are used to dealing with customers in numerous countries and offer currencies and services the UK retail banks just aren't interested in nor are capable of delivering.

 

If you're an expat oil worker in Saudi and your former UK bank doesn't want to know, where would you rather put your money?

 

It's a niche, but a genuine one.

 

P.S. You have the love the British Government sometimes - Offshore banking is SO useful for people leaving the UK, the Foreign & Commonwealth Office actively advise people moving abroad on the benefits of holding money offshore as part of their 'Know Before You Go' campaign (and the UK Government's conflicting point of view aside, rightly so!).

 

http://www.fco.gov.uk/resources/en/pdf/285...-to-live-abroad

 

From your explanation I can see the usefulness of the finance sector in providing a service to those expats who cannot get an account in the UK or their country.

 

But what of the low interest rates for customers and low tax rates for companies? We should be rid of this system that allows tax avoidance, should we not? I was under the impression that the U.S. government's issue with offshore centres was the fact that companies that should be paying tax in the U.S. are avoiding this by using offshore centres.

[Slim]

But what of the low interest rates for customers and low tax rates for companies? We should be rid of this system that allows tax avoidance, should we not? I was under the impression that the U.S. government's issue with offshore centres was the fact that companies that should be paying tax in the U.S. are avoiding this by using offshore centres.

 

Why shouldn't we be able to offer competitive tax?

[manshimajin]

Why shouldn't we be able to offer competitive tax?

Particularly if it is at the same rate as that EU stalwart Luxembourg.

 

I wish some people in Government and Treasury would read this thread - it might just give them some useful and strong ideas....

 

Bish how about writing to the FT for starters?

[La_Dolce_Vita]

Why shouldn't we be able to offer competitive tax?

Particularly if it is at the same rate as that EU stalwart Luxembourg.

 

I wish some people in Government and Treasury would read this thread - it might just give them some useful and strong ideas....

 

Bish how about writing to the FT for starters?

 

I am not just talking about the Isle of Man, but competitive tax as a whole. My understanding of finance may not be great but the impression I get is that those who can take advantage of competitive tax rates are those people of high incomes and large companies. It means that a group in society can effectively reduce the amount they pay in tax whereas others cannot. This to me seems wrong. Though I would be very interested to understand more about this if I have got the wrong idea about competitive tax.

 

I think this is what the US government is getting at, there are companies who are shirking their responsibilities to pay tax in the US. Am I right in thinking though that they are targeting the offshore centres, maybe first, because these areas have the lowest levels of taxation? It would seem somewhat hypocritical given that it is not the offshore centres which have low or competitive tax rates.

[La_Dolce_Vita]

Obama might be different this time around but there has rarely been a US Government since the Depression that has actually given a toss about the low income earners, or the poor. They still have little welfare state, poor to non-existent government health support, and all taxes seem to do is go back to the rich in one form or another or be used to fund big corporates doing outsourced government functions. Don't please believe that moves by the US to keep control of more taxes are alturistic, and might actually mean that more money is spent on the poor.

 

Anyone who has spent any time in the States knows that, its not in their psycology to support the poor or the needy I'm afraid. The poor don't aspire to anything, or pay their way, and those are deemed anti American activities.

 

Moving forwards Obama might just change this attitude a bit, I seriously doubt that the average fat, greedy, American will actually grow a social concience. If offered a choice between less taxes and supporting the poor I know how most would vote.

 

I don't think Obama is that different this time around, anyone who really believes that a democrat politician differs much from a republican politicians or that a black politician differs from a white politician in the use of their power are kidding themselves.

I completely agree, there is no altruism. The motivation is purely nationalistic and it will always be the government that sees where tax money is spent, that is the nature of taxes.

 

I suppose I shouldn't really be entering this debate in the sense that the arguments are really presented as why the Island should not be pressured into losing its attractiveness in terms of competitive tax, and comparison are made with other nations. Whereas I am saying that competitive tax appears to be a bad thing, but the issue is not about eradicating competitive tax regimes.