IoM Treasury Report Highlights Savings Tax As Source Of Uncertainty For Banking Sector

by Jason Gorringe, Tax-News.com, London

04 January 2005

The latest quarterly report to the Council of Ministers by the Isle of Man Treasury has warned that the introduction of the EU Savings Tax Directive in July 2005 is one of several factors that may impact the island’s financial services sector in the coming months.

The report, quoted in local news source the Isle of Man Online, suggested that while general sentiment within the island’s banking industry pointed to steady business flows being maintained in 2005, it is likely that this will be tempered by slower growth.

“Whereas in recent years it has been the offshore life industry that has been most affected it would now appear that the focus is on the banking sector and in particular the extent of the impact of the introduction of the withholding tax on bank interest to non-residents scheduled for July 1 2005,” the report observed.

However, it was also noted by the report that there had been a marked increase in the amount of funds under management at the end of the second quarter of 2004, which increased by £1 billion – double the normal quarterly average increase.

“If the average quarterly increase can be sustained this will be a significant result given the lethargy in the funds industry up to June 2003,” the report stated.

In addition to healthy growth in the fund management business, the Treasury also reported strong performance in the island’s e-business and manufacturing sectors.

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