Government is asking some companies on the Isle of Man to prove they have sufficient substance.

Draft legislation has been published asking tax resident companies to demonstrate they should access the corporate tax regime.

The legislation has been designed to meet the high level commitment made by the government in November 2017.

It’s designed to address the EU Code of Conduct Group’s concerns that some companies that are tax resident in the Island do not have sufficient substance to access the regime.

It is intended that the final draft legislation will be submitted for consideration at the December sitting of Tynwald.

The government has worked closely with the other Crown Dependencies in preparing its legislation with the intention of them being as aligned as possible.

The additional information required from companies to demonstrate they meet the substance requirements set out in the proposed legislation will form part of their annual tax return.

Treasury Minister Alf Cannan says: “In 2017 the EU Code of Conduct Group confirmed the Isle of Man as a cooperative jurisdiction, but did identify possible concerns, to which we made clear commitments to address.

“This is an important piece of legislation that needs to be enacted by 31 December to ensure that the Isle of Man meets this high level commitment made last year and remains fully compliant with international tax standards.”

The final draft of the legislation will be published with the Order paper for December’s sitting of Tynwald.