IoM Tax Assessor Says Zero Rate Designed To 'Kick Start' Manx Economy

by Robert Lee, Tax-News.com, London

03 July 2002

Speaking at a press conference this week, the Isle of Man's Assessor of Income Tax, Ian Kelly explained that the proposals to introduce a zero rate of corporate income tax are as much part of an effort to kick start the jurisdiction's economy as they are a response to the European Union's Code of Conduct on Business Taxation.

'Our driving force isn't just the EU, our driving force is also about the competitive position of the Isle of Man,' he told reporters, adding that in view of the recent announcement that international banking giant, HSBC is planning to outsource certain back-office jobs to India, it has become increasingly urgent that the Manx government find a way of attracting more business to the Island.

'If this is really a sound strategy, which we think it is...then shouldn't we be driving in that direction anyway? Doesn't it make economic sense to do that because we know there has to be some reshaping of our economy?' he mused.

Allan Bell, the Isle of Man's Treasury Minister supported Mr Kelly's assessment that the tax plans, if implemented, will improve the jurisdiction's international competitiveness:

'It will give our business community the opportunity to regain its hunger, to look for new business, not only to replace the short-term revenue loss which we expect, but also to continue the economic growth which we've enjoyed over the last few years.'

He went on to add that: 'It is also recognition that there is restructuring going on in the economy at the moment. We've already seen the first signs of that with HSBC outsourcing of jobs. We are aware of a considerable number of potential jobs which may be outsourced over the next three or four years.'

The Treasury Minister stressed the need to market the zero tax rate internationally, but added that the move was not designed to 'cock a snook at the UK'.

'We've been in consultation and they are satisfied overall,' he explained this week, continuing: 'I'm sure they won't like the zero rate because it is highly competitive but in terms of the Code of Conduct, in terms of the Savings Directive, which is what this exercise is about, it meets those requirements.'

According to the Isle of Man Online news service, the proposals will be implemented slowly, over the course of the next four budgets.

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