Talk The Talk, Walk The Walk

By Global Tax Weekly

In the beginning, when the internet broke out from its traditional role as a communications device for academics, college nerds, and the US military, offshore was predicted to be the center of the e-commerce universe. By locating websites offshore and in low-tax jurisdictions to carry out functions previously based in high-tax jurisdictions, businesses would be able to take advantage of low rates of taxation for increasingly substantial parts of their operation, or so the theory went. Indeed, in many cases, there’d be no need to have a presence “onshore” at all. Obviously, most internet-based businesses have taken full advantage of their almost ethereal presence to pay less tax in places like the US and Europe, and the world’s governments are only now starting to catch up. However, while many offshore jurisdictions talked the talk during the early phases of the growth in e-commerce and the digitalization of services, announcing grandiose plans to become the next e-commerce hub, very few actually walked the walk, and only a select few have been prepared to back up words with solid investment in telecoms infrastructure. The Isle of Man can be considered part of this offshore e-commerce elite group. Indeed, the jurisdiction’s telecommunication systems are probably among the most advanced in Europe, if not the world. I bet you didn’t know that Manx Telecom was the first European operator to launch a 3G mobile service and the first in the world to launch a 3.5G mobile service? And the island’s telecoms infrastructure is now so resilient it has almost magical “self-healing” properties in the event of a failure somewhere in the system (called the Tolkien-esque “self-healing ring” by the Government). It’s certainly an investment that has paid off, for the e-business sector now accounts for 20 percent of the Manx economy. The island isn’t resting on its laurels either, having announced its new digital strategy, which, appropriate enough, was published online last week. It remains to be seen how BEPS affects places like the Isle of Man. Nevertheless, the island is showing the world what can be achieved in the area of technology with a well-thought-out digital strategy backed up by serious investment.

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