Frans Camilleri, a governor on the Malta Financial Services Authority board, yesterday issued clarifications to comments he had given to this newspaper in an interview on Monday, which treated among other subjects the issue of Tax Harmonisation.
In the interview, Camilleri had stated that Malta was not against Tax Harmonisation on certain principles yet remained adamant that Malta would oppose tax harmonisation rates.
The comments led to some controversy, with the Opposition yesterday calling on the government to clarify its position on tax harmonisation. The Nationalist party stated that Malta has always stood against all efforts to harmonise tax system across the European Union. Adding that Malta adopted this approach throughout the past decades irrespective of which Party was in government.
In reply, the government said that its opinion on tax harmonisation had not changed. Malta cannot accept a one-size-fits-all situation, as this would put our financial sector at great risk. The government said that the Opposition should clarify what its MEPs think about this subject.
Speaking again to The Malta Independent, stressing that he was doing so in his personal capacity, Camilleri said: “My view was that Malta is nota gainst measures that concern certain basic principles. Including how company accounts are drawn up, the treatment of profits and how they are assessed, and the provisions that may be made against profits, as an example. I particularly referred to groups of companies or multinationals, and the question of transfer pricing which might give multi-nationals an opportunity to massage the accounts so that they make profits better in one jurisdiction rather than another.”
Explaining further, Camilleri spoke of the discussion on the CCCTB which has raised various issues, and the European Commission’s proposals are still being debated. “As is normal, Malta agrees with some ideas, but not others. Thus, whilst some might think that the Commission proposals address transfer pricing holistically, they do not really eliminate it in all situations.”
“Again, Malta is not against mechanisms aimed at reducing unwarranted or unintended opportunities for tax avoidance. The question is whether we need further rules or whether they are already adequately provided for under established Codes of Conduct and Directives, for example ATAD I. Therefore, certain tax harmonisation measures can already be said to be in place. The widening of ATAD Ito ATAD II with respect to tax avoidance is a further step”, he asserted.
“To the extent that harmonisation proposals impinge on the question of tax sovereignty and subsidiarity, then they would obviously not be acceptable, either toMalta or other countries in a similar situation. The line between harmonisation ofcertain rules and rates themselves could be fine, and this is what has been, and will remain, something to watch out against.”
Camilleri repeated that Malta was against harmonisation of tax levels and rates, adding “not merely because this is a sovereign matter for individual member states, as provided for in the Treaties. Many countries do not agree with such harmonisation, not just Malta, Cyprus or Ireland. I also acknowledged that there might eventually be tax harmonisation within the context of the deepening or further integration of the EU, particularly regarding ideas of a fiscal union, a European Minister of Finance, and a European Treasury. My view was that this was being pushed by a minority of countries and is not imminent. Many member states were against the idea, though one should not discount the possibility and prepare for it.”
“Whilst Malta is against tax fraud and evasion, its concern is with measures that imply further tax harmonisation. So, Malta is not retreating from its stated positions. We can be in favour of certain measures in certain circumstances, and against others in different circumstances, and our position will continue to evolve over time, both in terms of our national interests as well as in the context of the evolution of the EU itself.”