| By Mandy Robinson,
Tax-news.com London 26th October 2000
Radical tax reforms endorsed last week by the Isle of Man's Tynwald, the world's oldest parliament, will result in the halving of corporate tax to 10 per cent and a reduction in the top rate of income tax from 20 per cent to 15 per cent.
Explaining the need for the reforms, Treasury Minister Richard Corkill said: 'E-commerce and globalisation are changing the world economy out of all
recoginition. Companies expect jurisdictions to be competitive and international authorities expect them to compete fairly. We believe that our reform programme strikes the right balance between these two requirements. The Isle
of Man is already Europe's fastest growing economy. The passing of the tax reform through Tynwald will help enable us to continue to grow company profits, personal living standards and social services faster than ever before.'
According to a Treasury press release, the taxation reforms include: -
Reduction in the corporate tax rate from 20% to 10% for trading
companies over a three to five year period, with a deadline of 2005 -
Exempt insurance companies and ship management companies will be
brought within the domestic tax system, but at a zero rate -
A simplified approach to capital allowances whilst retaining100% relief when necessary -
A similarly simplified approach for the taxation of individuals by having all income assessed on a current year basis -
Reduction in top rate of income tax from 20% to 15% -
Reduction of the standard rate from 14% to 10% -
Special treatment for short-term contract executives for up to three years so that they will only be taxed on their Manx sourced income -
Personal allowances will be available for non-residents as well as residents -
A new tax credit system for distributions will ensure that tax neutrality is
preserved for the investor, whether resident or non-resident -
Incentives for business start-ups and venture capital initiatives
The Isle of Man's Chief Minister, Donald Gelling, has lent his full support to the reforms, this week calling them a 'package of good news' for the government,
economy and the residents of the island. Mr Gelling stated: 'the policy document looks forward to continuing progress in the development of the economy and public services, and the tax strategy is central to achieving this.
It will encourage high-value enterprise and, of course, reduce taxes still further for existing businesses and residents.'
The Isle of Man is, indeed, going from strength to strength. Mr Gelling confirmed that the government has met a key financial objective in boosting its reserve fund to in excess of £250m., the equivalent of half of the island's gross
annual expenditure. Furthermore, Manx GDP per capita by 1998/99 had closed to 93 per cent of the UK GDP per capita and in the last 18 months the Isle of Man has further caught up the UK with estimates now around 98 per cent of the UK figure.
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Manx tax reforms aid strong economic growth