Allan Bell: 'Game-changing' Fatca brings welcome transparency
On 7 December the Isle of Man announced it would adopt information sharing arrangements with the UK, which will closely follow those being negotiated with the US.
The US Fatca agreement will assist in the prevention of tax evasion and financial crime by creating a co-operative environment within which information on many forms of investment is shared by tax administrations.
In its basic form, financial institutions would need to have a direct relationship with the US authorities which could be particularly burdensome.
However, driven by the concerns of business about the heavy compliance load, the USA and five initial partners, France, Germany, Italy, Spain and the UK initiated the development of a model Intergovernmental Agreement.
In my view, Fatca is a game changer in relation to tax transparency and the automatic exchange of information. It will be used as the lever and model by many countries seeking equivalent information; and as such is likely to become part of the international standard.
Indeed, I believe those that try to swim against the tide of international change and sentiment run the risk of being labelled as a tax haven.
It is important that small international business centres, including the Isle of Man, are viewed by the international community as jurisdictions which have tax and regulatory regimes that meet international standards and are not harmful to other countries’ economic or fiscal interests, while remaining highly competitive.
Achieving this position will build further confidence in the stability of the Island’s investment environment and our standing as a trusted trading partner. It will also create a “passport”, or right of way, into global markets for all sections of our highly diversified economy.
Our decision to negotiate an agreement with the UK was taken after discussion with the Island’s banking and insurance sectors. There was been strong support from the business community on a move which was seen as inevitable and essential to creating certainty.
In addition to delivering on our commitment to international co-operation, we will also assist our business community with the compliance issues arising from the adoption of Fatca.
Indeed, a benefit for multinational companies on the Island is that the latest agreement with the UK will provide exactly the same platform in the Isle of Man that they will need to follow in the UK and in their other major countries of operation. This will help them to reduce compliance costs in meeting the new standards.
Small international business centres, like the Isle of Man, have a choice between participating in the shaping of this major change or letting others shape their future.
The Isle of Man has chosen to participate. We are bold enough to innovate, take risks and incubate new sectors.
A key to success is the ability to recognise change, respond to it appropriately and adapt in a way that enables us to thrive in this new environment.
Allan Bell is chief minister of the Isle of Man