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

---

Truly Bizarre Taxes: The Tax on Illegal Drugs

One can never underestimate the enthusiasm that politicians have for... 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

E-commerce Taxation

The means and types of businesses have transformed with advent... 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

Get Uncle Sam To Pay $36,000 For Your Childs Education!

Let's assume that you would like to begin saving for... Read More

Tax Trap #2 -- Double Taxation: Isnt Once Enough?

Have you been thinking about incorporating your small business or... Read More

Tax Strategy - Let Washington Pay for Your Corvette, Porsche, or Air Plane

Deducting Your Auto ExpensesAuto deductions are a very complex topic.... Read More

Understanding Basic Tax Terms

If your like many, you don't always understand what people... Read More

How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share

How Home-Based Businesses Can Avoid Giving Uncle Sam... Read More

Failure To Pay Employment Taxes ? Penalties

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

Tax Reduction Tips

In the rush to get tax returns prepared and filed... Read More

Keeping Your Own Money ? NOT Handing It Over To The Taxman

Most people trying to make a crust online (or offline... Read More

Need a Copy of Your Tax Return Information?

Taxpayers have two easy and convenient options for getting copies... Read More

Small Businesses Filing Amended Federal Tax Returns to Recover Money

Small Businesses Filing Amended Federal Tax Returns to... Read More

What Is Tax Law?

The federal tax code is complex. This complexity generally arises... Read More

2005 Ford Escape Hybrid Certified For Clean-Fuel Deduction

If you are environmentally conscious and purchase a 2005 Ford... Read More

I Havent Filed a Tax Return with IRS in Years, What Do I Do?

In elementary school, kids come up with creative excuses why... Read More

Home Based Business Tax Deductions

Running a home based business reaps many wonderful tax deductions... 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

Anticipating Your IRS Refund Can Cost You Plenty

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

Military Reservists, Enlistees May Get Deferral of Back Taxes

Reservists called to active duty and enlistees in the armed... Read More

How to Cut Duty Cost and Increase Profit as an Importer

Import duties continue to be significant elements in the cost... Read More

Tax Investigation - What You Need To Do

The knock on the door from a Tax Inspector is... Read More

The Seven Deadly Tax Sins: Commonly Missed Deductions

It's that time again, the April 15 tax deadline is... Read More

Employment Taxes ? What Are They?

If you have employees, you are responsible for paying a... Read More

About Income Taxes; Tidbits

1812The first attempt to impose an income tax on America... Read More

Tax Deduction for Alimony Payments? - Yes!

Over 50% of marriages end in divorce in the United... Read More

The Tax Man Cometh... To Search

You're at your office, or home, and the doorbell rings... Read More

Seven Key Tax Deductions for the Self Employed

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

Tips and Simple Guidelines on How to Calculate Payroll Taxes

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

SFR Substitute for Returns: IRS Action on Non-Filers

In the latest Star Wars episode, the evil empire executes... Read More

Section 179 ? Tax Relief From Depreciation Rules

"Depreciation." For business owners, this word is the one most... Read More

Are You An Innocent Victim of These Popular Myths?

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