The Isle of Man Government is today publishing draft legislation on its website 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.
This legislation has been designed to meet the high level commitment made by the Government in November 2017, to address the EU Code of Conduct Group’s concerns that some companies that are tax resident in the Island do not have sufficient substance to access the Isle of Man’s corporate tax regime.
It is intended that the final draft legislation will be submitted for consideration at the December sitting of Tynwald.
The Government has worked closely with the other Crown Dependencies in preparing its legislation with the intention of them being as aligned as possible. Representatives from the relevant industry sectors have been involved in the preparation of this legislation to ensure it can work in practice as well as meet the requirements of the EU.
The additional information required from companies to demonstrate they meet the substance requirements set out in the proposed legislation will form part of their annual tax return.
Additional information on key aspects of the legislation is available in a short note prepared by the three Crown Dependencies that is also published today.
Treasury Minister, Alf Cannan said: 'In 2017 the EU Code of Conduct Group confirmed the Isle of Man as a cooperative jurisdiction, but did identify possible concerns, to which we made clear commitments to address. This is an important piece of legislation that needs to be enacted by 31 December 2018 to ensure that the Isle of Man meets this high level commitment made last year and remains fully compliant with international tax standards.'
The final draft of the legislation will be published with the Order paper for December’s sitting of Tynwald.
In the interim, a copy of the draft legislation and the joint Crown Dependency note on key aspects are available on the Income Tax Division website at: Isle of Man Government - Code of Conduct for Business Taxation and EU Listing Process from 2016