IoM Announces VAT Rate Reduction

by Phillip Morton, Investors Offshore.com

04 December 2008

The Isle of Man's Treasury has announced changes to both the standard rate of value-added tax and the island's interest rates on outstanding tax payments.

The Treasury has advised that, as of December 1, 2008, the standard rate of VAT will be reduced to 15%, and will remain in force until December 31, 2009.

The rates of interest on payments of VAT, customs duty and excise duty due to and from the Treasury will also be amended from December 6, 2008. Interest on VAT payable to the treasury will stand at 8%, whilst interest on VAT payable by the Treasury will be 2%. Interest on excise duty and customs duties payable to the Treasury will stand at 5.5%, whilst interest on excise duty and customs duties payable by the Treasury will be 2%.

Compensatory interest will be payable to the Treasury on diversions of goods imported under temporary import reliefs and which are to be retained in the island or European Union. This is set by the European Commission and is adjusted on a monthly basis.

The Treasury have pointed out that interest rates on sums of VAT payable by the Treasury change automatically according to a formula in the Value Added Tax (Interest Rate) Order 1998.

Interest rates on sums of customs and excise duties (except for Compensatory Interest) change automatically according to a similar formula in the Customs and Excise Duties (Interest Rate) Order 2000 and Air Passenger Duty (Interest Rate) Regulations 1998.

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