IOM Government Adviser Says Low Tax Strategy Not Enough

by Jason Gorringe, Tax-News.com, London

26 February 2003

Speaking at a recent meeting of the Chartered Management Institute, economic adviser to the Manx government, Stephen Carse warned that low taxes and high regulatory standards may not be enough to attract new business to the Island in the long term.

According to a report from the Isle of Man Online news service on Tuesday, following questions from several of the jurisdiction's leading finance professionals on the future for the Isle of Man's finance industry, Mr Carse admitted that in 10-15 years, it is likely that the vast majority of finance centres will have implemented the required legislation, and that many will probably also have implemented the zero corporate tax rate recently announced by the Manx authorities:

'You do then have to focus on other issues, which is why the economic strategy will be an all-embracing document,' he explained, adding that: 'Taxation cannot stand on its own to lead the way forward. We have to develop a commercial environment which is not only conducive to existing business but newcomers coming in.'

Mr Carse continued: 'As quickly as we move down on tax and as quickly as we are up to pace on regulatory issues then everyone else will ultimately have to be there, so what then is our competitive advantage? One advantage is that hopefully we can have our stall set out first.'

Although, the Isle of Man Online reported, Mr Carse acknowledged that there are concerns that off-Island outsourcing amongst existing businesses located in the jurisdiction may increase over the coming years, he suggested that the greatest challenge has been handling external challenges presented by international bodies such as the OECD and the FATF, whilst maintaining sovereignty on taxation matters.

The government adviser admitted that the Isle of Man has had to adjust its position on certain matters, but concluded by observing that:

'In having had to move from our initial position we are doing nothing more than adjusting in the same way that most members of the EU themselves have had to in the face of pressures for greater transparency in international economic affairs. Let us not forget that even the UK has had to move massively on this issue - the UK government was originally totally opposed to either withholding tax or exchange of information.'

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