The Isle of Man Government intends to introduce a Qualified Domestic Minimum Top-Up Tax (QDMTT) with effect from 1 January 2025.
This measure is in response to the Organisation for Economic Co-operation and Development’s Pillar Two initiative, which aims to ensure that multinational enterprises (MNEs) pay a fair share of tax wherever they operate and generate profits.
The QDMTT will mean that MNEs with an annual turnover exceeding 750 million Euros operating within the Isle of Man will pay a minimum of 15% tax on the profits they generate on the Island.
Treasury Minister Dr Alex Allinson MHK said:
‘Alongside Jersey and Guernsey, the Isle of Man announced last year that it intended to implement a domestic minimum tax to provide for a 15% effective tax rate for large in-scope multinational enterprises, from 2025. Today I am confirming how the Isle of Man intends to achieve this.
‘The QDMTT approach is provided for in rules published by the OECD and ensures that the Island remains aligned with its international obligations and commitments as a reputable financial centre. It also means that the MNEs operating in the Isle of Man will retain confidence in our system and how it will interact with the tax systems in the other jurisdictions in which they operate.’
Dr Allinson added:
‘While the Isle of Man has relatively few multinational firms of the scale affected by the change, it is vital that we adhere to international standards and continue to play our part in global efforts to combat base erosion and profit shifting.
‘The Isle of Man has a much smaller number of MNEs that have their ultimate parent entity located in the Island. We are therefore looking at whether implementing an Income Inclusion Rule would be of relevance, and a final decision will be taken later in the year. We will also continue to monitor implementation internationally, as the Isle of Man remains committed to offering an attractive and globally-competitive investment environment.’
Dr Allinson concluded:
‘The Assessor and her team will continue to engage affected businesses while preparing the necessary legislation, which I envisage bringing to Tynwald in the autumn.’
