I've had the privilege during my lifetime of visiting many countries of the world, from Europe to South Africa, from China to Latin America.
But one country, (or I should say, "Crown Dependency"), that I have yet to see first hand is the Isle of Man, a 32 mile long, 14 mile wide, 221 square mile island in the stormy Irish Sea off the northwest coast of the United Kingdom where gale force winds (30+ knots, 30-40 mph) blow an average 10-15 days each year.
No doubt, the other 360 days the sun shines bright in this island of centuries old mythical creatures, including fairies.
Friends Are the Reason
I've studied the Isle of Man, written about it, and had contacts with its financial community, but the strongest attraction for me has been my friendship with Colin and Judith Bowen, two delightful residents of the island I've have had the pleasure of knowing for several years.
Colin (right) is the Deputy Chairman of the Isle of Man Assurance, an independent insurance company formed in 1971 that offers a host of annuity, life insurance and investment products -- and Judith does her best to keep him in line.
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 allows 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.
What got me to thinking about the Isle of Man was a recent Times of London article about the island and its steady and impressive financial progress, noting that: "This outcrop in the Irish Sea is a magnet for entrepreneurs, an incubator for new enterprises of the most surprising sort."
Manx in Space
Among the surprises: the CVI company that made the laser optics with which NASA’s Phoenix Lander (below) spotted snow on Mars last year. Another Manx company, Odyssey Moon, is competing to win the $30 million (£18.4 million).
Google Lunar X prize by putting a robotic landing craft on the Moon. A third, Excalibur Almaz, is developing space tourism. -- each attracted to the island by a special Manx tax provision that imposes zero income tax for space industrialization.
"Later this month the Isle of Man will officially join the space race. Nicole Stott, (left) wife of a Manxman, will begin her four months on the International Space Station. Ms. Stott’s husband, Chris, a space fanatic working for Lockheed Martin in the late 1990s, persuaded the island’s government to file for the orbital satellite space slots to which it was entitled.
In 2004 Allan Bell, the Treasury Minister, needed a headline announcement for his budget and declared a zero corporate tax rate for space activities. The response, he says, was "quite amazing".
"More than a dozen space-related businesses operate from the island, including some of the world’s biggest satellite companies. It has a director of space commerce, an honorary representative to the international space community, and an International Institute of Space Commerce. Manx schoolchildren attend NASA summer camps in Houston.
Gambling Center
A deconsecrated Methodist chapel in a narrow lane in Castletown hosts another surprise: the European headquarters of SBOBET, one of the world’s biggest online betting companies.
On a typical Saturday a dozen "liability managers" will be glued to computer screens in what used to be the church nave, constantly adjusting the odds on hundreds of live football matches as bets flow in at a rate of 200 a second. "The adrenaline level is quite amazing," says Bill Mummery, the executive director.
"It is one of about 30 e-gambling companies that have set up in the Isle of Man, attracted by a maximum gaming tax of just 1.5% and state-of-the-art telecommunications. Businesses have long used the island as a testing ground for new technologies.
Others firms include PokerStars, the world’s largest on-line poker room, and two gambling software companies, Microgaming and Playtech. E-gambling has created more than 500 jobs.
World's Oldest Parliament
The Isle of Man’s 1,030-year-old Tynwald, (below) which is the world’s oldest parliament, is thought to have been the first to give women the vote.
That innovative spirit lives on. The government runs what will soon be the biggest offshore register for corporate and private jets, and another for super yachts, which generates hundreds of jobs for lawyers, insurers and tax experts.
In 1995 the Government decided to develop a film industry. It offered to pay 25% of production costs in return for a share of the profits. In the 14 years since, 91 films have been made on the island, and the government has earned £3 for every £1 invested. Islanders talk nonchalantly of seeing Renée Zellweger jogging along the beach, or Johnny Depp in a pub.
Freedom to Flourish
"Freedom to flourish," is the island’s marketing slogan. Aside from handsome tax breaks it offers entrepreneurs friendly legislation, ready finance, a nimble bureaucracy, and easy access to politicians; their numbers are in the telephone book and Tony Brown, the chief minister, works in his electrician’s shop on Saturday mornings.
DOUGLAS, Isle of Man's capital city.
It is an approach that has reaped rewards. In spite of grumbling from London about its tax haven status, the island has enjoyed 26 consecutive years of growth. It has no national debt, an unemployment rate of just 2.2% cent, and has avoided the global recession. Per capita income 24% lower than Britain’s in 1996, is 18% higher now at about $35,000.
"It’s the greatest economic success story nobody has ever heard of," says Chris Corlett, head of the Department of Trade and Industry. The island does not flaunt its new-found wealth but it is apparent from the Mercedes, Porsche, Morgans and Bentleys and from the conversion of dilapidated hotels into sea front apartments.
Even old timers agree that life is better: the young no longer have to leave to find work, the Government pays for islanders to have medical treatment or university educations in Britain, and it is planning to give every schoolchild a free laptop.
Tax Haven Name Change
The Isle of Man no longer wants to be called a "tax haven" (does any place?) but it is a "low tax economy" with no capital gains tax, wealth tax, stamp duty, or inheritance tax and a top rate of income tax of 18%. The rate of corporation tax is 0% for almost all types of income, the only exceptions are that the profits of banks are taxed at 10%, as is rental (or other) income from land and buildings situated on the Isle of Man.
Offshore banking, manufacturing, and tourism form key sectors of the economy contributing to the Island's GDP of about US$3 billion.
The financial sector is the largest single sector, employing more than 20% of the total work force of nearly 40,000. More than 40 licensed banks (including many international banks) offer comprehensive, discreet and confidential, services that compare favorably with the banks in Switzerland or Liechtenstein.
In addition to banking, high caliber legal, accounting, insurance and other financial services are available on the island. In spite of their ancient history, banking on the offshore islands is modern, sophisticated and user-friendly. Total deposits in the 47 banks in the Isle of Man banking system in 2009 exceeded £98 billion (US$156.5 billion).
Welcome
It is one of the few low-tax international financial centers actively encouraging new residents. Work permits are easily available. Many thousands of international business corporations are registered here as well, attracted by the zero tax policies. There are more than 200 licensed corporate and trust service providers and the island has excellent. modern trust laws. There are also nearly 40,000 companies and partnerships and about 40,000 trusts under the administration of these local service providers. The investment industry has expanded with US$82 billion managed on the Isle of Man.
And if you're wondering about that unusual Manx symbol on its flag, called a triskelion, the three legs refer to the island's motto (adopted late in the symbol's history): Quocunque Jeceris Stabit, traditionally translated from Latin as 'Whithersoever you throw it, it will stand', or 'Whichever way you throw it, it will stand'.
Colin at Los Cabos
You can meet
Colin Bowen in person at the
Sovereign Society's 3rd Annual Offshore Advantage Seminar: A Beginner’s Guide to the Offshore World, November 4, 2009 – November 7, 2009, at the Westin, Los Cabos, Mexico. Colin will be among 21 of the world’s most respected offshore masterminds.
Sign up now. Remaining spaces are going fast.
In the meantime, contact Colin Bowen, Isle of Man Assurance, Ltd., IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP, Tel.: +44-1624-681-200; E-mail: colinb.ioma@ioma.co.im Web: http://ioma.co.uk