The Isle of Man government is to set corporate tax at zero percent from 5 April, as it continues its drive to bring more high-tech companies to the island.
At the same time, the dependency will introduce new personal tax rates, including a £100,000 cap on personal tax. Because the Isle of Man is not part of the UK, but is a self-governing crown dependency, it is able to make its own laws.
It has recently completed signing a series of "memoranda of understanding" with other tax havens which allows companies based in those countries to shift their business to the Isle of Man for up to 30 days in the event of a natural catastrophe. Bermuda, Cayman Islands, Dubai, Bahrain and Mauritius have all signed up.
In January, the dependency changed the rules for monitoring the fairness of online gaming sites — a key industry that the island is spending a large amount of effort on courting. The government used to demand that the source for random number generators was handed over to a third party for auditing, but now they sample the results. "A lot of companies were unhappy about handing over their intellectual property," said Tim Craine, director of ecommerce on the Isle of Man. "Now they're much happier."
Online poker site PokerStars.com is currently moving operations there, said Craine. He hopes the move will have benefits for other companies on the island because of the increase in bandwidth usage it will bring. "Their bandwidth requirements are four times the total for the island right now," said Craine. "This will give us the ability to negotiate lower rates with the carriers — my objective is to reduce this as much as possible."
Other companies to have taken advantage of the lenient tax regime include online payment solutions provider Neteller, which relocated a dozen board members there to set up the company HQ. Like other companies on the island, Neteller will be paying zero percent corporate tax from next month even though it still has hundreds of employees back in Canada.