Isle of Man Types of Company:

The UK's three IOFCs, Jersey, Guernsey and the Isle of Man have developed in different ways; the Isle of Man is not dominated by any one particularly activity, but has across-the-board strength in the financial sector, with substantial business in banking, fund management and captive insurance. The Isle of Man has also encouraged manufacturing and trading operations, which can be fiscally offshore while staying within the EU's VAT regime.

The island's trust sector is long-established and has a solid backing of law firms, trust managers and advisory practises. The Isle of Man has instituted a favourable regime for ship management but this sector has not shown very fast growth.

In December 2000 the Isle of Man government introduced the Corporate Service Providers Act 2000, which creates a licensing regime for corporate service providers (CSPs) and empowers the Financial Supervision Commission to process applications for CSP status and to investigate CSP license holders. CSPs must operate client accounts like other professionals. Under the act it is an offence for a CSP to operate without a licence.

In 2001 the Government passed the OnLine Gambling Regulation Act, and the first three licences for international gaming operations were issued in September 2001. Although three more licenses were issued in 2002, the Island's regime came to be seen as too onerous by 2003, and a number of license-holders left. By 2006 however it was clear that changes to the regime had been successful in re-kindling interest in the sector.

Late in 2001 the Government completed a new legislative regime for international pension schemes, and this became available for use early in 2002. For details, see the Insurance section via the link below.

The Island's 2003 budget included a major reform package for the Island's fund industry. Key measures included:

A zero tax rate for all third party fund administrators, and for Managers of EIFs and PIFs - representing an extension of the existing zero rate tax regime on fund managers' profits to both fund administrators and to managers of Experienced and Professional Investor Funds;

VAT Exemption for Experienced and Professional Investor Funds - representing an extension of the VAT exemption on management fees.

Overseas Funds Exemption in the context of Isle of Man regulation - such that an overseas fund may be administered in the Isle of Man without "dual regulation" where it is incorporated in a jurisdiction having an appropriate regulatory framework.

In July, 2006, the Isle of Man Financial Supervision Commission reported continued strong growth in the jurisdiction's financial services sector in the previous year, in spite of a "challenging" climate.

In its annual report for 2005/6, the FSC revealed that deposits on the island grew by 19%, while funds under management and administration grew by 76%.

For the last two years the number of new incorporations of Isle of Man companies has also continued to increase. Currently the number is over 40% up on the comparable period in the previous year. According to the FSC, this statistic "provides a very positive background" against which the planned new Manx corporate vehicle will be launched, later in 2006.

Together with the recent introduction of the 'zero/ten' tax regime, the FSC stated that it can plan its future growth strategy from a "confident and competitive position". The Annual Report notes, however, that over the last twelve months the climate remained challenging, and there was a continuing focus on reducing costs.

The report went on to note that the offshore sector as a whole continued to be highly competitive, with quality business increasingly focusing on well-regulated jurisdictions.

During the year, the Commission commenced a major project to consolidate and modernise the Isle of Man's financial services legislation, and has put forward important proposals to enhance its accountability and transparency as part of this project. The Commission also set out a mechanism under which there would be involvement of the industry in the setting of regulatory strategy. This project will also embrace innovative proposals for the regulation of e-money, to be drawn up in conjunction with the e-business sector which continues to have strong growth potential.

The Isle of Man's invitation to become a full signatory to the IOSCO Multilateral Memorandum of Understanding will also ensure that Manx-based businesses enjoy access into major markets overseas, the report stated.

Other developments during the year included the enactment of legislation for the licensing and supervision of trust service providers. The Commission took steps further to strengthen its own arrangements for good corporate governance. This section of the lowtax.net site describes the most important types of offshore business activity carried out from the Isle of Man.

Version date: 07.05.06