From IOMToday

The island faces a very real danger of being blacklisted by Brussels, the Chief Minister admitted.

Giving evidence to the economic policy review committee, Howard Quayle said his team were working hard to address a ’number of emerging threats on the external front’.

He said: ’We face the very real danger of the island being put on the EU blacklist. It is important to state the huge efforts that have been made in pulling together our response to the EU Code Group, which was satisfactory.

’We now face a challenging timeline to be able to make the changes we need before the deadline of December of this year. But we cannot fail to deliver these changes because of the potential repercussions for our economy if blacklisted.

The Isle of Man escaped blacklisting by the European Union in December.

But we are one of 40 jurisdictions deemed not to be fully compliant with EU and international tax standards that have given a commitment to make changes to their tax regime.

Those on the list have been given a deadline of one year to comply with tax good governance, although developing countries have been given until the end of 2019.

In a report, the European Council named the Isle of Man, alongside Bermuda, Cayman Islands, Guernsey, Jersey and Vanuatu, as having tax regimes that ’facilitate offshore structures which attract profits without real economic activity’.

Mr Quayle said the other major area is of course Brexit which he said had a ’huge and significant’ impact for the island. He said the government is working on a ’plan B’ if the UK and EU fail to reach agreement on a free trade deal.

He said the withdrawal agreement ratified by Brussels last week clearly indicates that the island will retain its current relationship with the EU during the implementation period.

Mr Quayle said UK Treasury’s review of VAT treatment of aircraft and yacht importation, requested by the Manx government in the wake of the Paradise Papers investigations, was expected to report at the end of April.

’I don’t know what the report will say. I hope that it’s a good report for the people of the Isle of Man,’ he said.

IMAGE: Toomas TÕNISTE, Minister for Finance of Estonia, following the ECOFIN Council, taking place on 5 December 2017

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