Introduction

The Isle of Man is well placed to become the offshore centre for e:commerce. The existing tax and legal framework lends itself well to this type of business and it will generally be possible to structure a subsidiary in the Isle of Man which will pay no local tax. VAT is an issue which must be carefully planned for as the Isle of Man has an identical indirect tax system as the UK.

The Isle of Man Government is eager to ensure the legal framework within the Island can meet the needs that e:commerce trading will place on it and steps have already been taken to fully review the existing laws in this area so that any amendments deemed necessary can be made quickly.

Listed below are some of the features that highlight why the Isle of Man might be the best place to locate your e:commerce.

Tax advantages

• No Isle of Man tax on profits from trading carried on in an Isle of Man company providing no intra Isle of Man trading
• Potential tax deferral for parent company until profits are repatriated, .e.g. via dividend or liquidation of subsidiary
• Tax efficient cash utilisation for Isle of Man subsidiary via leasing arrangements, treasury management function, goods procurement
• Low personal tax rates (top rate of tax 20%)

Other tax issues

• VAT has to be considered
• Parent company's domestic tax legislation to be considered

Structure

• Isle of Man exempt company wholly administered from within the Island - local directors and company secretary and all administrative support can be provided
• Banking should be undertaken within the Isle of Man
• Board meetings of trading company should take place on the Island
• Full professional accounting, legal, tax support available
• Full software, communications and electronic infrastructure available

Other features

• No barriers to new residents
• Political stability
• UK time zones
• Proximity to Europe
• Daily flights to 12 UK regional airports and Dublin

This pamphlet has been written in general terms. The whole area of taxation of e:commerce is complicated and professional tax advice should be taken by anyone contemplating in establishing such a business.

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Website: www.walbrook.co.im
E:mail: nicholas.williamson@deloitte.co.uk