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Update on work to meet Code of Conduct Group commitment

Tuesday, 7 August 2018

The Isle of Man Government is today publishing an update on the progress towards the proposed introduction of legislation which will require companies tax resident in the Isle of Man, undertaking specific activities, to demonstrate that they have sufficient substance in the Isle of Man.

In November 2017, the Government made a high level commitment to address the EU Code of Conduct Group’s concerns over companies tax resident in the Island having sufficient substance to access the Isle of Man’s corporate tax regime.

The Government has worked closely with the other Crown Dependencies and put forward proposals to the Group which will enable it to meet its commitment by 31 December 2018. 

These proposals will require companies that are tax resident in the Isle of Man and engaged in key activities identified by the EU to demonstrate they meet minimum substance requirements as part of their annual tax return.

The key activities that would be required to demonstrate these substance requirements are:

  • Banking
  • Insurance
  • Fund Management
  • Finance and leasing
  • Shipping
  • Collective Investment Vehicles
  • Intellectual Property
  • Holding companies that generate income from any of these key activities.

The substance requirements will vary across the different activities to reflect the needs of the companies involved. They are designed to be fair and proportionate while ensuring there are sufficient activities in the Isle of Man to reflect the amount of profits accounted here. They will include being able to demonstrate that the company is directed and managed in the Isle of Man, that they have adequate level of employees as well as annual expenditure and physical offices.

Chief Minister, Howard Quayle said:

‘The Isle of Man is a well regulated, transparent and cooperative jurisdiction. We have worked closely with our colleagues in Jersey and Guernsey to develop proposals to ensure that they meet the needs of our businesses as well as ensure that we fulfil our commitment to the EU.

‘We will be holding a series of meetings with representatives from the relevant industry sectors in the coming weeks to discuss these proposals and allow for any feedback as we prepare the legislation. This approach means that we can listen and act on the words of our industry. We will also be seeking views on the further transparency measures referred to in the EU’s scoping paper.’

A copy of the update provided to Tynwald Members is available on the Government website

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