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New attack on IOM tax haven status


NoTail
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34 minutes ago, bankerboy said:

I don’t think it’s the zero rate under threat- the EU document notes:

“In the context of criterion 2.2 the fact of absence of a corporate tax or applying a nominal corporate tax rate equal to zero or almost zero can not alone be a reason for concluding that a jurisdiction does not meet the requirements of criterion 2.2. “

The issue, it seems to me, is meeting this criterion 2.2 which states “"The jurisdiction should not facilitate offshore structures or arrangements aimed at attracting profits which do not reflect real economic activity in the jurisdiction."

hence, if I’m interpreting this correctly, it appears that zero tax is ok per se, but that ‘brass plate’ activities might not be.  Interesting that our govt (along with the other CDs) have committed to resolve this in 2018.

In the actual document what it says is:

Quote

 

2.2 Existence of tax regimes that facilitate offshore structures which attract profits without real economic activity

The following jurisdictions are committed to addressing the concerns relating to economic substance by 2018:

Bermuda, Cayman Islands, Guernsey, Isle of Man, Jersey and Vanuatu

 

which confirms that it is profit transfers that they are after in the case of the Island.  Other jurisdictions seem to require more to be done on the paperwork front, but to some extent the Island has already got that completed.

(That document also gives details of the various countries on black and grey lists).

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20 minutes ago, Yibble said:

Has anyone found the grey list / watchlist? I'm curious as to which other jurisdictions are on it. Presumably Luxembourg sits right at the top with double red underlining, or would that be too embarrassing for their former finance minister?

See my link above.  There are 17 "non-cooperative jurisdictions for tax purposes" which is sort of the black list plus 8 Caribbean ones who are being given more time because of September's hurricanes.  There is no single grey list, but a number of them where commitments have been made on particular items with various countries on one or more of them.

No EU jurisdictions seem to be on any of the lists as they have all technically signed up to these things, though various associated countries (not just of the UK) are there as is Switzerland.  Within the EU different forms of pressure are applied as we've seen recently with Ireland.

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Thanks both. It's bewildering that certain EU jurisdictions are missing from the list and that seems to undermine its credibility. If the EU is genuinely committed to transparency, then surely it should be transparent about matters to be addressed with some of its member states too? It doesn't look good if you slag off the neighbours when you can't get your own house in order.

As regards the IoM, requiring real economic substance is a good thing and anyone still relying on tax structuring which lacks economic substance is sailing close to the wind. I would hope its an issue which the IoM should not struggle to demonstrate compliance with.

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