    |
| The Isle of Man is an English speaking country which lies in the Irish Sea between Britain and Ireland. It occupies an area of 588 sq. km (277 sq. miles). Constitutionally it has never been part of the United Kingdom, but is rather a self-governing territory within the Commonwealth with a population of about 70,000 persons. ÊTynwald, the Isle of Man parliament, is responsible for the Island's domestic affairs including taxation. Britain is responsible for the Island's defence and foreign affairs. The Island has a special relationship with the European Community: whilst it is associated with the EC the Island is excluded from the Community's fiscal harmonisation policy. The Isle of Man is a part of the UK V.A.T. area and does impose V.A.T. on goods and services. As such, an Isle of Man company may be registered for V.A.T. and may therefore prove a suitable vehicle for international trade with other member states of the European Union. The Isle of Man law is closely based on English common law and the decisions of the courts in England are regarded as being persuasive in the Manx courts. |
ISLE OF MAN COMPANIES
The Isle of Man offers 3 types of company structure of which one is non tax paying, namely the exempt company:
AN EXEMPT
COMPANY must be
owned by non-residents and must have at least one Manx resident director and
a professionally qualified company secretary. Exempt status can be obtained
provided that the company's business and trading is carried on outside of the
Isle of Man. Banking activities may be controlled from within the Island and
any income and profit derived from the account will not be subject to Isle of
Man taxation. The exempt fee payable to the Isle of Man Government is £430 per
annum, payable in the first year upon application and annually thereafter before
30th June.
AN INTERNATIONAL
COMPANY is similar
to the exempt company in its structure, but is taxed differently. It is assessed
to tax at a rate between 1% and 35% upon negotiation with the Assessor of Income
Tax with the minimum tax being no less than £1200. This type of company
may be useful where it is necessary to show that a certain minimum level
of tax has been paid in order to gain relief from taxattion in another country.
For example, certain countries provide that if tax has been paid on income remitted
to the home country, then no further tax will be charged on receipt of those
profits by the home country, so an international company can attempt to negotiate
to pay the minimum percentage required to allow that income to be remitted back
to the home country without further tax being suffered on arrival. Clients wishing
to set up an international company will be charged on an individual basis.
A RESIDENT COMPANY is a company which has neither applied for exempt or international status. Manx resident companies are subject to local income tax at a rate ranging between 12% - 18% on world-wide profits. Manx resident companies have to file accounts with the tax authorities each year showing profit made for the computation of their tax liability. Resident status may be worth consideration though for a dormant or property holding company, which has no income or profit, so would therefore not be liable to any local taxes.
An Isle of Man company has the following characteristics:
TAXATION
Isle of Man exempt and non resident companies are not subject to any form of tax on profit in the Isle of Man but do pay a flat rate annual fee to the Isle of Man Government of £430.
SHAREHOLDERS
A minimum of 1 shareholder is required which may be an individual or a corporate body. Details of the shareholders must be filed on the public file but anonymity can be preserved by the use of nominee shareholders
DIRECTORS
Each Isle of Man company requires a minimum of two directors and corporate directors are not permitted. Details of the directors must be filed on the public file but anonymity can be preserved through the use of third party professional directors. It is important to note that an exempt company must have at least one Isle of Man resident director and would usually have all its directors resident to clearly demonstrate that the control and management of the company takes place on the Isle of Man. This is not a requirement for a non resident company which may have non resident directors.
ANNUAL REPORTING
An annual return must be filed each year showing details of shareholders and directors. There is no requirement to file accounts with the registrar, but please note that resident companies do need to produce accounts for the tax authorities.
TIMESCALE
Companies can be incorporated within 10-14 days but a list of ready made companies are available for immediate purchase.
RESTRICTIONS ON NAME AND ACTIVITY
The following words cannot be used without further approval; bank, assurance, casualty, guarantee, indemnity, insurance, re-insurance, surety, underwriting, bank, trust, trustee, holdings, international, group, global, world-wide, european, finance, securities.
LOCAL REQUIREMENTS
As a matter of local company law the company MUST maintain a registered office address within the jurisdiction of incorporation. Exempt Isle of Man companies must, as a matter of law, appoint an Isle of Man resident professionally qualified company secretary as well as a local director. For resident and non-resident Isle of Man companies it is a practical but not legal requirement to appoint an Isle of Man company secretary . We would generally provide these services as part of the domiciliary service fee.
SECRECY
There are no specific statutory provisions governing secrecy in relation to companies but English Common Law, which applies within the jurisdiction, does impose a common law duty on professionals to keep the affairs of their clients confidential.
© International Company Services Limited 1999.