The UK and Isle of Man governments are entering into a tax sharing agreement similar to the US Foreign Account Tax Compliance Act in a bid to tackle financial crime and tax evasion.
Fatca aims to tackle tax evasion by US taxpayers through the use of foreign accounts. The rules require foreign financial institutions to report certain information about financial accounts held by US investors from 30 June 2013.
The UK and Isle of Man governments have now reached a similar agreement and will automatically exchange information on tax residents on an annual basis.
The approach will closely follow the UK’s Facta agreement which includes exemptions for certain pension schemes registered with HMRC and other products such as Isas, National Savings & Investments premium bonds and company share save schemes.
Isle of Man chief minister Allan Bell says: “The nature of tax cooperation is changing and automatic exchange is becoming the global standard. The Island already shares tax information automatically under the EU savings directive and has recently announced that it will do so on a wider basis with the USA.”
Bell says the island is committed to “tax transparency” and the UK agreement is the logical next step.
Isle of Man-based James Osborne Financial Services owner James Osborne says advisers with offshore clients will see increased accountancy costs.
He says: “Ethically it is right but it is yet more regulation. Firms are already over-burdened with FSA and HMRC regulation and it is just another raft of data to provide.”