pongo Posted October 13, 2009 Share Posted October 13, 2009 Why not just have sales tax instead ? like in the usa. If the vat is lost what needs to be done is become duty free and forget paying the uk tax. If we leave the UK VAT system a significant number of businesses and employers here will either close or relocate. There is a bunch of other ways in which we are subsidised by the UK. There are already transport and communications costs which are absorbed by UK systems on which we quietly depend without making a big deal about it. Link to comment Share on other sites More sharing options...
gazza Posted October 13, 2009 Share Posted October 13, 2009 If we leave the UK VAT system a significant number of businesses and employers here will either close or relocate. There is a bunch of other ways in which we are subsidised by the UK. There are already transport and communications costs which are absorbed by UK systems on which we quietly depend without making a big deal about it. do explain u mean its the uk fault the boat is so expensive Link to comment Share on other sites More sharing options...
Sebrof Posted October 14, 2009 Share Posted October 14, 2009 Why not just have sales tax instead ? like in the usa. If the vat is lost what needs to be done is become duty free and forget paying the uk tax. If we leave the UK VAT system a significant number of businesses and employers here will either close or relocate. There is a bunch of other ways in which we are subsidised by the UK. There are already transport and communications costs which are absorbed by UK systems on which we quietly depend without making a big deal about it. Precisely what transport and comms costs? S Link to comment Share on other sites More sharing options...
thesultanofsheight Posted October 14, 2009 Share Posted October 14, 2009 Precisely what transport and comms costs? S Do I sense a smug attack building up? Link to comment Share on other sites More sharing options...
When Skies Are Grey Posted October 14, 2009 Share Posted October 14, 2009 Do I sense a smug attack building up? Well....it has been a while! Link to comment Share on other sites More sharing options...
nipper Posted October 14, 2009 Share Posted October 14, 2009 The Isle of Man is awash with money and a breeding ground for arrogance and greed. The Island displays extravagance at every opportunity, it's just that the Island is too stupid to realise that sooner or later it is going to be found out. It surprises me that the Island has got away with it for so long. Link to comment Share on other sites More sharing options...
wazir Posted October 14, 2009 Share Posted October 14, 2009 Why not just have sales tax instead ? like in the usa. If the vat is lost what needs to be done is become duty free and forget paying the uk tax. VAT is a sales tax. Every country in the world has some sales tax (well almost - not UAE but anyway). Sometimes it's called VAT and sometimes its called sales tax, sometimes it's called something else. In South Africa for example the sales tax is called VAT but it's nothing to do with our VAT network (of participating EU countries). In the EU the sales tax (VAT) is harmonized so that it doesn't need to be paid by business - only end users of products/services, which is (generally) a good think - if you are going to have a sales tax you need to factor in the difference between buyers who will resell and buyers who will use the good/services themselves. So, for example, a UK (or IOM) company buying fabric from Italy and selling it to Sweden will not pay VAT at all on any transactions provided that the companies it trades with are VAT registered. The VAT will be paid by the Swedish consumers and collected by the Swedish government (as VAT cannot cross borders). You are going to have exactly the same problems with an Islandwide sales tax as you do with EUwide VAT. The vital difference is that lots of companies which currently trade in the EU and are based here but will leave because they are no longer able to reverse their VAT and as such it becomes an expense. i.e. in the model above the IOM company will pay VAT in Italy which will be collected by the Italian government but which cannot be reclaimed (as we will no longer be in the VAT net). Link to comment Share on other sites More sharing options...
TheBloodyNine Posted October 14, 2009 Share Posted October 14, 2009 At this point I'm inclined to only listen to people who would still be here even if every other house was derelict and the boat only sailed once a week. I'm listening to people who happen to run their businesses here - even in the face of international disadvantages, rather than people who run their businesses here because of the tax advantages etc but would go elsewhere. A fantastic point. But there are very few of us left who are here just because we were born here, who just like it here, or simply don't really want to go anywhere else. The thing is even if people want to stay here because they like it most won't be able to as there will be no/very few jobs, and the few jobs there will be will be of the low paid service industry type. Even with highly subsidised transport to the Island, something I doubt will ever happen, it still makes no financial sense to run any kind of business that relies on either import or export to the island. Even being based in Liverpool would be a more financially viable situation. Link to comment Share on other sites More sharing options...
bluemonday Posted October 14, 2009 Share Posted October 14, 2009 The Isle of Man is awash with money and a breeding ground for arrogance and greed. The Island displays extravagance at every opportunity, it's just that the Island is too stupid to realise that sooner or later it is going to be found out. It surprises me that the Island has got away with it for so long. Indeed and now that the gold rush is threatened, it will be interesting to observe the reactions and actions of the Manx Government. Based on Krapfart, rabbits in headlights? Link to comment Share on other sites More sharing options...
