"For the past three years the Isle of Man has been delivering a national strategy of driving down income tax costs for business. Our current standard rate is 10 per cent and we are on course for the zero target by 2006," Bell explained, according to the Isle of Man Online. He added that the EU's affirmation of the jurisdiction's tax plans would bring some welcome stability to the financial sector, and represents an international endorsement of the government's taxation plans.

The Treasury minister confirmed that the Isle of Man will introduce a withholding tax rather than automatic exchange of information in order to meet its obligations under the EU Savings Directive. This will bring the jurisdiction into line with other European banking centres who have already decided to take the same course, most notably Switzerland, Luxembourg and Guernsey.

This is generally the preferred option of the banking industry, as clients from EU member states retain the option to voluntarily exchange information with their own member state. Bell also explained that the island was already exchanging information with third countries, as a result of other international commitments.

"The Island is already committed to the OECD's global standard of exchange of information on request," the Manx Treasury Minister explained, adding: "This is accepted by countries around the world, including the USA, with which we have signed a new tax information exchange agreement."

He announced that due to differing standards of information exchange, it "would be premature for the Isle of Man to make a general commitment to automatic exchange of information at this stage." There remains room however, for bi-lateral agreements if it can be shown there is a "clear mutual economic benefit," the minister observed.

In conclusion, Bell suggested that the Isle of Man will remain competitive despite the new EU regulations, and the island's commitment to the zero rate of income tax proves this. In addition, the Isle of Man's willingness to comply with EU legislation shows the world that it is a responsible financial jurisdiction, he observed.