CHIEF Minister Laurie Morgan ‘did not mislead’ the States into support for zero-10 tax reform. UK Government support for the Isle of Man’s new corporate tax package has raised speculation that Deputy Charles Parkinson’s similar proposals would have also been backed by the UK to go before the EU.

But Deputy Morgan said that there were no guarantees that the Isle of Man proposals would be code compliant with the EU.

And Treasury minister Lyndon Trott said: ‘It is ridiculous to suggest that the chief minister has in any way misled the States on this issue. In fact, he has done everything possible to ensure that a complicated issue is explained as simply as possible.’

Deputy Parkinson said that the backing for the Isle of Man plans increases the hypothetical chances of his proposals proving to be code compliant.

‘My argument is if the Isle of Man proposals were passed by Privy Council, there would not be any problems with my proposals to pay tax. I can’t see how an election to pay for tax could constitute harmful tax competition,’ said Deputy Parkinson.

‘I’m not going to say Deputy Morgan misled the House in saying something he did not believe was true.

‘He told the House it was very likely my proposals would not be code compliant on the election to pay tax.’

He said that the Policy Council had ‘pulled every string that it had’ to get States support for its proposals.

‘Unfortunately, I believe there was a great deal of scaremongering that my proposals would not be code compliant.’

Deputy Morgan suggested in the States that the UK Government would have considerable difficulty in being able to support the Parkinson package.

He said that Deputy Parkinson’s proposals were, in some respects, more far-reaching than the Isle of Man’s, and the economic impact of financial services in each island was relevant in assessing compliance.

‘When judging whether a set of proposals is likely to be EU code of conduct compliant, they need to be considered as a package, in the context of the particular economy involved.’

The Isle of Man’s zero-10 tax regime for companies was now in force, along with a distributable profits charge and a corporate charge.

An individual’s tax cap of £100,000 is now in place and special corporate tax regimes, such as tax-exempt companies, have ceased to exist.

Isle of Man assessor of income tax Malcolm Couch said that the new taxation proposals were a complete overhaul for companies.

‘We have introduced a standard rate of 0% for most companies and 10% rate of tax for companies with banking business and 10% for those who derive income from land property in the Isle of Man,’ he said.

‘We have also brought in a system which basically smoothes Treasury revenue flow by obliging companies to pay dividends to a certain extent when they are zero per cent.

‘Our changes have all been made with a very close eye on the EU code of conduct and will be reported to the EU. Now there are legislative changes, presumably the EU code of conduct group will look at them in detail. We are confident they are code compliant.’