A drive to develop business links with China shows just how disastrous it would have been to pull out the Customs Union.
That’s the view of Chief Minister Allan Bell MHK, who says the island has a unique proposition to offer Chinese exporters – with our zero corporate tax rate and our being part of the EU VAT network.
With the Manx government having lost a third of its income following the UK’s revision of the VAT revenue sharing deal, there had been calls to abrogate the ‘Common Purse’ agreement.
But Mr Bell insisted: ‘It would have been absolutely disastrous to have pulled out of the Customs Union.’
He was speaking after it was announced that His Excellency Liu Xiaoming, the Chinese Ambassador to the UK, will lead a Chinese business delegation on a three-day visit to the island tomorrow from (Friday).
Leading Chinese LED manufacturer recently set up a company in the island as part of its new export drive into the UK and Europe.
And Mr Bell, who is planning to visit China on a political level early next year, believes the island has great opportunities to offer exporters from the world’s fastest growing economy.
He said: ‘The island has a unique proposition for international business in the sense that we have a tax neutral corporate structure but also we are a member of the EU VAT network.
‘This gives Chinese exporters a great opportunity to export into the UK and the EU.
‘This is nothing to do with aggressive tax planning - all appropriate tax gets paid. The Isle of Man is in a position to provide high quality administrative support for these companies.’
Mr Bell said the aim was to ‘support a wide range of employment options as we can’.
He said in some niche areas this could potentially include the setting up of new manufacturing industries. But he added: ‘We have to realistic - there is a limited workforce in the Isle of Man.’
The Chief Minister pointed out the economy of one of our main rivals, Jersey, has shrunk for the fifth year in a row.
Jersey’s gross value added reduced by 4 per cent to a level not seen since the mid-1990s.
In contrast, the Isle of Man is still predicting growth of 4 per cent.
Mr Bell said: ‘It may not be the growth levels we had in the past but we are way ahead of our main competitor.
‘That’s a direct reflection of a policy decision to diversify and not to have all our eggs in one financial basket.’