Peer Review Report
The peer review assessment of the Isle of Man was carried out by a team of experts on behalf of the OECD’s (Organisation for Economic Co-operation and Development) Global Forum on Transparency and Exchange of Information for Tax Purposes, which has over 90 members, including the Isle of Man.
The report has commended the Isle of Man for the way it exchanges information with other countries and says the island's sharing of tax information has been ‘effective and expeditious.’
The Executive Summary of the report is detailed below and a full copy of the report is available from the OECD's website.
- This report summarises the legal and regulatory framework for transparency and exchange of information in the Isle of Man as well as practical implementation of that framework. The international standard which is set out in the Global Forum’s Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information, is concerned with the availability of relevant information within a jurisdiction, the competent authority’s ability to gain timely access to that information, and in turn, whether that information can be effectively exchanged with its exchange of information partners.
- The legal and regulatory framework for the availability of information in the Isle of Man is in place. Ownership and identity information is maintained by relevant entities and arrangements. In addition, this information is sometimes filed with governmental authorities or held by service providers pursuant to anti-money laundering rules. The general regulatory environment in the Isle of Man is comprehensive and, particularly for anti-money laundering purposes, all major financial sector industries are subject to active oversight designed to ensure that processes for customer due diligence and the maintenance of appropriate transactional information are followed.
- The power of the Isle of Man tax authorities to obtain information for exchange of information purposes in tax matters is clear. Each exchange of information arrangement is brought into force by an order of Tynwald that provides that the arrangement shall have effect notwithstanding any other enactment, and which modifies the basic access powers contained in the Income Tax Act 1970 to ensure that they apply for the purposes of the arrangement.
- There are limitations on the access to information due to exceptions that apply in the case of legal privilege, the confidential communications of a tax adviser, or that relate to the work of an auditor. In practice, these exceptions have never been invoked to prevent the tax authorities from obtaining information for the purposes of an exchange of information request, and, if they did arise, the Isle of Man authorities will authenticate the validity of any claim to these exceptions. The Isle of Man should review its policy regarding access to information held by legal advisers, tax advisers and auditors and ensure that it is compatible with effective exchange of information and record and continue to monitor requests for information where these rules are implicated.
- The Isle of Man has been exchanging information in accordance with the international standards since its first tax information exchange agreements came into force in 2006. Although this is a relatively short period, experience to date shows that exchange of information has been effective and expeditious. The Isle of Man now has mechanisms for the exchange of information in tax matters that meet the standard in force with 17 jurisdictions and is actively engaged in negotiations for further agreements. The Isle of Man has also exchanged information with the United Kingdom through a double tax arrangement since the 1950s (though the scope of information exchanged was limited) and, in criminal tax matters, has exchanged information with any jurisdiction (regardless of the existence of an international agreement) through its domestic Criminal Justice Acts since the early 1990s.
- The feedback provided by the Isle of Man’s information exchange partners is very positive. The information requested is provided quickly and exchange of information partners are appreciative of the open and transparent relationship they have with the Isle of Man competent authority.
- The competent authority is in the practice of informing the Financial Crime Unit (FCU) of the fact that an Isle of Man taxpayer (e.g. an Isle of Man record-keeper in possession of information that is the subject of an information exchange request) is the subject of a request in a criminal case. The Isle of Man authorities consider that disclosure to the FCU in these circumstances is in accordance with the terms of its exchange of information agreements. It is possible, however, that its TIEA partners may not share this interpretation. In these circumstances, and to avoid any uncertainty or misunderstanding in this regard, disclosure to the FCU should not be made without the express written consent of the partner jurisdiction.