The Isle of Man has is hoping to further stimulate the inflow of investment and business to the island with the introduction of a standard 0% corporate tax rate.
The new zero rate, which takes effect from 5 April 2006 is part of a package of business and individual tax measures announced by Treasury Minister Allan Bell as part of his 2006 Budget speech to Tynwald, the Isle of Man Parliament.
The new 0% tax regime is in accordance with the promised five-year public taxation plan announced in 2000, which has been delivered on target, two years ahead of other UK Crown Dependencies and other competitors in the full implementation of a zero tax strategy. This is intended to stimulate inward investment by businesses establishing on the Island, and will also provide a consistent treatment across all sectors of the economy as part of the Isle of Man's commitment to a diversified economy.
The Budget also introduces a cap on personal income tax at a maximum level of GBP 100,000 per annum, irrespective of earnings. The island's authorities hope this will attract high-net-worth individuals and active entrepreneurs to the Island with the drive to further stimulate the Isle of Man's burgeoning economy. By making a tax system that is simple to understand and available to all, the Treasury Minister is keen to provide a competitive advantage to the Island, in line with its fiscal strategy to promote the Isle of Man as a quality business centre of international standing. The introduction of a new Manx corporate vehicle, due later this year, is a further key element of its coordinated fiscal policy.
The Budget aims to deliver for the individual as well as business via a number of measures that will benefit all households on the Island. As part of the personal tax measures, an increase in personal tax allowances is announced, to GBP 8,670 for single people and to GBP 17,340 for married couples. Combined with an increase in the Personal Allowance Credit by 40% to GBP 350, this will help the less well off, giving almost GBP 3m income to those who need it most.
In line with Tynwald statutory directives, this budget has been achieved without creating a deficit. The Isle of Man Treasury budgets for a surplus and balances its books year on year. Significantly, the new tax measures are introduced without any increase in taxes or cut in public expenditure. As such, the Isle of Man represents one of the most successful economies in Europe, and is now in its 21st year of unbroken growth, with unemployment below 1.5 per cent. In the last ten years, its annual growth has averaged 7.4 per cent, compared to an EU average of 2 per cent. The Isle of Man is recognised as a 'category 1' jurisdiction by the Financial Stability Forum and Standard & Poor's and Moody's have awarded the Isle of Man a Triple A and AAA rating respectively.
'The 2006 Budget marks the delivery of our promises to the international community and demonstrates the Isle of Man's ongoing commitment to innovation,' says Bell. 'It provides for significant increases in public expenditure and the provision of further assistance to those in our society who need it most, both at home and overseas. t is also a Budget for business, inviting the enterprising and the ambitious to come to our Island to work with us.'
Key features of the Budget - an overview:
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