The Chief Minister of the Isle of Man, Howard Quayle, has confirmed that the Isle of Man has been removed from the EU’s grey list as a non-cooperative tax jurisdiction.
Responding to the news of the Islands removal from the grey list Mr Quayle MHK said: “We welcome this positive endorsement of our commitment and proactive engagement with international standards.
“We have a positive role to play in today’s global economy and will continue to be a responsible and open member of the international community at the forefront of international standards and have a continued commitment to tax transparency and cooperation.”
In December 2017, the EU Code of Conduct Group placed the Isle of Man on its ‘grey list’ following concerns that it did not have legal substance requirements for entities doing business in or through the Isle of Man.
The list which forms part of the EU’s external strategy for taxation as defined by the European Council is intended to prevent tax avoidance and promote good tax governance worldwide. In 2017, the EU screened over 90 jurisdictions against a number of criteria including transparency, taxation and the implementation of measures under the OECD’s BEPS (Base Erosion and Profit Sharing) initiative.
This exercise produced a ‘black list’ which consisted of those jurisdiction that were deemed to have failed in undertaking any form of meaningful action or discussion in response to the respective concerns raised by the EU, and a ‘grey list’ which was made up of jurisdictions who had made commitments to take action with agreed deadlines in place – this included the Isle of Man as well as number of other Crown Dependencies and British Overseas Territories.
However, the Isle of Man took a proactive approach and worked with the EU Code of Conduct Group and Jersey and Guernsey, to evidence its commitments and to satisfy their concerns, resulting in the introduction of new legislation in the Isle of Man.
The Income Tax (Substance Requirements) Order 2018 was passed through Tynwald on 11 December 2018, and requires for certain types of Isle of Man companies to satisfy substance requirements.
Mr Quayle MHK said “The government has engaged at every stage to ensure any concerns expressed by the Group were addressed. The Isle of Man is a well regulated transparent jurisdiction that takes its international responsibilities extremely seriously.”
For more information on the Income Tax (Substance Requirements) Order 2018 click here.