Why do Shelter Offshore Readers Hate the Isle of Man?

Since publishing an article this week about saving offshore in the Isle of Man we have been inundated with complaints by our readers who point out the scandals and negative headlines that have dogged the jurisdiction over the past twelve months or so.

But why do Shelter Offshore readers hate the Isle of Man so much?  Are so many of them victims of the collapse of Kaupthing, Singer & Friedlander or are they victims of the misinformation that has been spread about the island ever since?

We decided we needed to set the record straight on the Isle of Man’s behalf.  We don’t have a preference over offshore jurisdictions, but we do feel that the negative publicity the island has been suffering is actually unfair.  Yes, Kaupthing, Singer & Friedlander collapsed and resultant concerns have not been handled swiftly, efficiently or comprehensively enough for some victims…however, that is only one part of the story.

Kaupthing, Singer & Friedlander collapsed in October last year and it was the first time that the offshore jurisdiction’s investor protection scheme really had to come into play and be tested – and it was found wanting.  However, the Isle of Man authorities have been relatively quick to act and raise the upper limit of the deposit compensation scheme and to set aside £150 million for ongoing future potential compensation.  This was as a direct result of them realising that the entire reputation of the island was at stake following the collapse and the mess that ensued.

It is alleged by the government that three quarters of all savers affected by the collapse will be fully compensated – this is far better than those affected when Landsbanki in Guernsey failed for example.  Although yes, we can 100% see and appreciate that the 25% who will not be fully compensated rightly feel very aggrieved that the island’s legislation for compensation does not go far enough.

However, the Isle of Man is the best in terms of what it can and does offer non-resident savers.  If you save your money elsewhere in tax havens around the world you can find yourself 100% unprotected in even leading and respected jurisdictions.  So, the Isle of Man is not 100% perfect – but it is 100% better than most other locations in the world in which you can save your money – either onshore or offshore.

Therefore, we feel that the jurisdiction should be respected for what it has done and continues to do to maintain its reputation as a leading and reputable financial centre.  What’s more, for a balanced opinion one needs to look beyond the Kaupthing, Singer & Friedlander collapse and see how else the Isle of Man is attempting to secure its standing as a leading location for financial business…

For example, the Isle of Man is already signed up to the European Savings Tax Directive, and it has been very quick to comply with recent legislative changes demanded by the OECD and G20 nations for the exchange of information.  It has subsequently implemented a number of tax information exchange agreements with multiple countries, and as a result it is not on any blacklists as a disreputable offshore centre.

The Isle of Man continues to offer a strong business environment, it has low unemployment and it is expected to see GDP continue to grow – albeit at a reduced rate – despite the global financial crisis.  This is wholly unlike the UK where the economic picture is far worse.  What’s more, the Isle of Man offers favourable income and corporate tax rates, an attractive business and lifestyle environment, and its AAA rating is secure, unlike the UK’s.

All individuals can potentially benefit from the Isle of Man’s offerings, it is not an elite centre for the super wealthy – it has modest offerings for every day savers, expatriate pension savers, those seeking a secure banking environment, and even those who want to relocate to the island and take their business with them.  No, the island is certainly not perfect.  Yes, victims of Kaupthing, Singer & Friedlander’s collapse have suffered significantly, but we feel that there needs to be more balanced reporting about both the pros and the cons of the Isle of Man as an offshore tax haven.