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Economy

The Isle of Man has no capital gains tax, wealth tax, stamp duty, or inheritance tax and a top rate of income tax of 22% (as of April 2024). A tax cap is in force: the maximum amount of tax payable by an individual is £200,000 or £400,000 for couples choosing to have their incomes jointly assessed. Personal income is assessed and taxed on a worldwide income basis rather than a remittance basis. This means that all income earned throughout the world is assessable for Manx tax rather than only income earned in or brought into the island. The standard rate of corporation tax for residents and non-residents is 0%. Retail business profits above £500,000 and banking business income are taxed at 10%, while rental (or other) income from land and buildings situated on the Isle of Man is taxed at 20%.

Man's low corporate tax burden and absence of public registries of corporate ownership provides tax avoidance and tax evasion strategies for individuals and corporations, resulting in a large influx of funds from those in pursuit of tax advantage and financial confidentiality. The relative importance of agriculture, fishing and tourism in the Isle of Man, the former mainstays of the economy, has accordingly declined. As is typical of the low-tax crown dependencies, Man's economy features financial services, shell corporations for high-technology companies, online gambling and online gaming, cinema production and tax havens for high net worth individuals. These activities have brought some high-income jobs to Man, as hundreds of local residents serve as "straw man" directors and shareholders of shell companies. Similar schemes provide a means for high net worth individuals to reduce their tax obligations and to shield their financial dealings from public scrutiny. As described in the Paradise Papers, the Isle of Man economy features extensive illegal economic activity including tax evasion, money laundering from drug sales, money transfers from weapons sales, and looting of public treasuries of other nation states (particularly Russia). These funds are mostly funneled into the London financial markets. Online gambling sites provided about 10% of the Man government's revenue in 2014.

There has been an effort to regulate these illicit activities on Man, though the impact of legal measures instituted by the Man government remains uncertain. As of June, 2023, Man remains out of compliance with standards for Anti-Money Laundering & Countering the Financing of Terrorism requirements according to Moneyval, the European Union 's Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism.

The Isle of Man Department for Enterprise manages the diversified economy in 12 key sectors. The largest sectors by GNP are insurance and online casino operations with 17% of GNP each, followed by ICT and banking with 9% each. The 2016 census lists 41,636 total employed. The largest sectors by employment are "medical and health", "financial and business services", construction, retail and public administration. Manufacturing, focused on aerospace and the food and drink industry, employs almost 2000 workers and contributes about 5% of gross domestic product (GDP). The sector provides laser optics, industrial diamonds, electronics, plastics and aerospace precision engineering. Tourism, agriculture and fishing, once the mainstays of the economy, now make very little contributions to the island's GDP. The unemployment rate on Man is less than 1%.

Trade takes place mostly with the United Kingdom. The island is in customs union with the UK, and related revenues are pooled and shared under the Common Purse Agreement. This means that the Isle of Man cannot have the lower excise revenues on alcohol and other goods that are enjoyed in the Channel Islands.

The Manx government promotes island locations for making films by offering financial support. Since 1995, over 100 films have been made on the island. Most recently the island has taken a much wider strategy to attract the general digital media industry in film, television, video and esports.

The Isle of Man Government Lottery operated from 1986 to 1997. Since 2 December 1999 the island has participated in the United Kingdom National Lottery. The island is the only jurisdiction outside the United Kingdom where it is possible to play the UK National Lottery. Since 2010 it has also been possible for projects in the Isle of Man to receive national lottery Good Causes Funding. The good causes funding is distributed by the Manx Lottery Trust. Tynwald receives the 12% lottery duty for tickets sold in the island.

Tourist numbers peaked in the first half of the 20th century, prior to the boom in cheap travel to Southern Europe that also saw the decline of tourism in many similar English seaside resorts. The Isle of Man tourism board has recently invested in "Dark Sky Discovery" sites to diversify its tourism industry. It is expected that dark skies will generally be nominated by the public across the UK. However, the Isle of Man tourism board tasked someone from their team to nominate 27 places on the island as a civil task. This cluster of the highest quality "Milky Way" sites is now well promoted within the island. This government push has effectively given the island a headstart in the number of recognised Dark Sky sites. However, this has created a distorted view when compared to the UK where this is not promoted on a national scale. There, Dark Sky sites are expected to be nominated over time by the public across a full range of town, city and countryside locations rather than en masse by government departments.

In 2017 an office of The International Stock Exchange was opened to provide a boost for the island's finance industry.