On 1st May the Isle of Man Government gave an update on a number of taxation and regulatory matters in the light of international developments which are progressing ahead of the forthcoming G8 Summit.
The UK Prime Minister David Cameron will be hosting this year’s meeting of world leaders on 17 and 18 June. Among the topics expected to be on the Summit agenda is the initiative announced by the United Kingdom, France, Germany, Italy and Spain on 9 April 2013 for developing and piloting a form of multilateral tax information exchange based on the model FATCA intergovernmental agreement which they developed with the USA. Further European Union member countries have said that they will join the pilot.
The Isle of Man Government welcomes this move and intends to engage with the pilot and in supporting the development of a new global standard on automatic information exchange. Having a single global standard will lead to greater tax transparency while minimising compliance costs for business and Government.
The Isle Man also welcomes the communiqué issued by the finance ministers of the G20 on 19 April 2013, in particular the statement that:
“We look forward to the OECD working with G20 countries to report back on the progress in developing of a new multilateral standard on automatic exchange of information, taking into account country-specific characteristics.”
As many more countries than those in the OECD and G20 apply international tax standards, it is important that countries from outside those organisations are invited to take part in this vital work; and the Isle of Man stands willing to participate in the technical work of developing the new standard.
The 19 April G20 communiqué also said:
“We reiterate our support for FATF work, notably the identification and monitoring of high-risk jurisdictions with strategic AML/CFT deficiencies. We must tackle the risks raised by opacity of legal persons and legal arrangements, and encourage all countries to take measures to ensure they meet the FATF standards regarding the identification of the beneficial owners of legal persons, other corporate vehicles and trusts, that is also relevant for tax purposes.”
The Isle of Man is committed to complying with FATF standards on AML/CFT. Establishing the ultimate beneficial ownership behind all account and business relationships conducted by financial intermediaries in the Isle of Man is a mandatory legal requirement backed by onsite regulatory supervision in order to ensure compliance. The Isle of Man is committed to remain at the forefront of jurisdictions in this regard.
Isle of Man Chief Minister Allan Bell MHK said:
“The Isle of Man takes a leading role in the fight against tax evasion and illicit finance, both in terms of legislation and enforcement. Economic success is driven by the linked factors of having the best international standards in place and understanding the needs of business. My Government welcomes the impact that rapidly evolving international standards are having in raising standards globally, but also knows that business must not be forgotten. There must be a concerted commitment by governments that the foundation of automatic exchange of tax information, whether between two partner countries or multilaterally, has to be a common international compliance system for business. It is right that the private sector takes on new obligations in the fight against tax evasion and money laundering, but it is also right that the impact of those obligations should be kept to the minimum.”
Read here the Chief Minister's letter to Prime Minister David Cameron
The G8, otherwise known as the Group of Eight, is made up of heads of government from Canada, France, Germany, Italy, Japan, the Russian Federation, the United Kingdom and the United States of America. The 2013 Summit of leaders is being held on 17-18 June in Northern Ireland and will be hosted by UK Prime Minister David Cameron who outlined his priorities for the G8 at a speech to the World Economic Forum in January.
In advance of the G8 Summit David Cameron has also written to EU leaders on his plans for combating tax evasion
FATCA is the US Foreign Account Tax Compliance Act of 2010
AML/CFT is anti-money laundering/countering the financing of terrorism
FATF is the Financial Action Task Force, an international body which sets standards and promotes effective implementation of measures for combating money laundering, terrorist financing and other threats to the international financial system
When the Isle of Man announced on 7 December 2012 its intention to conclude a FATCA-like agreement with the UK, Chief Minister Allan Bell, MHK, said: “The nature of tax cooperation is changing and, as I made clear in my Agenda for Change speech to Tynwald in October, automatic exchange is becoming the global standard. The Island already shares tax information automatically under the EU Savings Directive and has recently announced that it will do so on a wider basis with the USA. This decision is a well-considered next step in the Island’s long-established policy of commitment to being at the forefront of tax transparency and international cooperation. The Isle of Man has achieved global recognition for its proven record of compliance with current international standards of tax co-operation, with the OECD reporting to the G20 last year that the Island was one of only a few jurisdictions with all the elements of effective tax information exchange in place. At the same time the Financial Stability Board placed the Isle of Man in the highest category of co-operative jurisdictions strongly adhering to international standards of co-operation and information exchange. Continuing with this approach, it is logical for the Isle of Man to embrace new forms of tax cooperation with our largest trading partner, the UK.”
Negotiations with the USA and the UK are continuing, and it is expected that the agreements introducing enhanced tax co-operation will be signed and published in the near future