US Tax Body Head Praises Isle Of Man

by Robert Lee, Tax-News.com, London

29 June 2010

The head of an influential taxation agency in the United States has praised the Isle of Man for leading the way in developing international standards of tax transparency and co-operation.

Joe Huddleston, Executive Director of the Multistate Tax Commission in Washington DC, was guest speaker at the Chief Minister’s International Lecture held at the Mount Murray Hotel on June 17. The Multistate Tax Commission works with individual states across the US on issues relating to the taxation of inter-state and international business.

Huddleston said it was important to appreciate the layered structure of government in the US and the role of the 50 individual states, some of which are amongst the top 25 economies in the world. The key problem for states was how to tax business with international interests. Corporations with a presence in jurisdictions deemed to be ‘tax havens’ were liable to state tax on their worldwide income, which could have a dramatic impact on them, he said.

Huddleston pointed out that the focus for the states was on taxing business, without much thought for the individual jurisdictions involved. Lacking the expertise to make their own assessment, states had looked to Organization for Economic Cooperation and Development (OECD) lists to provide authoritative guidance on what was considered to be a ‘tax haven’, he said.

“One of the problems in the US is that we have clung to old lists,” admitted Dr Huddleston, who added that he had not realized the implications of this until he met the Chief Minister and an Isle of Man government delegation in Washington. He noted that the Isle of Man’s placement in the same OECD category for tax transparency as the US itself, and other major nations.

The Multistate Tax Commission is currently undertaking the promotion of objective standards in relation to transparency and information sharing. The Isle of Man had been at the forefront of international discussion in this area in recent years, he said. Huddleston told the audience: “In the Isle of Man you should be proud that you have taken this leadership role in developing standards for business around the world.”

“You have taken an exceptionally proactive stance in identifying these issues and understanding how they impact on the Isle of Man. You should give yourselves a pat on the back.”

Noting the island's ability to engage in international talks on the matter, Huddleston opined that "opportunities [for the Isle of Man] are far greater than for many other jurisdictions," and endorsed the Isle of Man's efforts to grow its financial services industry.

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