Isle Of Man To Usher In New Income Tax Legislation

by Jason Gorringe, Tax-News.com, London

28 January 2004

The Isle of Man government is promoting new legislation that aims to further simplify the jurisdiction’s income tax system in a bid to make it fairer and more consistent.

According to the Treasury, the Income Tax (Amendment) Bill 2004, which is subject to approval by the House of Keys and Legislative Council will include:

• Extension of 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).
• Two months longer – five months instead of three months – to make a tax return. But overdue returns will be subject to a new £50 penalty after September 2005 and the Bill also updates offences in relation to returns more than two years overdue.
• Newly defined powers for the Assessor of Income Tax to obtain documents including material relevant to the international exchange of tax information on request, in line with the Island’s commitment to the OECD.
• Provision to prevent the avoidance of Manx tax by company directors, for example, using company loans to exploit the differential between corporate and personal income tax rates.

According to the Treasury, the Bill also extends personal allowances to non-residents and updates the existing Temporary Taxation Order process, whereby urgent changes to tax law can be introduced through orders approved by Tynwald. Such orders lapse if related primary legislation is not progressed at least to Second Reading stage within 12 months.

Treasury Minister Alan Bell observed that the Bill “continues the modernisation of the Island’s tax system by making it simpler, fairer and consistent with international standards. This is very much in line with the tax strategy approved by Tynwald and significant aspects of the Bill have been flagged up in the past.”

“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. Manx 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 agreements,” added Mr Bell.

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