Large retailers on the Island such as Tesco, B&Q and Marks and Spencer are to pay Manx income tax on profits they make here for the first time.

The announcement was made by Treasury Minister Eddie Teare in his budget speech in a move he said was 'only fair' given the taxpayer funds spent on the infrastructure which allows them to trade.

The measure will see a 10% rate levied on profits of more than ?500,000 on the largest retailers and is likely to generate ?3.5 million in tax take.

Minister Teare said the change did not fall outside the terms of the current zero ten policy, in which the applicable rate for companies remains at zero. As a contribution to the economy from April this year, it is likely to be widely welcomed by the public

It's understood retailers had not been consulted in advance of the budget and Treasury officials were due to outline the taxation plan to firms' head offices in the coming days.

Speaking in Tynwald, Mr Teare admitted that larger retailers already contribute to the economy by providing many local jobs but said he had promised a year ago he would consider taxing these companies and he was delivering on that pledge today: