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Isle Of Man Takes Important Step Towards Implementation Of Tax Strategy

by Jason Gorringe, Tax-News.com, London

15 July 2004

The signing of the Isle of Man Income Tax (Amendment) Bill 2004 at the June sitting of the Tynwald marks an important step towards the programme of changes under the island’s Taxation Strategy, whilst also helping the jurisdiction to meet its international commitments, Treasury Minister Alan Bell announced on Tuesday.

“One of the most significant changes that will impact on individuals on the Island is the move to a current year basis of assessment including the introduction of a payment on account,” Mr Bell explained.

He added: “The change to current year basis of assessment and the introduction of the new payment on account system will be achieved this year. When the next income tax return form is issued in April 2005, people will have a longer period to complete it - there will, however, be a new late filing penalty system.”

The Act includes measures to:

  • Extend the current year basis of assessment to all income received by individuals and other non-corporate taxpayers, including income from investments, self-employment and other sources. (Income from employment is already on a current year basis).
  • Introduce a payment on account system for those people who do not pay their annual income tax liability through the Income Tax Instalment Payment or Sub Contractor’s Deduction Schemes.
  • Allow more time to make a tax return and, after a period of education, introduce a late filing penalty system.
  • Provide the Assessor with additional powers to obtain information, including documents and information required to enable the Island to comply with its international commitments.
  • Prevent the avoidance of Manx tax through the use of company loans to take advantage of the differential between corporate and personal income tax rates.
"As I said when I introduced this Bill last year, the people of the Isle of Man are entitled to an income tax system that works as efficiently as possible and collects all the money that is owed to public funds,” Mr Bell continued, noting:

“Manx income tax rates are low compared with other countries and it is not unreasonable to expect payment of what is due. It is also important for the reputation and stability of the Island that we have the ability to honour our international commitments.”

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