Isle of Man
An accounting period for tax filing purposes can be no more than 12 months.
All companies are required to submit income tax returns on an accounting-period basis, whether they are liable to tax at 0%, 10%, 20%, or a combination of these rates. The tax return is due for submission one year and one day following the end of an accounting period. Where the financial statements cover more than 12 months, two (or more) returns may be required.
Companies are required to file their income tax returns online.
Fixed rate penalties apply if returns are filed late. The Assessor of Income Tax also has the powers to raise a default assessment where a tax return has not been filed.
Payment of tax
Payment of tax is due within one year and one day of an accounting period end. Interest is charged on tax paid late.
Tax audit process
There is no formal regular tax audit process in the Isle of Man. The Assessor of Income Tax can make an enquiry into a return within the time limits set out below.
Statute of limitations
Generally, the Assessor of Income Tax may make an enquiry into a tax return no later than 12 months from the date that the tax return is delivered to the Assessor.
If, however, the Assessor discovers that income tax has not been assessed that should have been assessed, the Assessor is able to make an assessment of that tax within a period of four years from the end of the relevant accounting period.
The Assessor also has powers to require the production of documents.
Topics of focus for tax authorities
The Isle of Man government is focused on delivering openness and transparency across all areas of Isle of Man taxation. The government and the tax authorities work closely with international bodies such as the EU Code of Conduct group and the EU's Economic and Financial Affairs Council to ensure that the Island is fully compliant with international standards in areas such as tax transparency and exchange of information. The Island is already recognised on the OECD White List as being in the top tier of countries for transparency and information exchange.
The Isle of Man is focused on reducing the avoidance of income tax and national insurance contributions of individuals using personal service companies and has introduced legislation to tackle this issue.
There is also more focus on the taxation of dividends paid to shareholders, particularly in relation to whether a payment is a bona fide dividend or disguised remuneration.
In order to comply with commitments made to the European Union, legislation that brings into effect, from 1 January 2019, a 'substance' requirement for companies resident in the Isle of Man for tax purposes. The legislation is targeted at companies that derive income from 'relevant sectors' as defined in the legislation but which do not have any real economic activity and presence in the Isle of Man.