Isle of Man Business Services Overview
About the Isle of Man
Setting up a Business in the Isle of Man
The Isle of Man is situated in the heart of the British Isles midway between England and Ireland.
The Isle of Man is an established international finance centre, with a secure base built on political stability, low taxation and a firmly established fiscal and regulatory environment independent of the UK. In relation to providing international services it is fully supported by a modern infrastructure.
It is one of the few international finance centres where Government’s objectives for economic growth are matched by the physical space and labour resources needed to sustain them.
In addition to the introduction of new investment and taxation vehicles designed to maintain and develop the Island’s status as one of the premier offshore locations, the Isle of Man Government is already well advanced in the implementation of a new and dynamic zero tax strategy. To encourage further inward investment the Government has also initiated a strategy and provided funding to establish the Isle of Man as a leading e-commerce platform.
The economy remains resilient with an estimated growth rate of 4% compared to an OECD average of 1.4% for 2013.. Unemployment currently stands at approximately 2.7%. The RPI annual inflation rate held at 3.3% whilst the CPI remained at 1.9% for April 2013.
However a change in how the rating agency Standard and Poor assesses the impact of external factors and monetary flexibility in small countries has seen the Islands AAA rating go down one notch to AA+. The move to the new method of rating by Standard and Poor has seen a number of other countries ratings being revised.
The key sectors in generating this performance have been financial services and professional services. The Isle of Man has won the award for “Best International Finance Centre” for 7 of the last 8 years. Bank deposits in 2011 remained steady at £62 billion.
The Isle of Man Aircraft Registry for private and corporate aircraft continues to expand and has over 500 high quality aircraft on the register making it the fastest growing offshore register in the world. A recent survey of leading aviation lawyers by the leading aviation publication “Corporate Jet Investor” voted the Isle of Man Aircraft Registry the best aircraft registry in the world.
The Ship Registry has worked hard to attract new shipping business to the Island paying particular attention to Asia over the last eight years. This has seen a growth to 28% of the tonnage on the Isle of Man Ship Registry since the first ship joined the register four years ago.
An important element of the Island’s fiscal strength is the long established and self imposed legislative requirement that Government must budget for a surplus in respect of its annual revenue spending. Whilst meeting this requirement Government has continued to invest in developing and updating the Island’s infrastructure, for economic as well as social benefit
The Island’s unemployment rate has been below 1½% (of an economically active population of 55,258) for nearly a decade but since the autumn of 2011 has risen to stand at over 2%. But labour market conditions for employers are considerably eased through the freedom to recruit and transfer personnel from off-Island. Although the Island operates a work permit system, it does so liberally, as evidenced in the information that shows around 11,000 permits being granted annually and refusals running at below 100 a year. The ability to bring in labour from outside is a key factor in constraining wage pressures. However the Isle of Man Government intends to introduce a new Control of Employment Bill in 2013 with the objective of ensuring the current Work Permit system is supportive of economic growth while at the same time protecting the vulnerable.
The Isle of Man has world-class telecommunications infrastructure and services which cater for the full range of modern corporate voice and data communications requirements. Manx Telecom, a wholly owned subsidiary of 02plc, part of the Telefonica group, a leading pan-European telecommunications company is the Island’s principal network operator operating advanced fixed and mobile networks across the Island. Both Manx Telecom and Cable & Wireless provide services under telecommunications licenses granted by the Isle of Man Communications Commission and approved by Tynwald and a number of ISPs and IT companies provide corporate network and related services.
Manx Telecom has invested a further £25 million designing and building the Next Generation Network (NGN) for the Islands future development. The NGN network enables Manx Telecom to offer its business consumers on the Isle of Man the ability to access and manipulate voice, data, television and video in one seamless converged network – the first community in the world to be able to do so.
Connectivity off the Island is provided by two resilient fibre optic rings, owned respectively by BT and Cable & Wireless, which connect the Island with the North of England and Northern Ireland.
These links employ ‘self-healing SDH loop’ technology which guarantees that if a fault occurs at any part of the link, voice and data traffic is seamlessly re-routed in the other direction. Their total available capacity is 3 million channels (240 Gigabytes) which, with a current capacity utilisation of less than 0.2% on the main cable alone, represents huge potential for the future. In addition, the Manx Government owns a third undersea cable connecting the Island with the North of England and is currently evaluating commercial and technical options for activating this capacity to support Island businesses.
The Isle of Man was one of the first countries to pass dedicated e-business legislation with the introduction of the Electronic Transactions Act in November 2000. Additional business continuity regulations introduced in 2002 enable banks, investment businesses and corporate service providers which are regulated in approved jurisdictions to use Isle of Man based computer servers in the event of catastrophic failure.
The Island’s strong position in financial services and e-business make it the perfect location for companies in the business of electronic trading platform development.
The Island also has a sophisticated internet hosting infrastructure. There is a choice of service providers whose range of services include hosting, managed services, internet security services, connectivity and consultancy. Web hosting business solutions are offered to businesses of all sizes.
The Isle of Man telecommunications and IT infrastructure may be summarised as follows:
The Isle of Man is an internally self-governing dependent territory of the British Crown. It is not and has never been part of the United Kingdom but is within the British Isles. Queen Elizabeth II is acknowledged by the Island as its Head of State, but the Island is politically and constitutionally separate from the United Kingdom. It is technically a Crown Dependency and is thus independent in all matters except foreign affairs and defence, both of which are the responsibility of the United Kingdom Government and for which the Isle of Man pays an annual contribution.
