Of the three UK crown dependency jurisdictions, all of which have zero-10 tax regimes in place, only the Isle of Man has issued a statement since that Code Group meeting on Friday. In that statement, IoM treasury minister Anne Craine said the island’s Government would continue to monitor developments in the matter.
“This is an important matter for the Isle of Man, and we are gathering further information so that we can gain a clear and full understanding of any concerns raised on what are quite complex and technical issues,” Craine added in her statement.
“We would expect that the views of the EU Code of Conduct Group will be explained in detail so that we can consider them carefully before determining what course of action, if any, to take."
As International Adviser reported in September, offshore industry officials believe that the full Ecofin Council is thought likely to consider the Code of Conduct Group’s recommendation on the subject of zero-10 tax regimes at its next meeting on 7 Dec.
At that point, if the council were to declare zero-10 regimes non-compliant with the EU’s Code of Conduct on Business Taxation, it is expected those jurisdictions which have them would be given a year or two to replace them.
As reported yesterday, the head of Tax Research, a Norfolk-based lobbying organisation, said in a blog that was published ahead of last Friday’s Code Group meeting that the zero-10 corporation tax regimes of Jersey and the Isle of Man had “failed” three out of five key criteria that were being used by the group to evaluate them.
In his blog Richard Murphy said: “Informed sources tell me that the EU has now considered the issue of Jersey and the Isle of Man, but not for Guernsey who have already agreed to reform their system. And that informed source tells me it is bad news for Jersey and the Isle of Man: they have failed on the first three criteria… but have passed the last two.”
Under zero-10 regimes, most businesses pay no corporation tax, while some industries, such as banks, pay 10%, and a few pay 20%.
The Code of Conduct Group is looking into the zero-10 regimes in response to concerns from some EU officials that they are ‘predatory’. However, they are a major element in the incentive package some offshore jurisdictions use to lure businesses to their shores.
