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15th Apr 2024

Malta rejects tax haven accusations

  • There were "lots of untruths" in the Green report, Scicluna said (Photo: Alan Cleaver)

The Maltese finance minister rejected accusations that his country was a tax haven on Thursday (12 January), saying it had "nothing to hide".



Speaking to journalists in Valletta, Edward Scicluna dismissed a report published the day before by the Green group in the European Parliament as "very unprofessional" and "very unfair".

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"There were lots of untruths" in the report, he said, adding that international organisations, including the OECD, a developped-country club, did not consider Malta as a tax haven.

He said that Malta had low taxes but was not hosting mailboxes for cheating companies or a place with "[illicit] money going through".

"We don't hide about having competitive taxation, there is nothing wrong with that," he added, saying that the tax system was inherited from the UK when Malta was still a British colony.


He admitted that Malta was against tax harmonisation in the EU but insisted that it was "against international companies playing regimes against each other" to pay less taxes.

A tax haven, the minister said, was a combination of complete secrecy, zero or very low taxes, corruption, and hidden terrorist money.

"One should distinguish between the three," he said. "Sometimes they go together, sometimes they do not. Those very strict on transparency and exchange of information, or on money laundering, should not be branded as tax haven."

The Green report said that due to tax refunds to resident and non-resident shareholders, the displayed 35 percent income tax rate was in fact "reduced the effective tax rate to just 5 percent for trading companies".

"What you see is not what you get," Scicluna said, insisting that the refunds are taxed in the country of origin of the shareholders or companies.

He added that "some countries have a lot of hidden reductions", including tax rulings which Malta did not have.

The Greens' accusations come as Malta takes over the six-month presidency of the EU Council, with minister Scicluna chairing meetings on tax discussions.

"Expectations from European citizens to deliver in the fight against tax evasion and avoidance, as well as money laundering, are high, given scandals in the past few years," the Greens' report notes.

"Is Malta best placed to achieve this?" it asks.

In recent years and months, Malta has shown a "repeated lack of ambition for tax reforms from" which the report says is "especially worrying" now that it holds the EU presidency.

Tax dossier

In its presidency programme, Malta vows to carry forward work on a number of ongoing taxation files," including the amendment to the anti-tax avoidance directive (Atad) and the re-launch of the common consolidated corporate tax case (CCCTB) - a common tax rule to calculate business tax across the EU.

Malta is supporting Atad's revision but is opposed to CCCTB. It is also resisting the country by country reporting - a rule to oblige multinational to release information on their business in every counry where they have activities.

Scicluna, with several other finance ministers, does not want reporting to be made public, and wants it to apply globally and not only in the EU.

Otherwise "we'll lose our competitiveness," he said.

He said that Malta "woud opt for an exchange of information between tax authorities and for them to be as transparent as possible about what they're doing about it".

The heated life of Malta's politics

While the smallest EU state has been commended in Brussels for its smooth presidency of the Council, domestic politics are characterised by heated polarisation with accusations and insults often being traded.

Opinion

This 'deregulation' lobbying now threatens EU economy

Next week's EU summit (17-18 April) will discuss the strategic agenda for the next five years. The current "competitiveness agenda" is to a large extent driven by a big lobbying campaign — so far, not well covered by the media.

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