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1 L E G I S L A T I V E C O U N C I L O F F I C I A L R E P O R T R E C O R T Y S O I K O I L Y C H O O N C E I L S L A T T Y S S A G H P R O C E E D I N G S D A A L T Y N HANSARD Douglas, Tuesday, 7th November 2017 All published Official Reports can be found on the Tynwald website: Supplementary material provided subsequent to a sitting is also published to the website as a Hansard Appendix. Reports, maps and other documents referred to in the course of debates may be consulted on application to the Tynwald Library or the Clerk of Tynwald s Office. Volume 135, No. 3 ISSN Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. Court of Tynwald, 2017

2 Present: The Acting President (Mr C G Corkish MBE), The Lord Bishop of Sodor and Man (The Rt Rev. P A Eagles), The Attorney General (Mr J L M Quinn QC), Mr D M Anderson, Mr D C Cretney, Mr T M Crookall, Mr R W Henderson and Mrs J P Poole-Wilson with Mrs R Donnelly, Acting Clerk of the Council. Business transacted Leave of absence granted Election of Acting President Mr Corkish elected Matter of National Importance VAT on aircraft importation into EU; media focus on off-shore financial centres Statement from the Chief Minister Order of the Day Dogs (Amendment) Bill 2016 Third Reading approved Customs and Excise Bill 2017 First Reading approved The Council adjourned at a.m C135

3 Legislative Council The Council met at a.m. [MR CORKISH in the Chair] Leave of absence granted The Acting Clerk: Good morning, Hon. Members. Mr President is off the Island today. Leave of absence has been given to Mr Coleman and Mr Turner. I now call upon the Lord Bishop to take Prayers. PRAYERS The Lord Bishop Election of Acting President Mr Corkish elected 5 The Acting Clerk: Hon. Members, you will need to elect an Acting President for this sitting under Standing Order 3.3. Mr Anderson: Acting Clerk, I wish to nominate Mr Geoffrey Charles Corkish as Acting President Mr Crookall: I would like to second Mr Corkish. The Acting Clerk: Mr Corkish has been proposed and seconded. Are there any other proposals? As there are no other proposals then I declare that Mr Corkish has been duly elected as Acting President for the remainder of this sitting. The Acting President: I thank Mr Anderson and Mr Crookall; and thank you, Hon. Members. Matter of National Importance VAT on aircraft importation into EU; media focus on off-shore financial centres Statement from the Chief Minister 20 The Acting President: Before we start our proceedings this morning, the Attorney General will read a Statement from the Chief Minister. Mr Attorney. 55 C135

4 The Attorney General: Yes, thank you, Mr Acting President; and thank you, Hon. Members for the opportunity afforded to me on behalf of the Chief Minister to read a Statement which he delivered to the House of Keys earlier this morning. It is a Statement on a Matter of National Importance. It reads: I briefed Hon. Members last month regarding co-ordinated enquiries which the Isle of Man Government had received by media associated with the International Consortium of Investigative Journalists. As I outlined, this media attention has centred on the importation of business jets into the EU through the Isle of Man, with a particular focus on the VAT treatment of aircraft leasing arrangements. You will have watched with considerable interest the matters I discussed with you unfolding over the weekend and yesterday, and I wanted to provide an update. As outlined in the press release issued on 24th October, we have invited HM Treasury to conduct an assessment of the practice for the importation of business jets via the Isle of Man into the EU. If there is any evidence of wrongdoing, then all appropriate action will be taken against individuals or companies. The scoping of the assessment by senior officers has begun and will be published this month, with the work being completed in As I have confirmed during the course of an initial review, we have found no evidence of wrongdoing, or reason to believe that our Customs and Excise Division has been involved in the mistaken refunding of VAT. The VAT treatment of the importation of aircraft into the EU is a highly technical and complex area in which the Isle of Man follows the same policy, laws and rules as the United Kingdom. However, we acted swiftly and decisively and have taken action to demonstrate that the Isle of Man is a well-regulated, open and transparent member of the international community. As you will have seen from last night s Panorama programme, there have also been allegations made in respect of an Order laid before Tynwald in Whilst enacted, I should advise Hon. Members that this was never utilised. It is difficult for any administration today to understand or attempt to justify the thinking made by an administration nearly 13 years ago. It relates to arrangements for exchanging information for tax purposes in 2005 which have now been replaced by the OECD Common Reporting Standard. We are considering all allegations made to determine next steps and what action can be taken in relation to the past. That being said, as I have set out, where the Isle of Man s integrity is challenged we will not be complacent. I will continue to honour my commitment that where evidence of any wrongdoing is found, the Isle of Man will take the appropriate action. You will, I am sure, have also seen and followed the intense media and political focus on offshore financial centres and tax transparency standards, not only in the UK but further afield across France, Germany, Italy, Russia, Japan and the US. Hon. Members, this debate will continue in the days and months ahead. Our overall message remains clear: the Isle of Man is not a place that welcomes those seeking to evade or aggressively avoid taxes. We are proud of the role we have taken in moving the international tax agenda forward. The Isle of Man has consistently been prepared to step out in front to support developing international tax transparency initiatives we do not wait. We did this with tax information exchange on request before 2009 and again in 2013 as an early adopter of the Common Reporting Standard, which was a significant step change in transparency. We now provide full automatic exchange of tax information with the EU member states, the UK and the United States. Again the Isle of Man has been a committed and active participant in the OECD s Global Forum, which is the body charged with monitoring the implementation of tax transparency standards. When previously reviewed by the OECD, the Isle of Man received a top rating. As Hon. Members are aware, we are awaiting the outcome of our latest review by the OECD. 56 C135

