Personal Income Tax is levied in Isle of Man depending on the residency status of the given individual. In the case where the individual is a resident in Isle of Man, the tax liability occurs on the worldwide income earned, and not just the income that is earned within the periphery of Isle of Man. On the other hand, as far as non-residents are concerned, they are liable to pay taxes on the income that is earned from within Isle of Man.
Personal Income Tax Rates
For personal income taxation, a standard rate of 10% is levied on taxable income for single individuals with a taxable income of up to 6500 IMP (Island of Man Pounds). For married individuals, the same of 10% is applicable, but with a different threshold. The 10% tax levy is applicable on married individuals that are earning an income of up to 13,000 IMP.
For individuals that are earning an amount greater than 6500 IMP (for single taxpayers), and 13000 IMP (for married taxpayers).
However, there is also a cap of 200,000 IMP for single taxpayers, and 400,000 IMP for married taxpayers in lieu of income tax liability for the given time period.
In the same manner, non-residents are also levied a tax at a flat rate of 20% on the total taxable income.
For payments that are made towards a non-resident individual, the assessor can impose an additional implementation of Withholding Tax (the rate is usually 20%).
These are the only personal income taxes that are imposed in Isle of Man. In exception to this, there are no locally imposed taxes
Corporate Income Taxation in Isle of Man
As far as companies that are resident companies in Isle of Man are concerned, it can be seen that it can be seen that they are taxed on their worldwide income. They are required to file their income taxes and report all the worldwide income that has been earned over the course of the financial year.
On the other hand, for non-resident companies, only income that is directly attributable to the Isle of Man. This holds for all companies that are non-residents, which have been incorporated outside the periphery of Isle of Man, but have business operations, as well as Permanent Establishments within Isle of Man.
There are three different rates of Corporate Income Taxes that are levied, that are as follows.
- Corporate Income Tax levied at a rate of 10%: This rate applies to all banking businesses that are carried out outside the Isle of Man, primarily on the basis of a deposit that takes license issued from within the Isle of Man (by the Isle of Man Financial Services Authority). This 10% rate is also applicable across all retail activities. This includes all retail businesses that are operational within Isle of Man. However, it is only applicable in the case where the profit that is generated by these retail businesses exceed 500,000 IMP (Isle of Man Pounds) in the given year.
- Corporate Income Tax levied at a rate of 20%: This rate is applicable on income that is derived from all real estate situated in the Isle of Man.
- Corporate Income Tax levied at a rate of 0%: This corporate income tax is levied on all businesses that are do not fall under the categories mentioned above.
However, in the cases where an election is done, companies that have previously been subjected to pay Manx income tax can also choose to elect paying tax at a rate of 10%.
In this regard, the general rules for corporate income taxation is accrued at a rate of 0%, 10%, 20% or any applicable combination at the given rates. This rule is similar across all companies, regardless of their residency status in Isle of Man.
These are the only corporate income taxes that are imposed in Isle of Man. In exception to this, there are no locally imposed taxes.
Other Corporate Taxation in Isle of Man
- Value Added Tax (VAT): There is a tax that is placed on consumption, equivalent to a standard rate of 20%. This is applied on domestic supply of almost all goods and services. However, some supplies are also charged at a rate of 0%. These supplies mainly include necessity based items like food, books, as well as public transport. A further reduced VAT of 5% is imposed on domestic property repairs, including several other things. Some categories are also altogether exempted from VAT, including insurance and financial services, education and healthcare.
- Custom and Excise Duties: Isle of Man also imposes a customs and excise duty from all the goods and services that are procured from outside the United Kingdom (UK). Excise duties are also applicable on tobacco, alcohol, as well as fuels.
Additionally, there is a tax imposed on all commercial flights, and this tax is also referred to as Air Passenger Duty.
- Property Taxes: There are no property taxes that are specifically imposed on companies, other than the 20% deduction that is made from profits in lieu of rental development of land and property.
- Betting Duty: There is a betting duty that is levied at a rate of around 15%. However, this rate might fluctuate depending on the type of gaming transaction itself (online vs land-based).
- Payroll Taxes: Payroll Taxes are also deducted from employees’ remuneration, as defined under the Income Tax Installment Plan.
- National Insurance Contribution: A standard rate of national insurance contribution is levied at a rate of 12.8% on income exceeding 120 IMP (Isle of Man Pounds) per week. However, reduced rates are also applicable in cases where the employee is already a part of the pension scheme.