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Withholding Tax

The 2006 Budget introduced a standard rate of income tax of 0% for corporate taxpayers and a rate of 10% for specific sources of income.

The Order specifies the sources of income that are subject to a 10% rate of income tax.

With effect from 6 April 2015 income from land and property is subject to a 20% rate of income tax in accordance with this order.

It is important that a company deducts the correct amount of withholding tax when making a taxable payment to a non-resident and this change in tax rates for companies also changed the rates of withholding tax that need to be deducted by companies when they make payments to non-residents.

From 6 April 2007, when a company makes a payment to a non-resident there are three important factors to consider:

  1. The type of payment being made;
  2. The tax rate applicable to the company making the payment; and
  3. The recipient of the payment.

The table below summarises the rate to be applied, but please contact the Income Tax Division on 685400 if you want to confirm the rate of withholding tax to apply to a payment that is not included in the table.

Payments to a Company Payments from a 0% Company
Rent (paid on Manx property) 10% (up to 5 April 2015)
Rent (paid on Manx property) 20% (with effect from 6 April 2015)
All Other Payments 0%
Payments to an Individual Payments from a 0% Company
Rent (Manx) 20%
Other Manx Income 20%
Directors Fees 0% *
Dividends 0%
Loan Interest 0%

* in certain cases where duties are performed on the Isle of Man the rate will be 20%

Payments to a Company Payments from a 10% Company
Dividends 0%
Rent (paid on Manx property) 10% (up to 5 April 2015)
Rent (paid on Manx property) 20% (with effect from 6 April 2015)
All Other Payments 0%
Payments to an Individual Payments from a 10% Company
Rent (Manx) 20%
Other Manx Income 20%
Directors Fees 0% *
Dividends 0%
Loan Interest 0% / 20% **

* in certain cases where duties are performed on the Isle of Man the rate will be 20%

** where the payment of loan interest is from a company with income from Manx land and property subject to tax the rate is 20%, where the company is subject to tax at 10% on other income sources the rate is 0%

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