Greens MEP Sven Giegold said that although he is still very concerned about the tax system in Malta, if credible action had been taken against Konrad Mizzi and Keith Schembri at the beginning, “I am sure the damage to Malta’s reputation would not have occurred. The people who opened these dubious financial structures were kept in office and, as we know from the documents, it seems that normal due diligence was not fully respected.”
Konrad Mizzi and Keith Schembri retained their position as minister and chief of staff in spite of revelations that they had acquired a company in Panama. They were also reappointed after the election.
He congratulated the Labour Party on its electoral victory, but also told The Malta Independent: “An election does not replace an investigation. If there is a suspicion that the law was not respected as was the case in what was shown in both the Panama Papers and the Financial Intelligence Analysis Unit, these allegations must be properly and fully investigated.
“I also read with great concern the allegations regarding sudden increases in public sector employment and this should also be investigated in a fair, transparent and tough way. What seems bizarre to me is that if you have strong allegations such as we have seen in Malta, before calling an election you should try to establish the facts so that the citizens would know what the facts are. There is a bi-polar system in Malta, people fight each other with strong language while there is no trust given by the public or neutral and fair investigation of the facts, and this is very worrying.
“I think the election came too early, but that was the sovereign decision of the Maltese, who have made their choice knowing all this, and this has to be respected.”
Asked about Mizzi’s choice as Tourism Minister and Keith Schembri being kept on, Giegold (above) said that he was not sure that Mizzi was the best public relations person for Malta. “I find it an ironic appointment and, not only that, but his re-appointment before these allegations have been cleared does not contribute to the re-establishment of a good reputation for the islands. Clearly, Malta now has the reputation for being a tax-haven, and not only because we shed a light on some of the business structures, but because of the whole list of things that have happened.”
This newsroom pointed out that Malta should not be called a ‘tax haven’ because it provided information to foreign authorities when requested, hence there is a lack of the secrecy implied by such a name. Giegold said: “In a report that we have published, we applied the criteria of the definition of a tax haven to Malta having come to the conclusion that Malta can legitimately be referred to as a tax haven according to those criteria. When the Organisation for Economic Cooperation and Development (OECD) began looking into tax havens, it had a straightforward definition: that a tax haven is a country used by foreigners in order to evade or avoid taxation in the country where it is normally due.
“The point is that if you tax profits made in Malta at a low rate, that is your sovereign right and nobody would have a right to claim Malta is a tax haven simply because you have low tax rates. The point is that Malta offers a tax system which invites companies or individuals to declare or spend profits in Malta that were earned elsewhere. Taxing your own production at a low rate is part of competition. The Maltese corporate tax system is used and designed in order to make it attractive for foreign companies to report their profits in Malta.”
Giegold agreed that Malta is transparent and in some cases more so than Germany: “But the point is that Malta is offering its sovereignty in order to move profits earned elsewhere. That is normally what the Labour Party family all over Europe fights against because, for legitimate reasons, profits should be taxed where they are earned.”
When told that Malta’s tax system had been given the all-clear by the EU when it joined the Union, Giegold replied: “Yes, but that was a long time ago, before all these revelations, such as Offshore Leaks, Lux Leaks, etc., so we have a totally new debate. Secondly, not everything that is legal is legitimate. There is no case law saying the Maltese system would violate EU tax law today. But is it legitimate to design your tax system so that you gain a huge refund if profits are earned elsewhere?”