

The Isle of Man Government has now set out its response to the Review of Financial Regulation in the Crown Dependencies ("The Edwards Review") published by the Home Secretary in November 1998. The response, prepared by the Council of Ministers was debated and approved by Tynwald on Wednesday 21st April 1999. One of the aspects covered by The Edwards Review was the existence of non resident duty companies. Whilst the Isle of Man Government cannot support the comments made it is clearly the case that the non-resident duty company is a vehicle which presently has a question mark hanging over it. As a consequence, it has been decided that there should be an immediate moratorium on the creation of companies of this type and that their future within the corporate structures of the Isle of Man will be determined in the light of legislation being progressed to regulate corporate service providers and a rationalisation of the taxation provisions for exempt and international companies.
Tynwald on 21st April 1999 approved the Income Tax (Companies Residence) (Temporary Taxation) Order 1999. A copy of the Order is attached. This Order replaces Sections 2D and 2E of the Income Tax Act 1970 and with effect from 6th April 1999 imposes a moratorium on the creation of Manx incorporated non-resident companies by deeming the following companies to be resident for the purposes of the Income Tax Acts:
Legislation confirming the amendments to the Income Tax Act 1970 will be included in an Income Tax Bill to be published later this year.
Pending the corporate service providers legislation and the rationalisation of the taxation provisions for exempt and international companies referred to above, companies which had a non-resident declaration in force on 5 April 1999 will continue to be non-resident for income tax purposes unless;
the non-resident status is challenged by the Assessor, or a rescission of the non-resident declaration is delivered to the Registrar.
It is recognised that where a non-resident duty company delivers a rescission, circumstances beyond the control of the company may lead to a short delay in changing the officers to permit the company to for example elect for exempt status under the Income Tax (Exempt Companies) Act 1984. By concession the Income Tax Division will not pursue any liability to resident tax arising in such a transition period providing that that period does not exceed 14 days.
Statutory Document No. 149/99
INCOME TAX ACT 1995
INCOMIE TAX (COMPANIES RESIDENCE) (TEMPORARY TAXATION) ORDER 1999
Approved by Tynwald 21st April 1999
Coming into operation in accordance with article 1(1)
In exercise of the powers conferred on the Treasury by section 15 of the Income Tax Act 1995(a), and of all other powers enabling it in that behalf, the following Order is hereby made: -
This Order may be cited as the Income Tax (Companies Residence) (Temporary Taxation) Order 1999.
This Order shall come into operation on the day on which it is approved by Tynwald.
Interpretation
In this Order -
appointed day" means 6 April 1999.
company" has the meaning given by section 341 (1) of the Companies Act 1931 (b);
non-resident company" means a company in respect of which, a non-resident declaration under section 2 of the Non-Resident Company Duty Act 1986 (c) was in force immediately before the appointed day.
Companies changing residence
Repeal
Sections 2D and 2E of the Income Tax Act 1970 are repealed.
MADE 30th March 1999. Minister for the Treasury.
EXPLANATORY NOTE This Note is not part of the Order This Order is made under the Income Tax Act 1995. The effect of the Order is to treat as resident in the Isle of Man for tax purposes * all companies incorporated on or after 6 April 1999; and * any tax resident company incorporated before that date. The Order replaces provisions in the Income Tax Act 1970

The Isle of Man Government has now set out its response to the Review of Financial Regulation in the Crown Dependencies ("The Edwards Review") published by the Home Secretary in November 1998. The response, prepared by the Council of Ministers was debated and approved by Tynwald on Wednesday 21st April 1999. One of the aspects covered by The Edwards Review was the existence of non resident duty companies. Whilst the Isle of Man Government cannot support the comments made it is clearly the case that the non-resident duty company is a vehicle which presently has a question mark hanging over it. As a consequence, it has been decided that there should be an immediate moratorium on the creation of companies of this type and that their future within the corporate structures of the Isle of Man will be determined in the light of legislation being progressed to regulate corporate service providers and a rationalisation of the taxation provisions for exempt and international companies.
Tynwald on 21st April 1999 approved the Income Tax (Companies Residence) (Temporary Taxation) Order 1999. A copy of the Order is attached. This Order replaces Sections 2D and 2E of the Income Tax Act 1970 and with effect from 6th April 1999 imposes a moratorium on the creation of Manx incorporated non-resident companies by deeming the following companies to be resident for the purposes of the Income Tax Acts:
Legislation confirming the amendments to the Income Tax Act 1970 will be included in an Income Tax Bill to be published later this year.
Pending the corporate service providers legislation and the rationalisation of the taxation provisions for exempt and international companies referred to above, companies which had a non-resident declaration in force on 5 April 1999 will continue to be non-resident for income tax purposes unless;
the non-resident status is challenged by the Assessor, or a rescission of the non-resident declaration is delivered to the Registrar.
It is recognised that where a non-resident duty company delivers a rescission, circumstances beyond the control of the company may lead to a short delay in changing the officers to permit the company to for example elect for exempt status under the Income Tax (Exempt Companies) Act 1984. By concession the Income Tax Division will not pursue any liability to resident tax arising in such a transition period providing that that period does not exceed 14 days.
Statutory Document No. 149/99
INCOME TAX ACT 1995
INCOMIE TAX (COMPANIES RESIDENCE) (TEMPORARY TAXATION) ORDER 1999
Approved by Tynwald 21st April 1999
Coming into operation in accordance with article 1(1)
In exercise of the powers conferred on the Treasury by section 15 of the Income Tax Act 1995(a), and of all other powers enabling it in that behalf, the following Order is hereby made: -
This Order may be cited as the Income Tax (Companies Residence) (Temporary Taxation) Order 1999.
This Order shall come into operation on the day on which it is approved by Tynwald.
Interpretation
In this Order -
appointed day" means 6 April 1999.
company" has the meaning given by section 341 (1) of the Companies Act 1931 (b);
non-resident company" means a company in respect of which, a non-resident declaration under section 2 of the Non-Resident Company Duty Act 1986 (c) was in force immediately before the appointed day.
Companies changing residence
Repeal
Sections 2D and 2E of the Income Tax Act 1970 are repealed.
MADE 30th March 1999. Minister for the Treasury.
EXPLANATORY NOTE This Note is not part of the Order This Order is made under the Income Tax Act 1995. The effect of the Order is to treat as resident in the Isle of Man for tax purposes * all companies incorporated on or after 6 April 1999; and * any tax resident company incorporated before that date. The Order replaces provisions in the Income Tax Act 1970