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Manx Income Tax Law Receives Royal Assent

by Jason Gorringe, Tax-News.com, London

17 July 2006

The Manx Treasury Department has confirmed that Royal Assent was given on 11 July 2006 to both the Income Tax (Amendment) Act 2006 and the Income Tax (Corporate Taxpayers) Act 2006.

The so-called ‘0/10’ tax regime for companies is now in force and has effect from 6 April 2006; that is, for the 2006/07 and subsequent years of assessment. The distributable profits charge and the corporate charge are also in force from 6 April 2006. An accounting period basis of tax assessment for companies will be introduced with effect from 6 April 2007.

The new 0% tax regime is in accordance with the promised five year public taxation plan announced in 2000, which has been delivered on target, two years ahead of other UK Crown Dependencies and other competitors in the full implementation of a zero tax strategy. This is intended to stimulate inward investment by businesses establishing on the Island, and will also provide a consistent treatment across all sectors of the economy, as part of the Isle of Man’s commitment to a diversified economy.

For individuals, the tax cap of GBP100,000 and the updated rules for married couples are now in force and have effect from 6 April 2006 for 2006/07 and subsequent years of assessment. These rules involve an increase in personal tax allowances to GBP8,670 for single people and to GBP17,340 for married couples.

The special corporate tax regimes such as tax exempt companies will cease to exist with effect from 6 April 2007.

It is foreseen that the new personal tax rules will attract high-net-worth individuals and active entrepreneurs to the Island with the drive to further stimulate the Isle of Man’s burgeoning economy. By making a tax system that is simple to understand and available to all, Treasury Minister Allan Bell is keen to provide a competitive advantage to the Island, in line with the government's fiscal strategy to promote the Isle of Man as a quality business centre of international standing.

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