All three crown dependencies are currently negotiating FATCA terms with the US, but the Isle of Man is the only one so far to state publicly its intention to forge a tax information sharing agreement directly with the UK.
Chief minister Allan Bell 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.”
Bell added that this latest decision is a “‘a well-considered next step” in the island’s policy of commitment to tax transparency and international cooperation.
He said it is logical for the Isle of Man to “embrace new forms of tax cooperation with our largest trading partner, the UK".
Under the proposed new arrangements, the Isle of Man and the UK will automatically exchange information on tax residents on an annual basis.
The approach will follow as closely as practicable the model intergovernmental agreement reached between the UK and the US and will be concluded to the same timetable as the agreement between the Isle of Man and the United States, according to a statement released by the Isle of Man today.
As reported, news that the UK government was planning a ‘son of FATCA’ agreement aimed at obtaining information on all accounts held by British taxpayers in Britain’s overseas territories emerged in an online report on 23 Nov in International Tax Review, which said it had seen a copy of a leaked draft of a government document detailing how the scheme would work.
The ‘son of FATCA’ sobriquet is derived from the US Foreign Account Tax Compliance Act, which was signed into law by President Obama in 2010 and which, as it is implemented over the next few years, will oblige foreign banks and financial institutions (FFIs) to provide certain information on any US citizens they may have as clients, ultimately to the US Inland Revenue Service.
Under a so-called FATCA "intergovernmental agreement"unveiled in July, FFIs in the crown dependencies would provide client information on any US citizens to the UK authorities, who in turn would provide it to the US authorities – the same sytem being used by UK FFIs.
It is thought that the UK saw this as a good time to put into place a parallel reporting structure whereby these insitutions would provide to the UK authorities as well the equivalent data on those of their clients who happened to be UK taxpayers.
Jersey, Guernsey urge global action
In a statement today, following the Isle of Man’s announcement that it would move to an information-exchange model, the chief ministers of Jersey and Guernsey stressed their "commitment… to combat tax evasion and…international efforts to combat financial and fiscal crime", but insisted that a "level playing field" was needed, with "all finance centres competing in the global market place” operating under the same rules.
"We have long made it clear that neither island has any wish to accommodate those engaged in tax evasion,” Jersey chief minister Sen Ian Gorst and Guernsey chief minister Peter Harwood said.
However, Sen Gorst added in his statement that Jersey regarded it as important that the UK, in its effort to "mirror" the approach of the US with respect to FATCA, ensured "a non-discriminatory approach for all jurisdictions".
“In our ongoing discussions with the UK Government, we will be pressing them to make clear the steps they are taking to promote the adoption of automatic exchange of information worldwide to ensure that a level playing field is achieved," Gorst said.
To read the joint statement issued by Jersey and Guernsey, click here.
Further details concerning how the Isle of Man’s agreement with the UK will work will be revealed over the coming weeks.
