As auditor to more than a quarter of the funds domiciled in the Isle of Man, PricewaterhouseCoopers is in a strong position to both view and influence the development of the funds sector on the isl
As auditor to more than a quarter of the funds domiciled in the Isle of Man, PricewaterhouseCoopers is in a strong position to both view and influence the development of the funds sector on the island. Apart from the zero rate of corporate income tax, says partner Mike Simpson, the rapport between industry and government has been a significant factor in the island’s success.
‘Regulation is light touch, focusing on the service provider rather than the fund,’ Simpson says. It has improved a step further with the introduction of overseas scheme rules, which have removed the burden of double regulation on foreign funds. PwC believes the geography of the island is also helping to maintain its competitive position among the various fund services jurisdictions dotted around the British Isles and further afield. ‘The Isle of Man covers more than 200 square miles,’ Simpson says. ‘You can fit Guernsey, Jersey, the Caymans and several other islands inside it, so we don’t see the same pressures produced by growth. Whereas rents in Guernsey are GBP30 per square foot, here they average GBP18. This has a whole knock-on effect on pricing. After all, the two biggest costs in this business are offices and staff.’
In addition, there are no residency restrictions as there are elsewhere. ‘You need a work permit, but we’ve never had a problem,’ Simpson says. And while the island does not have the climate and attractions of some other islands, qualified staff are surprisingly accessible. ‘We are able to recruit local graduates and people from all over the world,’ he says. ‘If we couldn’t, it would have been hard to grow the business as we have.’
Important growth areas for PwC include property, as new segments – such as emerging markets and EU accession countries – open up across the world. Some of these vehicles are choosing to list on the London Stock Exchange’s Alternative Investment Market, using the services of PwC as an advisor. ‘We are able to draw on the experience within the wider firm,’ says Simpson.
The advisory side is also busy with tax and corporate governance work. Tax is a particular specialty, Simpson says: ‘It is pointless having an umbrella company paying zero corporation tax if the subsidiaries pay 30 per cent.’ But the funds sector cannot afford to stand still, and PwC is part of efforts to make sure it stays up to date. ‘We need to remain competitive and keep developing products that are attractive to international business, which can basically go wherever it wants,’ Simpson says. ‘The experienced investor fund structure, for instance, has served its purpose well for seven or eight years, but for institutions there needs to be a vehicle that does not require an Isle of Man director on the board.’
The best way for a relatively new jurisdiction to succeed is by the main players acting in concert, PwC believes, occasionally ignoring the fact they are competitors. ‘The government is very helpful, but as an industry we still have to put our differences aside and go to it with a united voice,’ Simpson says. ‘If you can do that – and so far we have been pretty good at it – you get good results.’
Mike Simpson, partner and head of investment management, Pricewaterhouse Coopers Isle of Man