Thursday, November 18, 2010

Crunch time for future of island’s zero/10 policy

It's D-Day for the island’s corporation tax strategy.

The zero /10 policy will be considered tomorrow (Friday) by the European Union group that monitors the code of conduct on business taxation to decide whether it is compliant with rules on harmful tax competition

There has been growing international pressure against the zero/10 regimes operating in the Crown Dependencies and the Manx Government is currently reviewing its policy.

An unfavourable decision by the Code of Conduct group could have serious implications for the island which was the first to introduce zero 10 in April 2006.

A survey of corporate service providers warned that hundreds of jobs could go if zero /10 is ditched.

Treasury Minister Anne Craine MHK insisted the government has not been notified, either formally or informally, of any decision by the Code group ahead of today’s meeting.

Under zero/10, most companies pay no corporate tax although certain sectors, including banking, pay 10 per cent.

Chief financial officer Mark Shimmin said the government was aware the island’s tax legislation was on the agenda at Friday’s meeting.

‘No assessment by the Code Group has taken place to date,’ he revealed. ‘If the Code Group has any concerns regarding the interaction between the Isle of Man’s attribution regime for individuals and the zero /10 corporate income tax system, we would expect the Group to set them out in detail and we will then consider them carefully before determining what course of action, if any, to take: this position has not changed throughout 2010.’

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