TREASURY Minister Anne Craine MHK outlined the Budget to a gathering of 280 business people at the Mount Murray Hotel and Country Club, Santon, this morning (Wednesday).

Mrs Craine, the guest speaker at the Barclays Wealth-sponsored JCC Budget Breakfast, explained how the government had decided to withdraw the attribution regime for individuals which should end concerns over the Island's Zero-10 company tax system and said government spending had been reduced further and faster than previously planned.

Mrs Craine said: "Yesterday I announced the abolition of the attribution regime for individuals for accounting periods beginning April 6 2012.

"Appropriate legislation to give effect to this change will follow.

"What you may not know is that this announcement was reflected in Jersey yesterday. At the same time as I announced the abolition of ARI in Tynwald the Chief Minister announced the abolition of their deemed distribution rules in Jersey.

"Now what we need is a time of calm co-existence to be able to get an understanding with the European Union and the wider world that we are not going to be under constant attack because of our tax systems.

"I believe we will still continue to be known for our competitiveness but I do think there will be further changes to come such as enhancing the transparency of business and the level of co-operation between the Island and its economic partners."

In response to a question from the audience about the impact of the removal of ARI, Mrs Craine said: "I am told from some information which came out of Jersey yesterday that they estimate the loss of the deemed distribution regime will be in the region of £10m.

"Talking to our assessor of income tax (Malcolm Couch) we believe we can remove the measure and remain cost neutral.

"Why that is, is because Dr Couch has had in his toolbox the mechanisms to be able to address avoidance regimes or avoidance schemes any way and whilst these may be something of a blunt tool we anticipate we will be able to work within those and with consultation with yourselves be able to come forward with a mechanism that will be able to address that issue.

"We need to work out the finer details as yet but it is not anticipated there will be a financial cost."

ARI was likely to have been declared "harmful" under the European Union Code of Conduct for Business Taxation so the Isle of Man Government has pre-empted that move by withdrawing it.

Mrs Craine announced her first Budget in Tynwald yesterday.

Photos by John Gregory