Isle
of Man International Agreements
In
June 2000 the Isle of Man government wrote a 'Letter of
Commitment' to the OECD's Financial Action Task Force (FATF)
in which it promised to comply with international standards
of transparency and mutual assistance. The government did
not revealed what specific legislative consequences would
follow, but some changes to company law followed, as did
a strengthening of international treaty obligations, which
are reflected in domestic law.
In
September 2000, an inter-governmental report was published
by the Offshore Group of Banking Supervisors and the FATF
which praised the Isle of Man authorities for their successful
endeavours in countering money laundering and related criminal
activities with a 'robust arsenal' of pro-active initiatives.
The report examined the effectiveness of the island's legislation,
regulations and administration activities directed against
money laundering. The authors were particularly impressed
with plans to strenghten company sector regulations, saying
that these enabled the Island to be "at the forefront
of international efforts to prevent the abuse of company
structures for criminal purposes."
The
report also welcomed the creation of a new financial crime
unit which draws on the combined efforts and expertise of
the police, customs and regulators with a pro-active enforcement
strategy. And financial professionals and institutions on
the island have also been praised by the report - it says
that the financial sector has a 'good compliance culture'
which allows it to quickly highlight potentially suspicious
transactions.
In
October, 2002, the Isle of Man’s Treasury Minister,
Allan Bell, signed a bilateral agreement with the United
States of America which provides for the exchange of information
on tax matters between the two countries. The agreement
provides for exchange of information by specific case request.
Allan
Bell said: “Today co-operation between governments
is more important than ever as we work to ensure that no
safe haven exists - either onshore or offshore - for funds
associated with activities such as money laundering, terrorist
financing or tax evasion.
“Equally
the Isle of Man believes that the expansion of the global
economy depends on both onshore and offshore international
financial centres combining highly competitive entrepreneurial
environments for business with a quality of regulation and
stability.”
The
Isle of Man sets out to be a well regulated and responsible
jurisdiction and is financially strong, as evidenced by
its Triple A rating with Moody’s and Standard &
Poors. It has been recognized by the FATF as being "at
the forefront of international efforts to prevent the abuse
of company structures for criminal purposes".
Allan Bell continued: “The ability to exchange information
in relation to criminal matters already exists between our
countries via the Department of Justice in the United States
and the Attorney General in the Isle of Man.
“The
Island’s early commitment to OECD has permitted us
to play an active role with the United States and other
member countries in the development of a model agreement
on which the agreement being signed here today is based.
This provides an alternative route to obtain information
in relation to criminal tax matters and also provides for
a timetable for this to be extended to include civil tax
matters.
“The
development of a network of such agreements between member
states and committed jurisdictions, whether on a multilateral
basis, or a bilateral basis as adopted by the Isle of Man,
will in due course evidence the existence of a new and truly
international standard on Exchange of Information.
“The
Isle of Man will continue to support the development of
such international standards and seek to foster business
relationships with other countries based on those standards
and we look forward to participating in the ongoing discussions
with the United States to further develop and establish
closer economic and fiscal ties.”
The
IOM's agreement with the US forms part of the jurisdiction's
efforts to implement its commitments to the OECD, given
in early 2001, which included a commitment to develop effective
exchange of information. Over the following 12 months the
Isle of Man, together with other jurisdictions, negotiated
a Model Tax Information Exchange Agreement.
The
Model being adopted provides for exchange of information
based upon a formal request being received by the Competent
Authority in the Isle of Man. A request must be made on
an individual case basis and the subject of the request
must be under investigation in the requesting jurisdiction.
Other safeguards are included to prevent ‘fishing expeditions’
for example, the requesting party must first take all means
available in its own jurisdiction to obtain the information.
All information that is exchanged may not be passed on to
third parties and there are strict confidentiality measures.
The US Treasury Department announced in September, 2006,
that the Tax Information Exchange Agreement had entered
into force.
According
to the Treasury: "An exchange of letters between the United
States and the Isle of Man was completed on June 26, 2006,
thus bringing into force an agreement that allows for the
exchange of information on tax matters between the United
States and the Isle of Man."
In
October, 2007, an association of Nordic countries concluded
a package of Tax and Information Exchange Agreements (TIEA)
with the Isle of Man, providing for the exchange of information
between governments on a case-by-case basis, as the Manx
government seeks to reinforce its global reputation as a
well-regulated financial centre.
The Nordic countries started joint negotiations in July
2006 to conclude tax information exchange arrangements with
jurisdictions that have made a commitment to apply the OECD
standards on transparency and exchange of information in
the tax area. The taxation and economic co-operation agreements
have been signed with the seven members of the Nordic Council,
namely Norway, Sweden, Finland, Iceland, Denmark, Greenland
and the Faroe Islands. The package of 28 agreements was
signed at a ceremony in Oslo. The package include tax information
exchange agreements based on the OECD model of exchange
of information on request on a case by case basis, and shipping
and aircraft taxation agreements ensuring that a relevant
business based in the Isle of Man will not be taxed in the
Nordic countries so long as it is conducting international
trade. By the end of 2008, all 28 of the agreements had
been ratified and become operational.
