“Location, location, location” may be the three key attributes to look for when buying property but Manx Business Connection Chairman, John Webster's assertion that when considering the future of business it has to be “substance, substance, substance” made me think.
Therefore, as the most recent member of MBC’s ReallyManx group, I thought it would be useful to spell out my experiences.
Last year I had been offered the chance to return to my childhood home in the Channel Isles as my employer, an international bank, relocated its business there. My family ties with the Isle of Man, my family settled in the Island over 25 years ago, coupled with my chat with John convinced me that my future lay in the Isle of Man.
It has become clear that only by offering commercially-logical reasons and establishing companies of real substance will it be possible to undertake business offshore in future. Public opinion, coupled with attempts by fiscal authorities to maximise their revenues and the EU’s determination to eradicate any difference between countries that could stimulate competition, mean the end of traditional International Finance Centre (“IFC”) business. However, despite these developments, it must be emphasised that there are many reputable corporate service providers offering valuable, perfectly legitimate and ethical services to people and companies. While this is undoubtedly bad news for most IFCs due to the changing attitudes towards them, the Isle of Man is uniquely positioned to grow our economy on a new basis.
The Island’s diversified economic base, successful finance sector, wealth of experience in manufacturing and other key activities, as well as the physical space in which to expand real business activity, provide significant advantages for the Island. These differences set the Island apart from competing jurisdictions and enable it to claim to be an International Business Centre (“IBC”). Coupled with this marvellous business opportunity is the Manx community and quality of life. The Isle of Man is a wonderful place to live, to work and to bring up families. For these reasons, I rejected the offer to re-locate to Jersey and established Carpenter Business Limited (“CBL”) with the specific aim of assisting companies already on the Isle of Man or those wishing to set up on the Island, to create businesses of substance. In other words I want to turn the theoretical opportunity into reality by facilitating those who want to join the Isle of Man on its journey to become a reputable, thriving IBC.
The determination of the international community to remove offshore centres from the fiscal map has recently been illustrated by the conditions discussed during the bail out of Cyprus. Not only were the Cypriots encouraged to adopt a minimum corporate tax rate of 12.5% but the size of bank deposits to GNP was considered to be too large. It is interesting to note that Cyprus bank deposits are 7.8 times GNP whereas in the Isle of Man the ratio is over 12 and in Jersey almost 42. I fear that in future these ratios may be used as reasons for IFCs to reduce the size of their banking sectors.
The imminent introduction of US FATCA, UK FATCA and EU FATCA (Foreign Account Tax Compliance Act) are the latest manifestations of the determination of authorities throughout the world to eradicate all semblance of activity where there is any indication of possible tax avoidance. We can be sure that this is not the end, revenue authorities around the world are actively targeting the IFCs and the attack, which has full public support, shows no signs of abating.
The Island is an ideal environment for businesses to locate; an international centre for business, the Island has well-established and diverse sectors including manufacturing, tourism, film, agriculture (with many of its home grown products sold internationally), aviation, maritime, clean-tech, e-business, space, e-gaming and financial services – in other words, the Isle of Man already is an IBC and offers clients a jurisdiction at the forefront of tax transparency and compliance with other jurisdictions expectations. These attributes coupled with the fact that the Isle of Man has physical space for growth provide the Island with a uniquely competitive advantage when compared with other jurisdictions and are compelling reasons for businesses to establish or re-locate to the Isle of Man. I’m confident that John Webster’s analysis is correct; I’ve invested my future in this concept!
