The Malta Independent 23 July 2019, Tuesday

PANA report: Finance Minister says Malta’s tax system ‘open to abuse’ like all EU state tax systems

Helena Grech Thursday, 9 November 2017, 16:33 Last update: about 3 years ago

Finance minister Edward Scicluna defended comments reproduced in a report penned by the European Parliament’s (EP) PANA committee by saying that his full comment was that Malta’s tax system can be prone to abuse like in all European tax regimes.

The EP’s special committee into money laundering, tax evasion and tax avoidance sparked by the Panama Papers revelations last year produced a report on its findings in Malta. Among the key findings, it wrote:

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“The Maltese tax system is very attractive and in line with current international and EU standards as regards harmful tax competition. The Finance Minister, however, admitted that the Maltese tax system can be prone to abuse and confirmed that Malta disagreed with Commission proposals on specific tax issues (e.g. public CBCR, CCCTB).”

Scicluna defended his comment that the system can be prone to abuse by saying that his full remarks included a comment that this is the case for all European tax jurisdictions.

In a press conference held this afternoon to respond to the European Commission’s spring economic forecast for Malta, Scicluna added that all systems are open to abuse, and the Organisation of Economic Co-operation and Development (OECD) would not have set up its BEPS recommendations aimed at curbing tax avoidance if that was not the case.

Scicluna was providing his first official response since the PANA committee report came out yesterday.  He said that there could be no better commendation than hearing that Malta’s tax system is compliant to EU and international standards.

Responding to an accusation in the report that Malta dragged its feet in its cooperation during the PANA committee’s visit to Malta, Scicluna stressed that the government was in the midst of the EU presidency and was hosting many events related to that.

When asked about a comment made in the report regarding Malta’s tax enforcement institutions being highly politicised, Scicluna remarked that the island’s small size and highly divisive atmosphere creates a politicised atmosphere, which turned more sour over the past three years.

The minister spoke of an agreement between both sides of the House where they had agreed to defend Malta’s financial services sector, but how this eventually broke down. He immediately said he does not wish to point to any sides, but that the most “helpful” thing to do would be for everyone to “come together”.

Then energy and health minister Konrad Mizzi and the Prime Minister’s chief of staff Keith Schembri were each caught out with a secret Panama company sheltered by a New Zealand trust.

EU spring economic forecast

On the Commission’s economic forecast for Malta, it predicted steady growth and forecast that the government surplus both financially and in terms of imports/exports –meaning there are higher exports than exports, are expected to be sustained for 2018 and 2019.

Scicluna said such statistics are important, not because Malta does not carry its own forecasts but because it sends a positive message.  He pointed to the expected sustained forecast and said this is important because it shows that the achieved surplus is not just a fluke.

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