Speaking exclusively to International Adviser, chief Government minister Allan Bell did not rule out international life companies having to pay up to 10% corporate tax, which would bring them in line with what the banks in the island pay already.
“Clearly we have to be aware of the changes that are taking place around us and we have to equally be aware of what we can sustain in terms of a taxation structure into the future”, he said, in part reference to the austerity measures that will be needed in 2013.
“Whatever the outcome there has been extensive consultation with the industry on what a new tax strategy might look like. It may not be a radical change at all from where we are today.”
The ‘Taxation Strategy 2012-2016’ consultation received 66 replies, including one respondent who would “consider leaving the Isle of Man if there is any adverse change in this area resulting in the loss of provision of employment, general spending and investment.”
Short of imposing a 10% rate, the Government should reduce corporate tax to 5% and apply it across the board to all financial services including insurance, said another respondent.
Bell said the life companies are “hugely important to the Isle of Man”, representing nearly 15% of the economy and having overtaken banking to become the biggest sector on the island.
“Therefore everything we do will be very much focused on maintaining and expanding the insurance sector and the life sector in particular is a hugely important ingredient in that.
We will not be taking any steps which in any way would jeopardise that level of business and in fact we would be looking to work with the industry still further to expand that industry in the future.”
Mike Foy, managing director of AXA Wealth International, said the issue has been debated for over two years: “Are we planning for a tax increase? No. Might it happen? Possibly. But there are a lot of variables at play here.”
Neil Chadwick, technical manager, Royal London 360 said: “I would like to think that the government would be reluctant to do anything which would have an adverse impact on the current status quo.”
