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Isle of Man due to signal shift in tax policy
TREASURY Minister Allan Bell was due today to signal a major shift in the Isle of Man's tax policy – with the aim of silencing the critics who accuse us of banking secrecy.
At a Organisation for Economic Co-operation and Development (OECD) Forum in Paris, Mr Bell will announce that the withholding tax for EU-residents with offshore bank accounts here will be scrapped from July 1, 2011 – and the automatic exchange of tax information introduced.
The Isle of Man secured its place on the OECD's whitelist of co-operative countries back in April, having signed more tax information exchange agreements than any other offshore jurisdiction.
But currently such tax information is shared only on request.
>> Isle of Man moves on tax co-operation
09 May 2009
Non-residents can choose to exchange tax information or pay a withholding tax of 20 per cent on their savings interest, which is remitted back to their home country.
Under a review of the savings directive by the European Union the withholding tax is to go up from 20 per cent to 35 per cent in July 2011.
But the Manx Treasury has opted instead to move to the automatic exchange of information on the same date, which Mr Bell said would keep the Isle of Man at the 'forefront of tax co-operation'.
He said: 'The Isle of Man has led the way for a number of years now in how small countries with financial services centres should operate in the globalised economy.
'My announcement is further evidence that the Isle of Man is prepared to align its policies with international benchmark standards, which signals to our trading partners and investors alike that we can be relied upon and that our name is associated with probity and foresight.'
In his speech to the forum Mr Bell stressed the withholding tax arrangements were 'perfectly acceptable' and agreed when the savings directive was finalised by the European Union.
But he noted: 'Some observers, and many European Union member countries, consider the withholding tax option to be some form of cover for banking secrecy - and clearly banking secrecy should have no place in a world characterised by internationally agreed tax standards.
'The Isle of Man does not, and did not, have any form of banking secrecy law or practice, but our government thinks that it is now important to signal for the avoidance of any doubt that this is the case.'
UK Justice Minister Lord Willy Bach said: 'I welcome the Isle of Man's decision to move to automatic exchange of information under the EU Savings Directive.
'This is a clear indication of their commitment to high standards of regulation and tax-transparency and shows that they lead the way in terms of how small jurisdictions with financial services centres should operate.'
WHAT DO YOU THINK?
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YOUR COMMENTS
I have to wonder what the real driving force behind this move is, as it appears to be very poorly thought through. Just what does the Isle of Man gain from this change in policy? It can't be an increase in financial business, because there is nothing on offer here that can't be found in abundance in other jurisdictions, to include those already employing an automatic exchange of information. And those banks in the automatic exchange scheme already (as I have personally witnessed) have been providing information to 'home jurisdictions' even though their customers have not been resident there for quite some years. Is the Isle of Man going to be drawn into such gross abuses of privacy too just to curry favour with those in Berlin, Paris and Washington? To what end? And a 20% withholding tax ---- to whom is that to be paid? Are customers of financial institutions in the Isle of Man simply to consider this a small price to pay to do business in the Isle of Man? To the joy of other jurisdictions I would have thought. I agree that there has never been banking secrecy in the Isle of Man. Indeed, there has been little in the way of confidentiality. However, even a modicum of confidentiality in one's private affairs today would be a refreshing change from the herd mentality which seems to have overwhelmed the Isle of Man government of late in their bid to be first in disclosing any and all private information to whomever pretends to need it.
ANON
The 20% withholding tax which many depositors in the failed Kaupthing Singer & Friedlander Bank chose to pay to the EU has done them absolutely no good, as neither the authorities in Brussels nor the UK government have stepped in to help them. Non-residents may, at present, indeed be able to choose 'to exchange tax information or pay a withholding tax of 20 per cent on their savings interest which is remitted back to their home country' but a very large number of depositors with tke KSFIOM were British citizens, resident in the UK or in mainland EU countries, so what have the authorities in these countries done to help them in exchange for the 20% tax which many of the depositors chose to pay them? Nothing. Rights bring reponsibilties and the EU authorities seem to have abdicated their responsibilities in the KSFIOM case. Savers with Kaupthing in the UK did not have to suffer. The UK government saw to that. No taxation without responsible representation should be the maxim here.
BOB
Allan Bell's announcement is encouraging news as far as EU taxation is concerned. The larger matter to be addressed is tax avoidance that has the affect of depriving revenue for poorer countries. Maybe some developing countries will be the 'new' tax havens to benefit from tax avoidance like our island has done up till now.
MOSSES (Name and address supplied)
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