Isle of Man - 23 Years of Prosperity

Even though the U.K. government under the Labour Party has tried to curb tax havens worldwide, the historic fact is that some of the world's major tax haven jurisdictions are England's Crown dependencies, the Channel Islands and the Isle of Man.

Recent official figures from the Isle of Man show that the island's GDP grew by 9.2% to more than £1.6 billion (US$3.2 billion) in 2005-06. Per capita income in the Isle of Man at $US36,000 is now 13% higher than in the UK and over 25% higher than in the 15 countries in the EU before the 2004 expansion. In 2005 the Manx government abolished most corporate taxes and now estimates that total investment fund assets un der administration exceed the US$50 billion mark. In 2006, international ratings agency Standard & Poor's renewed its 'AAA' international credit rating for the Isle of Man, reflecting the island's robust economy and strong fiscal position.

Located in the Irish Sea just 30 miles from the U.K. mainland, the island is firmly established as an important international tax haven. Its independent parliament, the Tynwald, traces its origins back over a thousand years and is responsible for all domestic legislation, including taxation for its 76,000 citizens. The legal system is based on English common law, currency is the pound sterling, and although not a part of the UK, the UK government is constitutionally responsible for its defense and diplomatic representation. The island forms part of the EU single market trade area and the value added tax (VAT) area, but is otherwise not part of the EU fiscal area.

Insurance & Annuities

The Isle of Man is known worldwide for its excellent insurance and annuity products. Many of these are popular with Americans, since under U.S. tax law life insurance and annuities allows in most cases four key benefits: 1) tax-free build-up of cash value, including dividends, interest, and capital gains; 2) tax-free borrowing against cash value; 3) tax-free receipt of the death benefit; and 4) freedom from estate and generation skipping taxes. These benefits are available in any life insurance policy or annuity designed to comply with U.S. tax laws. The island also offers captive insurance plans and management of captives.

In 2006 the insurance, finance and business services, grew at an impressive rate of 18.5%. Insurance, banking, finance and business services continue to be the main source of Manx income at more than £670 million (US$1.3 billion) constituting 36% of the total GDP. Many thousands of international business corporations are registered here, attracted by the zero tax policies. The government gradually has abolished almost all corporate income taxes and currently only financial institutions pay limited income tax. There is no capital transfer tax, no surtax, no wealth tax, no death duty, no capital gains tax and no gift tax. Value added tax is at the same rates that apply in the United Kingdom.

The deputy head of Isle of Man Finance, Steve Beevers, this week said: "The strength of growth in the Isle of Man economy is obviously very pleasing and is the culmination of sterling work by both government and the private sector over many years. We are out-performing both the UK and Europe and the challenge will be to continue building on this formidable track record."

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