| At the present time a company incorporated in | | | | company and 100% for an investment company |
| the Isle of Man, owned by non-residents and | | | | oro A company owned wholly by non- residents, |
| which complies with the other statutory | | | | regardless of what percentage of profit is actually |
| requirements, is not liable to Isle of Man taxation. | | | | distributed. |
| Whilst locally trading companies pay tax at 18%, a | | | | It is this third category of qualification, which is |
| qualifying offshore company pays a flat annual | | | | the most important, as it means that companies, |
| tax of £475 or £1,000. | | | | incorporated on the Isle of Man but wholly owned |
| The Isle of Man is however required to comply | | | | by non-residents, will continue to enjoy tax- free |
| with the E.U. Code of Conduct on Business | | | | status. |
| Taxation and other international initiatives designed | | | | Companies will have to apply for distributing |
| to eliminate discrimination between taxpayers. This | | | | status but the exact means by which they will do |
| means, essentially, that the tax treatment of local | | | | so has not as yet been decided. The Government |
| and offshore companies should be the same. The | | | | has however indicated that companies which have |
| Island decided some time ago that it would meet | | | | successfully claimed such status may not be |
| its obligations by introducing a zero rate of | | | | required to submit accounts with every tax |
| taxation for all companies except those engaged | | | | return providing sufficient information is provided |
| in certain finance sector activities and the | | | | on the return to support the claim. |
| Government has now issued a consultation paper | | | | There are further rules which apply to companies |
| outlining how it is proposed that the new system | | | | which are wholly or partly owned by Isle of Man |
| will operate. | | | | residents and these companies will be obliged to |
| From April 2006 the distinction between offshore | | | | calculate the tax payable on that part of the |
| and locally resident companies will disappear and | | | | profits applicable to local shareholders and to pay |
| companies will be classified as distributing or | | | | it over to the Treasury. |
| non-distributing. A distributing company will be one | | | | The new system will accord with the international |
| of the following,o Where the whole of the | | | | obligation for the Isle of Man not to discriminate |
| distributable profit has been charged to tax at the | | | | between onshore and offshore companies and |
| rate of 10% oro Where the company has | | | | enable it to escape the sanctions, which may be |
| distributed a specified minimum of its distributable | | | | invoked against some of the other offshore |
| profit, expected to be 60% for a trading | | | | centres. |