Zero tax in the Isle of Man

[TheMotorcycleBoy]

After analysing the odd Manx-based company or two, I couldn't help but notice that they are afforded 0% corp tax:

https://www.gov.im/categories/tax-vat-a ... tax-rates/

And I believe that they pay precious little income tax over there (but I stand to be corrected, on that one..) as well.

How does the whole place work?

Clearly this situation has some very nice implications re. dividend policies.

Thoughts?
Matt

[Lootman]

After analysing the odd Manx-based company or two, I couldn't help but notice that they are afforded 0% corp tax:

https://www.gov.im/categories/tax-vat-a ... tax-rates/

And I believe that they pay precious little income tax over there (but I stand to be corrected, on that one..) as well.

How does the whole place work?

Clearly this situation has some very nice implications re. dividend policies.

It's been a while since I have been there but Andorra also claimed to have no tax on residents. Apparently they get enough revenues from tourists and people/entities domiciling there to fund the entire (tiny) nation. It's possible that other micro-states like Liechenstein and Aruba share this most desirable of qualities.

It also helps when all your residents are well off and typically don't need so much welfare and other public services.

Personally I love to see these small principalities thriving and prospering for no reason other than that 99% of places on this planet over-tax their citizenry and businesses, driving capital and the successful to the few places that don't make that mistake.

[Alaric]

The Isle of Man charges UK VAT and excise duties on tobacco and alcohol. Income tax is a flat 20% regardless of income. Getting to and from the Isle of Man by air or sea can be expensive and the cost of goods that have to be ferried across like diesel and petrol can be 10p a litre more than in the UK.

Over the past 30 years, it's developed as a base for "financial services". With more lax regulation, products effectively banned in the UK can be marketed to an international, usually expatriate audience.

[TheMotorcycleBoy]

I suppose it is plausible to think that islands with populations possessing "narrower socio-economic characteristics" than the much broader spread back in the mainland, may be less dependent of certain social services, and hence less tax revenue is required to serve those implied needs.

[PeterGray]

Don't forget also that tax havens generally rely on having a lot of wealthy "clients" who are classed a residents for tax purposes - so they pay the lower tax haven's rates - while not actually being resident much of the time - so they make very little use of any local infrastructure or services.In effect they subsidise the real residents in exchange for avoiding tax elsewhere.

[odysseus2000]

About 25 years ago tax in the Isle of Man was never more than £10k per person, but since then rates have risen as the Island authorities have taken on several large infrastructure projects including new docks/port in Douglass and have become more compliant to what the mainland wants in terms of taxation on this little volcanic island.

One of my relatives moved there for tax reasons late last century and did very well out of it, sending £1000 to each of his many UK based relatives to celebrate his good fortune. He went around building churches, helping the local horse vet get much better equipment and a whole host of other stuff. He delighted in the experience and in the social life he found there, racing his Rolls Royce in the Rolls Royce club and riding over the scrub, jumping over Bentley bonnets, Five barred gates as the mood took him.

It was a symbiotic relationship which I was blessed to see at first hand.

Regards,