Allan Bell, the Isle of Man Treasury Minister, has announced in the Budget the completion of a review into the Island's funds sector, and the establishment of a £20m economic development fund.
The report is the result of an in-depth review chaired by international funds expert Paul Smith, previously global head of the alternative fund services division at HSBC, and is one of the measures Bell unveiled in the Budget designed to further advance the economy over the next five years.
Bell claims the 58-page report identifies areas of “huge financial growth” and will be followed by similar high level reviews for the Island’s banking and captive insurance sectors.
The main objective of the recommendations in the ‘Smith Report’ is to ensure the Island’s funds industry is in a position to achieve, by 2010, $50bn of funds under management and $100bn of funds under administration.
In addition, it aims to position the Isle of Man as a location for the domiciliation of specialist institutional funds in the alternative and closed-ended fund sectors and as a preferred jurisdiction for the establishment of front and middle office operations for global fund managers.
Key recommendations from the report include:
- Introduction of a new specialist fund category – with criteria including a $100,000 initial subscription; ability to base the management and/or administration in other jurisdictions; no restrictions on investment strategies; and a “light touch” regulatory approach;
- More focus on the front and middle office functions of London-based alternative fund managers, as well as managers in other key fund centres, and
- A revised offering to fund managers to include a tailored business proposition for location to the Island, and a set up assistance package.
The report's recommendations follow on from the recent implementation of the Island’s new package of measures to attract business, consisting of the introduction of 0% Corporate Tax, a £100,000 annual cap on personal income tax and the modernisation and streamlining of the Isle of Man Companies Act.
As a result, the 'Smith Report' aims to secure the sector’s long-term prospects by capitalising on market opportunities in the international investment funds arena, including the institutionalising of alternative asset management.
Bell says in order to secure the future, each sector of the economy needs to take a strategic view of the opportunities and threats it faces and define its vision and strategic direction.
And he says: "The Smith Report demonstrates the huge potential for growth that exists in the Isle of Man for the funds sector and makes a number of far-reaching recommendations."
Smith adds: “This review represents a major industry initiative, which I believe will be critical in determining the future size and shape of the Island’s funds industry and in achieving the ambitious funds growth targets envisaged.”
In addition, the Treasury Minister announced the establishment of a £20m economic development fund which will offer financial support to new businesses, although it will prioritise “high value opportunities” which provide the best prospects for fostering economic growth and inward investment.
Meanwhile, the Budget - which was presented to the Island’s parliament Tynwald this morning -, confirmed personal tax rates at the standard rate of 10% and higher rate of 18% remain unchanged, although personal tax allowances have increased by 2.1% to £8,850 for individuals and £17,700 for a married couple.
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