I’m in trouble. When I was in the Isle of Man (IOM) last week I was cornered by a nice man from the Isle of Man Examiner who asked me various questions I can’t now remember about my views on the IOM.
It seems that I referred to it as a tax haven. I meant this kindly. I thought that being a tax haven was good thing. Apparently not. The article goes on to stress that even David Cameron has said that the island can no longer be considered a tax haven.
One of my new friends from the IOM has been in touch to say that the IOM is better considered a “low-taxed financial centre” in that it is accepted by the IMF and the OECD, and has hordes of tax agreements on disclosure regarding non-residents of the IOM.
The OECD (in November 2011) even released a Tax Transparency Report assessing over 50 jurisdictions, and found the Isle of Man to be one of eight countries to be fully compliant in all main areas with no significant improvements required.
I think this might a problem of vocabulary. For me, the phrase ‘tax haven’ doesn’t automatically suggest any kind of dishonesty or evasion (although I accept it often includes it), just avoidance. And if you are resident in the IOM instead of, say, the UK, you can avoid one hell of a lot of tax.
There is no capital gains tax, there is no inheritance tax, there is no corporation tax, there is no stamp duty, and income tax comes in very low indeed: the top rate is 20%. It is also capped at £120,000. No one pays more.
The island also looks pretty good in economic terms. It has 29 years of GDP growth behind it, and no debt. So it’s a great haven from all sorts of things where you can also pay a great deal less tax than elsewhere. A tax haven or not a tax haven?
PS Buying a nice house in a not-a-tax-haven such as the IOM is not as expensive as you might think. Here’s a nice cottage for £335,000, and a pretty Victorian villa for £425,000. Top end houses aren’t cheap, but they aren’t that much more expensive than houses in the south east of England (where you have to pay increasingly ridiculous rates of stamp duty). If I were looking, I might look at this.