• the profits derived from an industrial or commercial enterprise in one country will not be taxed in the other country except to the extent that they are attributable to a permanent establishment;
• profits of shipping or air transport attributable to a resident of either country are not taxed in the other country, regardless of 1;
• an individual resident in only one of the two countries is exempt from tax in the other country on personal, including professional services performed in the other country on behalf of a resident of his own country (but they must be taxed in his own country); and
• if despite the above, tax is payable in both countries, the tax paid in one country is allowed as a credit against tax due in the other.

• A tax information exchange agreement based on the OECD model; and
• An agreement for the allocation of taxing rights over certain income of individuals and to establish a mutual agreement procedure in respect of transfer pricing adjustments.

In October, 2002, 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 seven Nordic countries (including Greenland, Finland, the Faroe Islands, Norway, Denmark, Sweden and Iceland) concluded a package of Tax and Information Exchange Agreements (TIEA) and economic agreements with the Isle of Man. By the end of 2008, all 28 of the tax and economic cooperation agreements had been ratified and become operational.

The complete list of TIEAs entered into by the Isle of Man as of May 2011 is as follows:

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.

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.

“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.

MoUs

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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