The Isle of Man government plans to extend the 10% rate of corporate income tax to the island's largest retail businesses as part of Budget plans outlined to consolidate the territory's finances.

Announcing the 2013/14 Budget in the island's legislative assembly, the Tywald, on 19 February 2013, treasury minister Eddie Teare said: 'This year's Budget is titled Firm Foundations. You need these if you are to build anything that will stand the test of time. We have looked across the whole of government and prioritised spending for the next three years. We now know how we will rebalance the Budget by 2015-16. The next two years will be about building that lasting achievement of a rebalanced budget. Our house will be in good order.'

Key measures in the Budget include:

• The extension of the national insurance holiday scheme for private sector employers engaging additional staff until 6 April 2015, one year longer than had been planned;
• An extension of the 10% corporate income tax rate (currently covering banking and local development and rental income) to include major retailers with annual profits of at least £500,000 from 6 April 2013;
• A reduction to the government headcount of 100 posts per year for the next three years, adding to the 400 posts and 300 staff lost since 2010;
• Legislation to stop avoidance of Manx income tax through "personal service companies;"
• Maintaining the maximum income tax liability (known as the tax cap), at £150,000;
• An increase to the Personal Allowance Credit to £500 per person;
• No changes to income tax rates, personal allowances or thresholds.

According to budget projections, the government expects the local economy to grow strongly this year, by 4% of GDP in 2013/14, up from 3% in 2012/13. It pointed out that this is substantially above the average for the world's developed countries of 1.4%.

(Global Daily Tax News, Wolters Kluwer)