Taxation of Isle of Man Companies from April 2006

At the present time a company incorporated in the Isle of Man, owned by non-residents and which complies with the other statutory requirements, is not liable to Isle of Man taxation. Whilst locally trading companies pay tax at 18%, a qualifying offshore company pays a flat annual tax of £475 or £1,000.

The Isle of Man is however required to comply with the E.U. Code of Conduct on Business Taxation and other international initiatives designed to eliminate discrimination between taxpayers. This means, essentially, that the tax treatment of local and offshore companies should be the same. The Island decided some time ago that it would meet its obligations by introducing a zero rate of taxation for all companies except those engaged in certain finance sector activities and the Government has now issued a consultation paper outlining how it is proposed that the new system will operate.

From April 2006 the distinction between offshore and locally resident companies will disappear and companies will be classified as distributing or non-distributing. A distributing company will be one of the following,

? Where the whole of the distributable profit has been charged to tax at the rate of 10% or

? Where the company has distributed a specified minimum of its distributable profit, expected to be 60% for a trading company and 100% for an investment company or

? A company owned wholly by non- residents, regardless of what percentage of profit is actually distributed.

It is this third category of qualification, which is the most important, as it means that companies, incorporated on the Isle of Man but wholly owned by non-residents, will continue to enjoy tax- free status.

Companies will have to apply for distributing status but the exact means by which they will do so has not as yet been decided. The Government has however indicated that companies which have successfully claimed such status may not be required to submit accounts with every tax return providing sufficient information is provided on the return to support the claim.

There are further rules which apply to companies which are wholly or partly owned by Isle of Man residents and these companies will be obliged to calculate the tax payable on that part of the profits applicable to local shareholders and to pay it over to the Treasury.

The new system will accord with the international obligation for the Isle of Man not to discriminate between onshore and offshore companies and enable it to escape the sanctions, which may be invoked against some of the other offshore centres.

The Chesterfield Group provides a full range of trustee, and corporate advisory, formation and management services and invites enquiries. More particulars can be found on our web-site http://www.chesterfield-management.com REF=CH5EZ

---

Tax Tips - Which Tax Form Is Right For Me?

IRS Tax forms can be confusing.Am I a 1099 or... Read More

A Taxing Investment

April 15 - The most dreaded day of the year... Read More

Another Tax Loophole

Just image, you are a small manufacturing company, business has... Read More

Small Business Tax Deduction - Write-Off Bad Debts

Practically every small business has receivables that it cannot obtain... Read More

Understanding Marketing Tax Deductions

Marketing is a necessary expense in running practically any business... Read More

Business Tax Loophole: Leasing Assets To Your Corporation

While there are many equally valid reasons to incorporate, saving... Read More

Correspondence From The IRS ? Yikes!

It's a moment every person dreads. You pick up the... Read More

What to Do If You Can?t Pay Your Taxes

The end of tax filing extensions is quickly approaching. What... Read More

Save Money on Taxes - Let Uncle Sam Pay for Your Fun!

"Deducting Meals and Entertainment"O.K. You've been working really hard on... Read More

How to Check the Status of Your Tax Refund Online

So, you were pleasantly surprised to learn that you are... Read More

Home Business Tax Tips

If you have recently started an Internet or home business,... Read More

Tax Tips to Save Money on Taxes - Get the Corporate Kick and Save Loads of Money

Why a Corporation Helps Save You TaxesThe Tax Rates (Notice... Read More

How to Reduce the Estate Tax Using the A-B Revocable Living Trust

In a past article I relayed the plight of the... Read More

Seven Key Tax Deductions for the Self Employed

As a sole proprietor, it's wise to familiarize yourself with... Read More

Surprising Truths About Tax Preparers

Choosing the right tax preparer for your business is a... Read More

How To Get An Instant Pay Raise

As a gentleman was leaving my class recently, he wanted... Read More

Tax Audits: What Signs Make You More Likely to be Audited by the IRS?

It's a major fear for most Americans: A notice from... Read More

Need an Offshore Sales Office in a Tax Free Environment?

The 100 year old investment-banking firm of... Read More

Tax Jokes and Quotes

Do you realize that some tax forms ask you to... Read More

Are You An Innocent Victim of These Popular Myths?

Misconceptions, misinterpretations and just plain "untruths" are floating about income... Read More

Failure To Pay Employment Taxes ? Penalties

As an employer, you must pay employment taxes if you... Read More

Navigating The Internet Sales Tax Laws

QUESTION: I have been contacted by my local city... Read More

Take Control of Your Taxes

As everyone in the U.S. knows, we have just passed... Read More

Anticipating Your IRS Refund Can Cost You Plenty

While accountants are reaching for aspirin, millions of Americans are... Read More

Rental Property Tax Deductions

Own residential rental properties? This article discusses how income from... Read More

How To Get An Extension To File Your Business Tax Returns

Yes, the tax season is upon with the first filing... Read More

Reducing Taxes Through Dividend-Salary Mix Calculations

Should I take wages or dividends from my privately owned... Read More

Access to E-records by Taxing Authorities: A Case for Pakistan (Part I)

Background issues of access to recordsTo assess the records at... Read More

Amending Procedural Laws for Collection of E-taxation

The electronic transaction ordinance defines the certificated copies in which... Read More

Render Unto Caesar

Once a year Canadian taxpayers are required, by law, to... Read More

Slash Tax when Buying a Business

When buying a business, how the "purchase price" is made... Read More

Small Business Tax Issues for Self-Employed Individuals

The United States is a nation of entrepreneurs. There are... Read More

Tips and Simple Guidelines on How to Calculate Payroll Taxes

Managing a business small, medium or big requires you to... Read More