The Isle of Man Doesn’t Want Your Money

February 20, 2013

There is a well-known saying that all publicity is good publicity. Having spoken to several Corporate Service Providers on the Isle of Man about the FATCA legislation being brought in I’d like to question the truth of that saying, it appears they were not overly keen on the island appearing on the front page of the Financial Times.

The Isle of Man has long been regarded as one of the most compliant offshore jurisdictions having been early adopters to signing up to tax information sharing in principal and then signing large amounts of those agreements over the years. In addition to this their appearance on the OECD white list has reinforced this position as a compliant, well regulated place to do business. Why then would they choose to be the first to jump when the UK government shout and implement the automatic sharing of tax information? The Channel Islands (the Isle of Man’s closest competition) are sitting back to see how things “look” in the medium term before agreeing to FATCA. What is in this for the Isle of Man, with so much national press now looking at the Island and numerous mentions of “tax evasion” has this been a massive publicity own goal?

Truth be told only time will tell whether early adoption has been a good or a bad thing for the island. The CSPs, accountants and IFAs I’ve spoken to do not see it as a positive move. Of course it’s often the case that the negative voices speak loudest but I’ve been shocked at the doom and gloom outlook of some normally very positive individuals. It seems to some that a government that was previously more than happy to prosper on the back of the work of CSPs is now equally happy to turn their back on them. There has long been a move on the island away from small scale company formation and tax mitigation to large scale corporate tax avoidance across certain sectors (e-gaming, IP, space – you’re not a bank so zero percent corporate tax). No matter what the reasons for people to choose the Isle of Man for their offshore dealings in the past and no matter how legitimate the reasons for looking offshore in the future there is surely no reason now at all to favour the Isle of Man over any other jurisdiction? When it comes to matters of privacy the island starts off with a huge negative score before you even start to consider other aspects of your tax planning.

If you’re looking to invest money offshore why would you choose the Isle of Man?

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