5 75 80 However, it cannot and should not be overlooked that to truly combat evasion and abuse, action not only needs to be global, but it also needs to be implemented consistently and effectively. Without this, the problem will be displaced, rather than resolved. We therefore welcome any encouragement by the international community, including governments and all other relevant international bodies, towards a global solution. I hope that this provides an update, but I will continue to keep Hon. Members updated as these matters develop. Thank you, Mr Acting President. The Acting President: Thank you, Mr Attorney. Order of the Day Mr Cretney to move: 1. Dogs (Amendment) Bill 2016 Third Reading approved That the Dogs (Amendment) Bill 2016 be read a third time and do pass The Acting President: We turn to our Order Paper. Item 1, the Dogs (Amendment) Bill 2016, and I call upon Mr Cretney to move the Third Reading. Mr Cretney. Mr Cretney: Yes, thank you, Mr Acting President. I would like to thank Hon. Members for their scrutiny of the Bill and also for the improvements made during its process through this Branch of the Legislature. I do not believe there are any questions outstanding. I beg to formally move its Third Reading, and that the Bill do pass. Mr Henderson: I beg to second, sir. The Acting President: Mr Henderson, thank you. Mr Anderson Mr Anderson: Thank you, Mr Acting President. Can I just thank the hon. mover for the reassurances he has given as the passage of this Bill was taken through this place. I think the general public will be reassured by the reassurances that the Member has given about the implementation of this scheme. The Acting President: Mr Cretney, do you wish to reply? Mr Cretney: It is always good to reassure. 110 The Acting President: There being no other Member wishing to speak, the motion is, Hon. Members, that the Bill be read a third time and do pass. All those in favour, please say aye; those against, no. The ayes have it. The ayes have it. The motion carries. 57 C135

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7 Mr Henderson to move: LEGISLATIVE COUNCIL, TUESDAY, 7th NOVEMBER Customs and Excise Bill 2017 First Reading approved That the Customs and Excise Bill 2017 be read a first time The Acting President: We turn now to Item 2 on our Order Paper, Customs and Excise Bill 2017 and I call on Mr Henderson to move. Mr Henderson. Mr Henderson: Gura mie eu. Mr Acting President, this Bill is being introduced by the Treasury and its intentions are threefold: firstly, to amend the Customs and Excise Act 1993, to ensure it remains relevant and capable of facilitating co-operation with the UK Agencies and complying with the requirements of the Customs and Excise Agreement Secondly, to amend the Customs and Excise Management Act 1986, the main item of Customs and Excise legislation. The amendments are made to the import/export cash declaration system following last year s evaluation by Moneyval, and the mutual assistance framework available to Customs officers permitting co-operation in cases with other bodies where fraud, breaches of sanctions and other serious crime are involved. Finally, to amend section 63 of the Terrorism and Other Crime (Financial Restrictions) Act 2014 to allow the Financial Intelligence Unit to deal with UN and EU sanction matters as a one-stop shop for the reporting of all forms of financial crime. The contents of this Bill were subject to a public consultation earlier this year, and discussions with the FIU, Police and regulators in the working groups established for the purposes of the national risk assessment and the Moneyval evaluation. The substance of the Bill is contained in its parts 2, 3 and 4. Part 2 of the Bill contains amendments to the Customs and Excise Act This Act is used to apply and amend legislation required to comply with the terms of the Customs and Excise Agreement The amendments made are intended to ensure that the 1993 Act continues to be capable of fulfilling this role. In addition, Part 2 contains provisions that would allow for the secondary legislation giving effect to certain aspects of the Customs and Excise Agreement to be updated or replaced, and to make explicit the requirement for the annual report produced by the UK National Audit Office on the local collection and administration of the shared revenues to be laid before Tynwald. Part 3 of the Bill amends the Customs and Excise Management Act It does so by inserting a new section 76J into part VA of the Act, and by amending sections 174B and 174D. In its report on the Island, Moneyval noted that there was no requirement in law for the Treasury to maintain records of cash declarations, cash disclosures and seizures of cash under the regime imposed by part VA of the 1986 Act. The new section 76J imposes such a requirement, and also requires the Treasury to lay before Tynwald an annual report summarising the information recorded. The amendments to sections 174B and 174D are concerned with the extension of the current discretionary power to disclose information and evidence for the purposes of a criminal investigation or criminal proceedings to cases where a civil investigation is involved, or where the proceedings would or could result in a civil penalty rather than a criminal penalty. These amendments are considered necessary in the light of the increased use of such civil investigations and proceedings in cases involving serious fraud, money laundering, sanctions violations, etc. Part 4 of the Bill merely changes one word in section 63 of the Terrorism and Other Crime (Financial Restrictions) Act 2014, to allow the Treasury to delegate to the FIU some of its functions relating to UN and EU financial sanctions. 59 C135

8 Treasury considers the Bill to be important, both in terms of the operation of the Customs and Excise Agreement with the UK and the revenues that the Island derives as a result; and of the Island s ability to play its full part and I state that again, Eaghtyrane its full part, as a responsible member of the international community in combating money laundering and terrorist financing, and other forms of serious and organised crime. Acting President, I beg to move. The Acting President: Mr Crookall. Mr Crookall: Mr Acting President, I beg to second The Acting President: There being no other Member wishing to speak, the motion is that the Customs and Excise Bill 2017 be read a first time. All those in favour, please say aye; those against, no. The ayes have it. The ayes have it. Hon. Members, that brings us to the end of our business sitting today on the Order Paper. Can I record our thanks to our Acting Clerk, standing in today for our Clerk who is absent today in the Keys; and thank you, Hon. Members. The Council is now adjourned until Tuesday 14th November at a.m. Thank you, Hon. Members. The Council adjourned at a.m. 60 C135