The Manx exercise their extensive political and legislative independence through their ancient parliament, Tynwald, which is the oldest legislature in the world in continuous existence. Tynwald has two branches, consisting of the House of Keys (which is elected by universal suffrage) and the Legislative Council (whose members are elected by members of the House of Keys). The 24 members of the House of Keys are popularly elected every 5 years and the overwhelming majority are independents. The Island is noteworthy for its relative absence of party politics; this has contributed to the remarkable stability of the Manx system.
The Island has a ministerial system of government that is headed by the Chief Minister who selects the Manx Cabinet (the Council of Ministers). The Chief Minister is nominated by Tynwald from amongst its members after each general election.
Her Majesty the Queen as Lord of Mann is our Head of State. Her personal representative on the Island is His Excellency the Lieutenant Governor, who is appointed by the Crown for a five-year term.
The Island is a Crown Dependency which, through its ancient parliament, Tynwald, enjoys a high degree of domestic legislative and political autonomy.
Dating back to Viking origins over 1,000 years ago, Tynwald is the oldest legislature in the world in continuous existence. It has two branches: the House of Keys and the Legislative Council.
Every five years the House of Keys is dissolved by the Lieutenant Governor and a General Election is held to elect members of the House of Keys. The House of Keys is the Lower Branch of Tynwald, which consists of 24 members who represent single member and multi member constituencies. The members of the House of Keys are directly elected by the people of the Isle of Man. The majority of Members sit as independents, and the virtual absence of party politics has contributed to the remarkable stability of the Manx system.
Eight of the eleven Members of the Legislative Council (MLCs), are elected by the Members of the House of Keys; the remaining Members of Legislative Council are the ex-officio members, H.M. Attorney General, the Lord Bishop and the President of Tynwald, who is elected by Tynwald as a whole.
The Legislative Council generally acts as a revising chamber for Bills which are usually introduced in the Keys. The Royal Assent to Tynwald Bills is given by the Queen or, now more commonly, by His Excellency the Lieutenant Governor.
The two branches sit separately throughout the parliamentary year principally to enact primary legislation; they sit together as Tynwald Court mainly to debate matters of policy, approve delegated legislation and to adopt financial motions. On 5th July each year, Tynwald Court assembles in the open air on Tynwald Hill at St. John's, a Viking site of the Manx parliament, to conduct parliamentary business and receive petitions for redress from aggrieved citizens.
Lawyers in the Isle of Man are known as advocates and combine the roles of solicitors and barristers in England. Organised into partnerships, Manx advocates perform a wide range of work and have an exclusive right of audience in the Island's courts (although English barristers can be licensed to appear in certain cases). Other legal work (except conveyance) can be undertaken in the Island by registered legal practitioners qualified to practice in other jurisdictions.
Although English law does not extend to the Isle of Man, the Manx legal system is based on the principles of English common law, like the legal systems of most Commonwealth countries. Manx criminal law was codified in the 19th century and is closely based on English law. In relation to contract, tort, family law and social security, Manx law is very similar to English law. But in other respects Manx law has been developed to meet the Island's special circumstances, particularly with regard to direct taxation, company law and financial supervision.
As regards land law, many of the changes made in English law in recent times have not been followed in the Isle of Man and there are significant differences between Manx and English conveyance procedures. The Manx system is based on a Registry of Deeds, although a system of land registration is now being set up.
The principal sources of Manx law are Acts of Tynwald and Orders and Regulations made under these Acts. Tynwald has power to pass Acts on any subject, but all Acts of Tynwald require the Assent of the Queen. The United Kingdom Parliament at Westminster still legislates for the Island in respect of some subjects which are of common concern to the Isle of Man and the United Kingdom, such as defence, nationality and immigration.
Although the Isle of Man is largely autonomous, the United Kingdom remains responsible for the Island's defence and international relations. EU law has direct application to the Isle of Man only for very limited purposes, in accordance with Protocol 3 to the 1972 Act of Accession.
The Island's High Court judges are the two Deemsters (a term dating from Viking times), who have jurisdiction over all the criminal and civil matters that in England would fall under the High Court, County Court and Crown Court.
The Manx Appeal Court (the Staff of Government Division) consists of the Deemsters and the Judge of Appeal, a part-time position filled by an English QC. The final appeal, one that is rarely pursued, is to the Judicial Committee of the Privy Council in London.
The Island has its own lay magistrates (similar to their English counterparts) and also two stipendiary magistrates (the High Bailiff and Deputy High Bailiff) who also act as coroners of inquests and preside over the licensing court.
The Manx are similar to the English, are renowned for their politeness and courtesy. This is a key element of the culture and is a fundamental aspect of the communication style. When doing business in the Isle of Man you generally find that direct questions often receive evasive responses and conversations may be ambiguous and full of subtleties. Consequently, it is important to pay attention to tone of voice and facial expression, as this may be an indication of what is really meant.
The term “Stiff Upper Lip” is often used to describe the traditionally British portrayal of reserve and restraint when faced with difficult situations. The Manx people show similar reserve and constraint. In Manx culture open displays of emotion, positive or negative are rare and should be avoided. During meetings, this means your Manx colleagues will approach business with an air of formality and detachment.
A vital element in all aspects of Manx life and culture is the renowned British sense of humour. The importance of humour in all situations, including business contexts, cannot be overestimated. Humour is frequently used as a defence mechanism, often in the form of self-depreciation or irony. It can be highly implicit and in this sense is related to the British indirect communication style.
The Isle of Man is renowned for its Viking history and strong sense of tradition supported by a long-established system of government and economic stability dating back over 1,000 years.