In
March 2009, the Isle of Man signed a Tax Information Exchange
Agreement with France. This agreement was signed 7 years
after the island signed its first TIEA with the USA. At
the time, the island currently holds a quarter of the 51
TIEAs in existence globally.
The
Isle of Man was one of the first nations to make a clear
commitment to OECD standards on tax co-operation in 2000
and was recognised by the OECD as a ‘committed jurisdiction’
in 2001.
Minister
Bell said: “We are delighted to announce the signing
of our 14th TIEA, a significant milestone in our ongoing
commitment to international tax co-operation. For nine years
the Isle of Man government has been dedicated to achieving
OECD standards, and this latest TIEA is part of our continuing
work and mutual co-operation with not only France, but all
other countries we have agreements with.”
Minister
Bell commented: “In addition to our agreement with
France and the recent one with Germany, we are at advanced
stages of negotiation with several other countries and will
continue to strive for effective co-operation based on agreed
international standards by developing, signing and ratifying
further TIEAs.”
Also
signed at the ceremony was an agreement for the avoidance
of double taxation with respect to enterprises operating
ships in international traffic. This builds on the Isle
of Man’s network of shipping taxation agreements,
and will further enhance opportunities for the island’s
highly regarded shipping sector.
The
Isle of Man government on April 3, 2009, released a statement
welcoming the island’s inclusion on the OECD ‘white
list’ of countries complying with the global standard
for tax co-operation and exchange of information.
The
list, produced following the G20 summit in London, places
the Isle of Man in the top tier of jurisdictions –
along with nations such as the UK, USA, Germany, France,
Sweden and Ireland – that have ‘substantially
implemented the internationally agreed tax standard.’
Welcoming
the Isle of Man’s recognition as a cooperative jurisdiction,
Chief Minister Tony Brown said:
"The
OECD white list provides recognition at the highest level
of the Isle of Man’s place in the mainstream of economies
that comply with the global standard on tax. This is a defining
moment for us, confirming our position amongst the most
responsible and co-operative countries of the world.”
Treasury
Minister Allen Bell added:
“The
OECD lists are a significant step forward in the debate
about tax, as countries are now being judged and separated
on the basis of agreed international criteria – not
just size. The Isle of Man has always supported an objective,
global approach to this issue and the G20 summit has confirmed
this as the way forward.”
“Inclusion
on the white list represents a major endorsement of the
Isle of Man and of our long-term strategy of positive engagement
with the OECD. This can only reinforce the island’s
reputation and confidence in our future as an international
business centre of quality.”
“The
island has long been committed to the international standards
of tax transparency developed by the OECD in 2000. We are
at the forefront of small nations in delivering on that
commitment.”
“Over
the past seven years we have signed more tax information
exchange agreements than any of our counterparts, including
agreements with the UK, France and Germany. We have concluded
a total of 14 so far, 12 with OECD countries, and there
are several more in the pipeline.”
“The
island also has a strong track record of complying with
international standards of financial regulation, as assessed
by the IMF and others. A series of independent, external
reviews over the past decade have enhanced our reputation
as a well regulated centre for international finance,”
noted Bell.
The
Chief Minister, meanwhile, stressed that the Island would
continue to work with the OECD and other bodies promoting
international standards on tax and financial regulation.
“The
Isle of Man has a long-term policy of positive engagement
with international initiatives and of supporting international
standards,” declared Brown, adding: “At a time
of global economic crisis this responsible, co-operative
approach is particularly relevant and vitally important.”
“The
G20 summit is clearly more of a beginning than an end. As
work continues towards solutions to the global economic
crisis, the Isle of Man is ready to play a constructive
part,” concluded Brown.
At
the time of writing, the Isle of Man has signed 16 TIEAs
- more than any other offshore jurisdiction.
In
February, 2005, agreements were signed with the Dubai Financial
Services Authority, the UAE Central Bank, and the Bahrain
Monetary Agency. The DFSA signed two memoranda of understanding
with the Isle of Man's Financial Supervision Commission
and Insurance and Pensions Authority.
The
two agreements aim to provide a framework for the provision
of mutual assistance and information exchange between the
two jurisdictions with regard to cross-border transactions.
In addition, the agreements are designed to improve compliance,
thereby helping to prevent money laundering and fraud.
Under each agreement, the Middle East Agencies, the FSC
and IPA will consult with each other on an on-going basis
to enhance regulatory co-operation and to collaborate on
international supervision between the regions.
The
MOUs also provide a framework for regulatory cooperation
through the exchange of information and mutual cooperation
in the field of on-site examinations of entities, subject
to regulation in both jurisdictions.
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