Addressing a Manx Business Connection breakfast, Mr Kelly said the Island had to recognise its role and fight very hard to retain it.

He said further proposals would be coming out of the EU — partly to do with tax but also about regulation, an amalgamation which had been gathering pace for some time.

The European Commission had put out a recent paper dealing with the necessity of co-ordinating activities to fight international crime and terrorism. This had referred to four different levels of defence including regulation and tax.

Said Mr Kelly: 'I think you will see that coming together and it is going to be a bit of a challenge for us. As always with the European Union we find ourselves having to meet their standards and yet we can't compete on that level playing field because we are denied access to those markets.

'One of the challenges is how we face those issues which will come out of the EU and we should be looking to that. The Isle of Man can't avoid it because we are going to get sucked into it in some way, so the real entrepreneurial skill is how to embrace it to see how we can get something out of it. How can we modify, how can we change and be flexible?

'It is what we have tried to do with the OECD and EU. You are faced with those issues and you can't avoid them so how do you duck and dive to survive? Here I think we need to improve our market intelligence as to just what exactly is going on in the rest of the world.

'We really need to build up our database on some of those things because these are problems other countries are facing.'

Mr Kelly said 'an awful lot' was happening and one of the main challenges facing the Manx government was how to co-ordinate all the activities. There were many initiatives under way across different departments and divisions within Treasury and there was a danger, if they were not co-ordinated, of wasting resources and of being at odds with each other.

He said the Island's taxation strategy in itself was not enough; that was not going to secure the Isle of Man's future. It was only one tool in the panoply of measures available to government — the hard part was converting that concept into real business.

Thanking to the speaker, Isle of Man Bank managing director Jerry Linehan said that describing Mr Kelly as a tax assessor was an understatement of the role he had carried out in the Island.

'Having worked with him on a lot of initiatives I know the role of tax assessor is a very small part of what he has been doing. He has been involved in the Edwards review, OECD, the FATF review, IMF review and EU Savings Directive to name just a few. The way the Isle of Man has steered its course through that tricky path is in no small way down to Ian.'