pongo Posted October 14, 2009 Share Posted October 14, 2009 The thing is even if people want to stay here because they like it most won't be able to as there will be no/very few jobs, and the few jobs there will be will be of the low paid service industry type. Even with highly subsidised transport to the Island, something I doubt will ever happen, it still makes no financial sense to run any kind of business that relies on either import or export to the island. Even being based in Liverpool would be a more financially viable situation. At the moment it is feasible to operate here as a small business trading in non physical goods. IE electronically. Or trading by placing orders into other systems for example. In which case there are no physical (or additional) transport costs. You can be in import - export (effectively) without the goods actually being here. Separately - the lack of double taxation agreements with the US is already becoming a serious issue for anyone involved in licensing intellectual property. I know that I am not the only person who has been discussing this issue. At the very best this results in significant accountancy fees, at the worst it means giving up 30% withholding taxes to the USA. UK companies are, by comparison, zero rated IIRC - in return for filing a simple online form. If it was only about money then, yes, it would already be cheaper, much cheaper, to be operating from the UK. I happen to think that small business is ultimately more important for the stability of an economy than big employers. Small business is also now international in many cases. EG - a graphic designer working from a home office at the end of her garden may very well be doing a contract for a company anywhere in the world. If the island wants to promote small business then it needs to further come into line with the rest of the world. Link to comment Share on other sites More sharing options...
bluemonday Posted October 14, 2009 Share Posted October 14, 2009 What pongo said. Excellent post. Link to comment Share on other sites More sharing options...
wazir Posted October 14, 2009 Share Posted October 14, 2009 At the moment it is feasible to operate here as a small business trading in non physical goods. IE electronically. Or trading by placing orders into other systems for example. In which case there are no physical (or additional) transport costs. You can be in import - export (effectively) without the goods actually being here. If it was only about money then, yes, it would already be cheaper, much cheaper, to be operating from the UK. But the majority of business here are not small business operating electronically, they are large business, some electronic and some actually based in goods import and export (and therefore VAT triangulation within the EU which will soon not be possible). I don't believe you about it being cheaper to operate in the UK. Sure staff costs may be less and materials too but you have to pay corporation tax (28%) and then tax on your takehome from the company (up to an effective rate of 51.5%) surely the IOM's 0%/18% is much better? Link to comment Share on other sites More sharing options...
pongo Posted October 14, 2009 Share Posted October 14, 2009 I don't believe you about it being cheaper to operate in the UK. Sure staff costs may be less and materials too but you have to pay corporation tax (28%) and then tax on your takehome from the company (up to an effective rate of 51.5%) surely the IOM's 0%/18% is much better? You removed the 2nd paragraph and hence the context of the third when you quoted me. With hindsight, perhaps it should have been a single paragraph. Here is an example as I understand it. This obviously has nothing to do with VAT but addresses the wider disadvantage of us being non standard compared with say Whitehaven: If a company in the US pays a royalty of $100 to a company in the IOM - the US Govt keeps $30. The IOM company is not directly taxed in the IOM. If a company in the US pays a royalty of $100 to a company in the UK the US Govt keeps nothing provided a simple online form is filed. The UK company will then be taxed by the UK. But only on actual profits after costs are deducted. That $30 is money which the company could actually use (and use could very well mean spending it locally - ie that money goes back into the local economy - rather than the US economy). I am not a tax expert but this is my understanding of the situation. Many perfectly viable small businesses in the UK operate very close to break even point after costs are deducted and therefore also pay very little tax. Small businesses are the basis of a viable economy IMO. Link to comment Share on other sites More sharing options...
bluemonday Posted October 14, 2009 Share Posted October 14, 2009 All good posts. What should be concerning MG now is the medium to long term future and the need to be proactive not reactive, I feel Rog hit it on the head. Coming events are unavoidable, the repositioning to deal with it is the key issue. Link to comment Share on other sites More sharing options...
wazir Posted October 14, 2009 Share Posted October 14, 2009 If a company in the US pays a royalty of $100 to a company in the IOM - the US Govt keeps $30. The IOM company is not directly taxed in the IOM. If a company in the US pays a royalty of $100 to a company in the UK the US Govt keeps nothing provided a simple online form is filed. The UK company will then be taxed by the UK. But only on actual profits after costs are deducted. That $30 is money which the company could actually use (and use could very well mean spending it locally - ie that money goes back into the local economy - rather than the US economy). I am not a tax expert but this is my understanding of the situation. Many perfectly viable small businesses in the UK operate very close to break even point after costs are deducted and therefore also pay very little tax. Small businesses are the basis of a viable economy IMO. Yes that seems fair enough if it's a dividend payment or a royalty US will withhold 30% tax. Though this can be avoided with a bit of planning. But for most normal trading activities - such as invoices being raised and company fees being paid American exit tax isn't an issue as it does not apply. i.e. IOM company designs a website for an American client they pay the invoice (plus the VAT which is unrecoverable to the them as they are not in the VAT network) at full cost and no tax is withheld. Link to comment Share on other sites More sharing options...
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