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Code of Conduct for Business Taxation and EU Listing Process from 2016

In 2016 the Council of the European Union (EU Council) committed as a priority to coordinated policy efforts in the fight against tax fraud, evasion and avoidance and against money laundering at an EU and global level. On 8 November 2016 the EU Council adopted the 'Conclusions on criteria and process leading to the establishment of the EU list of non-cooperative jurisdictions for tax purposes' (the 'EU Listing Process'). 

In 2016 the Code of Conduct for Business Taxation (the 'Code Group') were instructed by the Council to undertake a screening process whereby jurisdictions, including the Isle of Man, were assessed against standards of:

  • Tax transparency,
  • Fair taxation
  • Compliance with anti–BEPS measures (together the 'EU Listing Criteria')

The screening process took place during 2017 and no concerns were raised against the Isle of Man’s standards of tax transparency and anti-BEPS compliance. Details of the Isle of Man’s policy on tax transparency is available and on its compliance with anti- BEPS can be found within our dedicated BEPS pages. However, during this screening process the Code Group expressed concern that, although it had met previous 'fair taxation' standards, the Isle of Man did not have a 'legal substance requirement for entities doing business in or through the jurisdiction'. The Code Group were concerned that this 'increases the risk that profits registered in a jurisdiction are not commensurate with economic activities and substantial economic presence'. These concerns were articulated in a letter to the Island in November 2017.

Isle of Man Response

In response, the Isle of Man Government made a commitment to address these concerns by the end of December 2018.

As identical concerns were raised in respect of Jersey and Guernsey, the Isle of Man has been working closely with those governments to collectively develop proposals to address the concerns raised by the Code Group. This work has included dialogue with the European Commission (Taxation and Customs Union - TAX UD) and the Code Group both in plenary sessions (with other jurisdictions) and bilateral meetings. This engagement is ongoing.

The Isle of Man has also engaged closely with the OECD through the Global Forum on Transparency and Exchange of Information for Tax Purposes, the Base Erosion and Profit Shifting Inclusive Framework and a specific voluntary group established to progress discussions on the issue of economic substance.

High Level Timetable

2018

August

Industry engagement and drafting of legislation to introduce substance requirements commences

September/October

Draft substance legislation and further transparency measures discussed with European Commission and the Code Group

November/December

Substance legislation presented to Tynwald

2019

January

New requirements for companies engaged in certain activities to have substance apply for accounting periods commencing on or after 1 January 2019

February

EU Listing decision expected

First half 2019

Consultation on Mandatory Disclosure Rules

Second half 2019

Regulations for Mandatory Disclosure Rules presented to Tynwald

2020

January

Companies commence filing of new form tax returns

Keeping Updated

If you would like to be added to our mailing list in order to receive regular EU Listing Process updates, please supply your details on the Mail List Contact Form.

EU Listing Key Documents

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