Tax agreement with UK defended by Allan Bell

Mr Bell said the move was a "logical step"

Sharing tax details with the UK and United States is crucial to safeguarding the Isle of Man's long-term future, the chief minister said.

Last week, Allan Bell announced the island would adopt a tax information sharing agreement with the UK similar to one being negotiated with the US.

Under the agreement, the UK and Isle of Man will automatically exchange a wide range of information on tax residents.

Mr Bell said: "The decision was made now to safeguard the island's future."

He added: "There is a brand associated with the Isle of Man as a country which both protects and fosters business.

"That brand will be damaged if we try to swim against the tide of international changes and sentiment and run the risk of forever being labelled as a tax haven, with the prospects of new blacklists and missed opportunities."

The new agreement will see the two governments adopt enhanced reciprocal tax information sharing arrangements, under which they will automatically exchange information on tax residents on an annual basis.

Mr Bell said: "Failure to meet the standards of the best regulated jurisdictions in the world would damage the island's economic prospects in the medium to long term."

'Have a choice'

The agreement with the UK government follows the introduction of the Foreign Account Tax Compliance Act (FATCA) in the Unites States.

FATCA was implemented by the US government to clamp down on the growing number of US citizens who were discovered trying to avoid tax by holding bank and wealth accounts overseas.

Mr Bell admitted the Isle of Man had been under intense pressure to adjust its tax regime for more than a decade.

He said: "It is clear that the next two years will see massive changes in the way in which nations co-operate in the field of international taxation.

"Bluntly, we have a choice. We can either participate in the shaping of that change and minimise its less welcome impacts in the short term, or we can sit back and let others effectively shape our future.

"As chief minister, I cannot accept the lack of leadership that this second option represents.

"Because we have reached this view, key strategic decisions as to how and where to position the Isle of Man in response to the evolution in global standards need to be taken now.

"Those decisions must take into account the needs of our private sector, although we must base decisions of this magnitude on the interests of all those who work and live in the island, as well as those with whom we have important relations."

On Monday, the chief ministers of Jersey and Guernsey announced they would not sign up to a tax exchange agreement with the UK unless it is a global regulation.