MALTESE LEADERS DEFY ATTACK ON TAXATION SYSTEM
Amidst a fierce campaign leading to the general election on the 3rd of June, the Labour Government and the Opposition Nationalist Party have found themselves united on a common front.
Both the Government and the Opposition have taken the same position, categorically rejecting an extensive report nicknamed ‘Malta Files’ issued by the network of investigative journalists, ‘The European Investigative Collaboration (EIC)’. This report describes Malta as a base for rich people and oligarchs to exploit the taxation system consequently avoiding and evading taxes due.
The Prime Minister Joseph Muscat and the Opposition Leader Simon Busuttil insist that there is nothing illegal in the Maltese tax system. Moreover, they maintained that the information published in the Malta Files is public information and accessible through the register of the companies held by the Malta Financial Services Authority.
The Maltese taxation system charges 35% tax rate to companies but permits its foreign shareholders to claim a rebate of 85% on tax already paid. Through this system, Malta approximately generates over € 240 million per year.
Both the Maltese Prime Minister Joseph Muscat and the Opposition Leader Simon Busuttil rebuffed accusations that in Malta there are offshore companies.
In the past days, whilst addressing a joint press conference together with the Prime Minister of Malta, the Finance Minister of Malta, Edward Scicluna described this attack as ‘bullying’ from other European countries who are envious of the Maltese taxation system and the regulatory framework for remote gaming. They appealed for a unified position against this unprecedented assault to defend Malta and safeguard investments and employment.
Minister Scicluna affirmed that neither the European Commission nor the Organization for Economic Cooperation and Development (OSCE) has ever criticized the taxation system in Malta, besides the fact that no reference was made to Malta in the recent report on the avoidance of taxation systems in the EU.
Unofficial sources in Brussels, have declared that France and Germany are behind these claims on Malta’s taxation system. France is currently experiencing a period where it wants to develop and strengthen its financial sector.
The French authorities want to lure big companies willing to leave the UK following Brexit and so exploit mechanisms that have brought success in the financial services sector in small countries such as Malta and Luxembourg.
On several occasions, Germany requested Maltese authorities to provide information on particular German companies, and the Maltese authorities concerned responded with full documentation. The Maltese Minister of Finance was recently in Berlin where he met with the media and explained that there is no secrecy in the Maltese tax system.
The Maltese Prime Minister declared that he would defend the interests of Malta against all odds, “Malta is a full-time member of the EU, not part-time. And a basic point of the single market is freedom of establishment. So I have no difficulty to defend the system. We’re not alone in the European Council – a prime minister I speak to, told me ‘the day they touch our taxation is the day we’ll say no to everything.”
According to the transparency criteria applied by the Tax Justice Network, Malta ranks at number 50 whilst Luxembourg and Germany are at 54 and 55 respectively whereas Panama and Switzerland both hit the bottom of the list.