Planning on registering a company in the Isle of Man? If you are, then you should definitely pay close attention to the recent changes in the tax regime of this British Crown dependency. Failure to do so may significantly decrease your chances of successfully doing business in the Isle of Man.
Isle of Man: Taxation
Corporate Tax
- Domestic companies are taxed on income derived worldwide;
- Foreign companies get taxed on income derived on the island;
- Corporate income tax rate is zero percent;
- Banks providing deposit services on the island of Man are taxed at ten percent;
- Income derived from land & property is taxed at twenty percent.
There is no:
- dividend tax;
- capital gains tax;
- income tax (only applicable to royalties, interest, dividends & technical services);
- stamp duty.
Property Tax
- For land without real estate - zero percent;
- For national real estate - twenty percent of the gross value of real estate;
- For commercial real estate - thirty percent;
- For industrial real estate - fifty percent.
VAT
- The standard rate is twenty percent;
- The reduced rate of five percent is applied to the supply of electricity & fuel to households (the same rate is applied to the installation of energy saving materials);
- A zero percent rate is applied to most food items & children's clothing;
- Applying for a financial services license in the Isle of Man requires paying an annual renewal fee (including annual government, agent & office registration fees);
- Currency - GBP;
- Reporting - IFRS & UK GAAP;
- The Isle of Man ratified the MLI.
Isle of Man: Expected Changes in Taxation
The regulation of economic presence in the Isle of Man is included in national legislation. Failure to meet the requirements of economic presence entails the following sanctions:
- financial penalties;
- cancellation of company registration.
Launching a business in the Isle of Man requires compliance with the “management & control” criteria. Those that have met the said criteria will be further screened to ensure they have an “adequate economic presence” in the Isle of Man. These are the requirements they must comply with:
- BoD must hold regular meetings on the island;
- A quorum must be ensured;
- BoD members must be physically present on the island;
- If there’s only one director, proof must be provided that they made written decisions while being physically present on the island;
- all BoD minutes must be preserved on the island.
As mentioned above, incorporating a company in the Isle of Man requires compliance with the ‘economic presence’ criteria. What this means is that opening a business in the Isle of Man is impossible without careful planning. If you require a consultation on company registration in the EU, UK, USA or any other jurisdiction of your choice, you’re welcome to contact IQ Decision UK. Our experts will do their best to ensure your company’s compliance with all required laws & regulations & make all your legal troubles vanish into thin air.
