Banks Excluded From Isle of Man's Zero Tax Plans

by Amanda Banks, Tax-News.com, London

14 August 2002

Speaking to the Isle of Man Online news service this week, Assessor of Income Tax, Ian Kelly announced that the planned zero rate of corporate tax will not apply to banks and building societies based on the Island, which will pay a rate of around 10%.

Mr Kelly told the news service that the recently announced tax reform proposals are intended to be a modification to the Treasury's existing tax strategy rather than a radical shake-up. and explained that:

'In introducing these proposals, we have to achieve something of a balancing act. It would not be possible to move to a position where all companies were zero rated, as that would represent a loss of some £60 million in revenue, a figure too great for the Treasury to bear, and one that would impact severely on public expenditure.'

He went on to add that despite their exclusion from the zero rating, banks and building societies based on the Isle of Man are expected to benefit from the fact that existing Manx companies should become more economically viable, and new businesses are likely to be attracted to the jurisdiction by the measure.

'Treasury sees the exclusion of banks and building societies from these proposals as a reasonable balance, leaving them with a highly attractive low rate of tax,' Mr Kelly concluded.

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