Isle of Man and its Global Business Opportunities
Why Choose Isle of Man as an Offshore Tax Haven
The Isle of Man is a self-governing territory that is part of the British Crown but enjoys separate autonomy and is known for its well-established finance and offshore sector. The island’s offshore sector has an international reputation and has been offering services since the 1930s.
The jurisdiction offers close proximity to the UK, limited access to EU markets, and a supportive government that has a long tradition of offshore banking, all in a low tax jurisdiction.
The Isle of Man has a number of pieces of legislation that govern the offshore sector, taken from the The English Companies Act 1929. The legislation allows for quick incorporation processing, flexible administrative structuring, and minimal reporting requirements together with a formidable reputation which help make the Isle of Man a respected and well known jurisdiction to form an offshore company.
Benefits of Setting up an Offshore Business Company in Isle of Man
- International reputation
- Respected financial jurisdiction
- English as the official and common language
- Close geographical proximity to Great Britain and Europe
- A robust offshore and financial market
- The Isle of Man is on the OECD’s ‘white list’
- The country has met all of the international regulatory requirements that have been put forward by the IMF, FATF, and the EU
- There is a 0% corporate tax rate (except banks)
- Low tax economy
- Free trade with the UK
- Political and economic stability
- Long standing political system
- Sophisticated baking system
- Though not part of the EU, its VAT number is accepted in the EU
- Fast incorporation times
- Single member ownership of an international company is available
- The Isle of Man Companies Registry has been in existence since 1865
- Supportive government legislation and financial incentives for the continuing growth of the financial sector
- All foreign owned ‘offshore’ companies receive residential status
Background Information about Isle of Man
The Isle of Man is a small independent island nation apart of the British Isles between Great Britain and Ireland in the middle of the Irish Sea. The island has a total land mass area of 572 square kilometres and 160km of coastline.
The Isle of Mann has a long history dating back some 6500BC. The small nation is completely independent of the United Kingdom and is an internally self-governing country that is a British Crown dependency. Meaning that the country has full autonomy, though the British government is responsible for its foreign relations and defence.
The head of state is Queen Elizabeth II, who is given the title the Lord of Mann and is represented through a Lieutenant Governor. The country is governed through a Parliamentary Democratic Constitutional Monarchy. The islands parliament, the Tynwald has its existence dating back to 979AD and is considered the world’s longest standing parliament. There are two houses that make up the Legislature, the Upper house, referred to as the Legislative Council and the Lower house referred to as the House of Keys. The Chief Minister serves as the head of government for five year who is elected from the House of Keys after a general election. The country’s executive power lies in the hands of the Lieutenant Governor, the Chief Minister and the Isle of Man’s Council of Ministers. The country has a judiciary that is separate from the other governmental branches
Political party influence is not very strong and many political candidates usually run as independents. The largest party is the Liberal Vannin Party, while some of the other party’s that are represented in parliament are the Many Labour Party and the Alliance for Progressive Government. Though the British Parliament has ultimate authority over the matters of the Tynwald legislature, there is a long-standing agreement that the UK will not interfere with issues related to domestic concerns. While the country is not apart of the European Union due to its relationship with the UK there are several EU laws that are binding. As a result Isle of Man goods can be moved throughout the EU tariff free but capital and services can not.
Economy and Infrastructure
The economy used to be predominately made up of fishing and agriculture though today those traditional forms of economy are quickly becoming obsolete. This has been due to the rise of the offshore sector as well as banking, financial services, manufacturing, and tourism, which now dominate the economy.
While many financial service dominated sectors have been hurt over the last few years due to the downturn and the changes in the international economic regulations the banking system on the island remains stable.
The country has a GDP at 4.1 billion pounds (2010) with a per capita income at USD 53,800 making it the 11th highest income in the world. The island is in a customs union with the UK, which accounts for most of the country’s trade.
The Islands has a developed infrastructure with two mobile operations and four broadband Internet service providers and is connected to a worldwide fibre optic network.
The island has over 1000 kilometres of public paved roads. There is a comprehensive public bus service as well as ferries to Britain and Ireland and Northern Ireland. There is one commercial airport, which has scheduled and chartered flights to a number of airports in the UK. There is also a train that runs between several locations through the island.
Population, Language and Culture
The population of the nation is just under 85,000 (2011) with the capital Douglas being he largest city on the island with nearly 28,000. The inhabitants of the island are mostly from the Isle of Man making up 48%, with the rest of the population coming from England 36%, Scotland 3%, Northern Ireland 2%, Republic of Ireland 2%, Wales 1% with the remaining 7.5% coming from various countries around the world.
The official language of the country is English though a small portion of the population, roughly 2,000 inhabitants claim that they can speak the local Manx Gaelic language. The language is of Celtic origins and is one of a number that are spoken amongst the other inhabitants of the British Isles and is similar to Scottish Gaelic an Irish.
The Island of Man’s culture is influenced by Celtic and Norse origins. There is a long tradition of myths and folklore that still remains in some forms. Much of the modern culture is mainly due to British influence due the large number of migrants that have come to the island.
The predominant religious tradition is Christianity followed by Methodist, Anglican and Roman Catholic. There are also a small minority of Muslims and Jewish traditions found on the island. The music is influenced from the Norse and Celtic traditions as well as those coming from Scotland, Ireland, England and Wales. There has been a traditional music revival since the 1970s such continues to today. Seafood is large portion of the diet together with most other forms of meat. Traditional staple foods are spuds and herrin (potatoes and herring) and a more modern invention chips, chees and gravy is found in most fast food restaurants.
There are no exchange controls on the Isle of Man. The Manx pound is the local currency and is readily exchangeable with British pound.
Type of Law
The Isle of Man is based off of English Common Law. British law found in the UK does not extend to the Isle of Mann although their system is based off of English common law. The Manx legal system is the local system of governance that has been developed to meet the islands special circumstance, especially in regards to company law, taxation and financial matters.
Principal Corporate Legislation
The Isle of Man has their Company Law based off of the English Companies Act 1929. The Island has a few pieces of legislation that makes up the Companies Act 1931-2004, together with a Single Member Companies Act that allows for single member ownership. There is also a 2006 Act Company that regulates another form of company under a separate piece of legislation that runs in parallel to the 1931 Companies Act. A company formed under the 1931 Act may freely convert itself to a company under the 2006 Act Company, but not vice versa.
The Isle of Man is considered a low tax jurisdiction. As such it does not have any corporate tax, capital gains tax, wealth tax, stamp duty, or inheritance tax. There is an income tax for residents at 10%, but companies are not subjected to it. All offshore or Foreign Private Companies incorporated on the Isle of Man are not subjected to any local taxation.