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Changes to Taxation 13 July 2004

Treasury has made further progress towards the programme of change under the Taxation Strategy and its ability to meet international commitments. The Income Tax (Amendment) Bill 2004 has now received Royal Assent and was signed at the June sitting of Tynwald.

The Act includes measures to:

  • Extend the current year basis of assessment to all income received by individuals and other non-corporate taxpayers, including income from investments, self-employment and other sources. (Income from employment is already on a current year basis).
  • Introduce a payment on account system for those people who do not pay their annual income tax liability through the Income Tax Instalment Payment or Sub Contractor’s Deduction Schemes.
  • Allow more time to make a tax return and, after a period of education, introduce a late filing penalty system.
  • Provide the Assessor with additional powers to obtain information, including documents and information required to enable the Island to comply with its international commitments.
  • Prevent the avoidance of Manx tax through the use of company loans to take advantage of the differential between corporate and personal income tax rates.

Treasury Minister Allan Bell MHK said:

"One of the most significant changes that will impact on individuals on the Island is the move to a current year basis of assessment including the introduction of a payment on account. I have asked the Assessor to ensure that, during July, every household on the Island receives a leaflet giving information regarding these changes. The leaflet will also give details of further guidance notes that will be available on request from the Income Tax Division.

"The change to current year basis of assessment and the introduction of the new payment on account system will be achieved this year. When the next income tax return form is issued in April 2005, people will have a longer period to complete it - there will, however, be a new late filing penalty system. Before this system is introduced, a full education programme will be conducted to ensure that everyone understands their responsibilities with regard to their income tax affairs.

"As I said when I introduced this Bill last year, the people of the Isle of Man are entitled to an income tax system that works as efficiently as possible and collects all the money that is owed to public funds. Manx income tax rates are low compared with other countries and it is not unreasonable to expect payment of what is due. It is also important for the reputation and stability of the Island that we have the ability to honour our international commitments."

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