Chi­nese com­pa­nies keen to ex­plore gas off Isle of Man

China Daily (Hong Kong) - - BUSINESS - By REN XIAOJIN renx­i­ao­jin@chi­nadaily.com.cn

Chi­nese com­pa­nies have ex­pressed an in­ter­est in se­cur­ing ex­plo­ration acreage to find gas in waters off the Isle of Man, the self-gov­ern­ing Bri­tish Crown De­pen­dency lo­cated be­tween the United King­dom and Ire­land, said a se­nior gov­ern­ment of­fi­cial.

Ear­lier this year the gov­ern­ment of the is­land, lo­cated off the northwest coast of Eng­land, an­nounced that it was plan­ning to award a new round of petroleum ex­plo­ration li­cences.

Steven Beev­ers, head of spe­cial projects in the de­part­ment of eco­nomic de­vel­op­ment of the Isle of Man, said his ad­min­is­tra­tion was open to hav­ing part­ners in en­ergy and other sec­tors from China.

“We will be li­cens­ing for gas ex­plo­ration in Au­gust,” Beev­ers said. “We al­ready have some Chi­nese com­pa­nies in­ter­ested in that.”

Ac­cord­ing to a re­port from BP Global, at least 2.5 bil­lion cu­bic me­ters of gas within the Isle of Man’s 4,000 square kilo­me­ters of seabed have been de­tected, and the ac­tual re­serves could be up to 25 bil­lion cu m. It could po­ten­tially gen­er­ate around 6.23 bil­lion pounds ($8.22 bil­lion) of rev­enue if price stays sta­ble, Beev­ers said.

He said that the is­land, known for its com­pet­i­tive off­shore tax pol­icy, had in re­cent years started to pro­mote it­self to the Chi­nese mar­ket, af­ter hav­ing built up a rep­u­ta­tion over the long term as an in­vest­ment hub in the West. Cur­rent Chi­nese in­vest­ment in the is­land, he said, ac­counts for around one-tenth of its to­tal for­eign in­vest­ment.

Beev­ers added the Isle of Man was suit­able for small and medium-sized com­pa­nies.

“Com­pa­nies can ap­ply for gov­ern­ment grants and eq­uity sup­port. We don’t charge com­pany tax on prof­its, but in re­turn we ask for em­ploy­ment. We can also pro­vide eq­uity par­tic­i­pa­tion and act as silent part­ners if that’s what you want,” Beev­ers said.

Chi­nese tech gi­ant Huawei Tech­nolo­gies Co Ltd has been work­ing with the Crown De­pen­dency to set up 4G in­ter­net cov­er­age there. Prop­erty de­vel­op­ers eye­ing the mar­ket in the UK, such as Reign­wood Group, have also op­er­ated in the is­land, tak­ing ad­van­tage of its ben­e­fi­cial off­shore tax pol­icy, ac­cord­ing to Beev­ers.

Li Yongyuan, a lawyer in Yingke Law Firm, said that Chi­nese com­pa­nies should be aware of lo­cal tax laws and reg­u­la­tions when op­er­at­ing in off­shore hubs.

“Many com­pa­nies in­vest­ing in off­shore hubs such as the Isle of Man want to re­duce their tax costs, but they need to know not only the lo­cal laws, but also the bi­lat­eral or mul­ti­lat­eral tax agree­ments the off­shore ar­eas have with other coun­tries where their busi­ness op­er­ates.

“With­out con­sult­ing pro­fes­sional law firms — es­pe­cially the lo­cal ones — and not stay­ing up­dated with the le­gal en­vi­ron­ment, those com­pa­nies can un­in­ten­tion­ally vi­o­late the laws.

“The Isle of Man is an au­ton­o­mous area within the UK. It has in­her­ited a large part of the Bri­tish le­gal sys­tem. Chi­nese com­pa­nies not fa­mil­iar with lo­cal reg­u­la­tions, laws and the cul­tural en­vi­ron­ment may face risks caused by such ig­no­rance.”

We can also pro­vide eq­uity par­tic­i­pa­tion and act as silent part­ners if that’s what you want.” Steven Beev­ers, head of spe­cial projects in the de­part­ment of eco­nomic de­vel­op­ment of the Isle of Man

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