There is “no evidence” of VAT avoidance on aircraft registered on the Isle of Man, a UK Treasury report has found.
The Manx government asked for a review of its use of UK and EU VAT laws in 2017 following media allegations.
HM Treasury’s report found the law had been “correctly implemented”, but called for more checks on aircraft use after registration.
Chief Minister Howard Quayle said the government had “always maintained” the island had followed the rules.
The investigation looked into whether the way VAT rules were applied allowed individuals to import private jets into the EU without paying the right amount of VAT.
Although not a member of the UK or EU, the island must apply VAT rules in a similar way, which means VAT is not payable on jets registered solely for business, but can be charged on private aircraft.
The report stated information from leaked financial documents, known as the Paradise Papers, had formed the basis of media reports about offshore tax authorities and the tax affairs of wealthy individuals.
The allegations, which were widely reported by the BBC and other media outlets, claimed the 472 aircraft registered with the Isle of Man Aircraft Registry between April 2012 and March 2017 indicated there was “favourable VAT treatment” on the island.
However, the review found that the registry was a separate organisation from Isle of Man Customs and Excise (IOMCE) and the registrations had “no overlap” with the VAT system.
During the period, there had been 233 VAT registrations with IOMCE, with only 20 opting for VAT exemption.
The report concluded that “the administration of the VAT exemption for importation of aircraft” was not deemed “a risk” to the island, the UK or EU member states.
Mr Quayle said that as the government had “always maintained” the island had followed the rules, he was “pleased that the review has provided confirmation of this”.