There is no immediate threat to the island from the latest moves by the European Commission against low tax economies.
That the view of Chief Minister Allan Bell after the EU Commission published a ‘Scoreboard’, which looks at the tax systems of 81 non-EU countries.
It is part of a move by Brussels to draw up a new blacklist of tax havens.
Jurisdictions have been examined against ‘objective economic, financial, stability and tax good governance indicators’, says the Commission, to allow member states in the Code of Conduct Group to decide which may need to be ‘screened’ in more detail.
Those that ‘refuse to co-operate or engage with the EU regarding tax good governance concerns’ should be put on the EU list, it says.
But the Manx government said in a statement: ‘It is clear that this is not a blacklist. The Commission has instead chosen to create a long list of countries – which includes many members of the G20, including the US, China, Canada and Japan – for further examination.
‘The Isle of Man Government welcomes the Commission’s decision that their eventual list will be a ‘last resort’ option that will be a tool to deal with third countries that refuse to respect tax good governance principles, when all other attempts to engage with these countries have failed.’
The Commission has used three selection indicators for its scoreboard - strength of ties with the EU, financial activity and stability. There are also three risk indicators - transparency, preferential tax regimes and no or zero corporate rate tax.
The Chief Minister said he was concerned that the later was being used as assessment criterion.
He said: ‘Tax rates are matters for national governments and any move to list purely on the basis of tax rates runs counter to the international consensus. We look forward to engaging further with the Commission as the process evolves.’
Mr Bell said: ‘We are still trying to identify what they are trying to achieve. The issues at play have less to do with greater transparency and more to do with the internal politics of Brussels.
‘On this list is not one name in the EU which is quite astonishing. I believe the work the Isle of Man has put in to lead the way in international agreements had left us in a strong position to fend off any criticism. I don’t believe there is any immediate threat to the Isle of Man at all. We need to be calm and see how the debate moves on.’
But Mr Bell said it showed how important it is for the island to keep its eye on the ball internationally - and for election candidates to be fully up to speed on global developments concerning tax transparency and beneficial ownership.
He said: ‘The international agenda is not an optional extra, it’s absolutely central.’
Mr Bell said looking at the scoreboard tables it was difficult to come to a conclusion where the Isle of Man was ranked. But the only area where we fall foul is our zero corporation tax regime.
But he said the island had the ‘absolute right’ to set our own tax rates. Our tax structure was entirely transparent, he pointed out, and in terms of transparency, we comply with all international standards.
‘In that sense, to say I’m relaxed about this is too strong a word. But on first reading, we are not in the Commission’s cross-hairs.’
He added: ‘The Isle of Man has been at the forefront of work to promote global tax cooperation and transparency, as well as to support efforts to combat money laundering, fraud and corruption. We are fully compliant with the OECD Global Forum criteria and are committed to continuing fully to meet our international obligations.’
‘It was recognised by the UK Government at the Anti-Corruption Summit in May that the Isle of Man is ‘far in advance of most other countries’ on the international tax transparency agenda.’