The highlight of 2013 that will last longest in my memory is the British & Irish Lions smashing Australia in the third test to win the first Lions series in 16 years, but away from sport and closer to home the Island has also seen some important developments affecting the fiduciary sector this year.
Last year, I predicted that the Island’s low tax regime would cease to be the major focus of attention of supra-national bodies like the OECD, and the emphasis would increasingly be on transparency. This has been a clear development in 2013. Whilst the impact of the US FATCA legislation is becoming better understood in the sector, the Isle of Man and other Crown Dependencies have signed tax sharing agreements with the UK which are being referred to as UK FATCA. The Isle of Man agreement, including the Manx Disclosure Facility, have been pinnacle movements in Allan Bell’s strategy to put the Isle of Man at the forefront of international transparency and cooperation.
No more ‘tax havens’
It’s a move that has worked. Recently David Cameron went on record to state that the likes of the Isle of Man should no longer be referred to as ‘tax havens’. A far cry from Alastair Darling’s calls from a few years ago to look more closely at that ‘tax haven sitting in the Irish Sea’!
But are these agreements good for the Island and the fiduciary sector in particular? Whilst much has been made of the impact of the US FATCA, arguably, it is the agreement with the UK that will have a greater impact on the fiduciary sector. It is a reasonable assumption that for the majority of corporate service and trust providers their client base has a much greater UK than US concentration. Whilst transparency will become the norm across international centres, we must ensure we don’t race ahead of competitor jurisdictions.
So what is on the horizon in 2014?
Momentum is already gathering for a ‘European FATCA’ which will further reinforce transnational transparency standards. Hopefully, we will see an end to aggressive tax planning schemes and the promoters responsible which, whilst making their owners a pretty penny, actively damage the Island’s reputation at the expense of all the firms and government representatives travelling the World promoting the Island and its many excellent attributes. The future for the Isle of Man lies within its ability to provide niche, high service offerings like Boston’s venture capital business, Sharia compliant structuring for our Middle Eastern clients as well as bespoke, Multi Family Office services.
I expect further consolidation in the fiduciary sector with the changing regulatory landscape meaning scale and international reach are two key ingredients to compete profitably in the sector. Whilst I expect fewer players to be in the fiduciary market, with a fair wind and ongoing economic recovery the prospects for the sector remain positive.