KPMG Isle of Man Update on Economic Substance Requirements
The Isle of Man Income Tax Division has just released much-awaited updated guidance in relation to the economic substance requirements, which can be found here. As with the guidance it replaces, it applies equally to the equivalent substance requirements in both Jersey and Guernsey.
This guidance should, to all intents and purposes, be considered as “final”, particularly as we understand it has been reviewed by both the EU and the OECD. We do not expect it to be updated in the foreseeable future.
The main updates comprise the inclusion of specific sections dealing with the application of the rules to the shipping, insurance and high risk IP relevant sectors (albeit in respect of the latter this essentially replicates the commentary included within the “Key Aspects” note issued in December 2018). The guidance also contains several other new pieces of commentary including:
As expected, many areas of the legislation remain open to interpretation and it is likely that the directors of a significant number of affected companies will be required to exercise at least some degree of judgment. This being the case, in order for companies to protect their position, it is critical that they, inter alia:
We at KPMG Isle of Man have worked closely with our colleagues in the Crown Dependencies and British Overseas Territories as the substance requirements have developed and would be delighted to offer you our advice and assistance.
Please contact David Parsons, Robert Rotherham or your usual point of contact at KPMG Isle of Man.
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