When Isle of Man treasury minister Allan Bell unveils his budget in February, in which he must deal with an unanticipated £90m income shortfall caused by the ending of a customs revenue-sharing agreement with the UK, it is thought he will seek to avoid touching the island’s zero-10 corporate tax regime.
As he has in other recent interviews, Bell told International Adviser he could not reveal where he plans to make the cuts and tax increases necessary to compensate for the lost customs revenue in advance of his formal presentation of the budget to Tynwald, the Manx parliament.
But he hinted that the island’s zero-10 corporate tax regime was likely to be spared the axe – at least for now.
The Isle of Man introduced the then-unique combination of a basic 0% corporation tax with a 10% tax on companies in certain sectors, including banking, in 2006.
Jersey and Guernsey have since gone to zero-10 regimes, but earlier this year, the EU Code of Conduct group announced this year that it was reviewing the Jersey and Guernsey zero-10 arrangements, in response to what was said to be pressure from some higher-tax EU member countries.
The announcement prompted speculation that the Isle of Man’s corporate tax regime, among the first to combine a 0% corporation tax with a 10% tax on companies in certain sectors when introduced in 2006, might also come in for review.
“Our zero-10 [regime] was deemed to be compliant by the European Union’s Code of Conduct group back in 2003,” Bell said.
“Obviously we recognise that times have changed, and we will be following the current debate in Europe with some interest, and if there is a need to review the situation at any time, then clearly the Isle of Man will.”
Financial crisis
In October, Isle of Man chief minister Tony Brown stunned Isle of Man residents with the news that the crown dependency had been plunged into an “unprecedented” financial crisis following Britain’s announcement that it would slash £140m off the island’s annual budget of £572m, beginning with a £90m drop in income in the first year, as it made changes to the centuries-old customs revenue-sharing agreement.
Bell’s comments came in a late December interview, more of which may be found in Isle of Man holds breath for Bell’s budget in February, in the Features, Tax, Technical section.
