In the civilized world, many nations have entered into mutual agreements to prevent “double taxation” because it was considered inhuman and unjust to tax individuals twice, that is in both the country in which they are earning their income (tax domicile) and the country in which they reside. To make this more stringently clear, most of such agreements are also being termed as “avoidance of double taxation agreements” i.e. to avoid double taxation. However, our illegitimate government, elected by a very marginal majority by electoral corruption, entered into an agreement with the Great Socialist People’s Libyan Arab Jamahiriya led by Colonel Gaddafi (whom the United Nations declared a dictator) by which, after several amendments, rendered this agreement to mean practically the opposite to what it was originally intended, and literally a “double taxation agreement” i.e. to be taxed at both contracting country and the residency country. This was announced in L.N. 328 of 2010, Income Tax Act (CAP. 123) Double Taxation Relief (Taxes on Income) (The Great Socialist People’s Libyan Arab Jamahiriya) Order, 2010.

In a nutshell, our tax authorities and the Minister of Finance has decreed that Maltese workers in Libya should pay minimum of 15 per cent in Libya, and anything less than this amount, the Maltese government would claim the difference. In other words, if the new Libyan government recognises the hardships and dangers faced by foreign and local worker in the oil industry and decides to lower the tax rate for such workers to less than 15 per cent (as it has already been applied to Libyan workers), then the Maltese government would intervene to claim its pound of flesh. On the other hand, as a considerable number of Maltese workers pay as much as 25 per cent income tax to the Libyan government, they are logically entitled to 10 per cent rebate/refund – unfortunately no such luck.

What our defunct government fails to realise is that Maltese workers in Libya are an asset and benefit to the Maltese nation. The unfortunate workers sacrifice most of their lives (in most cases spending eight months of each year in Libya) deprived of their families, relatives and friends for lengthy periods of time, deprived of certain luxuries they are accustomed to in their homes in Malta, and working in hazardous industrial locations (it is not the first time that a Maltese worker lost his life travelling overland in this vast country, in an air crash, or in an industrial accident). The current situation in Libya is still being termed as fluid, as some of our diplomats recently discovered when their vehicle was hijacked in Tripoli.

Ultimately, in spite of the risks, dangers and sacrifices endured by Maltese workers in Libya, they are an invaluable source of foreign income to the Maltese economy. They spend their hard-earned foreign currency in their home country (even though living most of the time abroad), and yes, they do pay taxes in Malta – on every item purchased and most services, they pay that European invention called VAT. They are not a financial burden on Maltese society, such as the thousands of mysterious consultants, or the ministerial honoraria of €500 a week self-awarded in utmost secrecy (albeit suspended).

The dire consequences of this insidious agreement can be mainly twofold. Since our government does not have jurisdiction over companies not registered in Malta, oilfield companies who are registered and have opened offices in Malta may decide to close shop and re-open elsewhere (Tunis, Egypt, and/or in Libya itself) to avoid the bureaucracy involved of double taxation. This will be loss of income for Malta. On the other hand, Maltese workers working in Libya might not consider it worthwhile to continue doing so if they are to be taxed by both countries (Libya and Malta). They may opt to resign, in some cases claim unemployment benefits, and their jobs in Libya will be taken by other nationalities who do not have such absurd double taxation agreements with Libya, thereby depriving Malta of an invaluable source of foreign currency. It is amazing how our dictatorial government can continue to destroy the islands’ economy in this manner having destroyed several public corporations (Air Malta, Sea Malta, and so on) and sold one of our major banks to a foreign entity using a cheaper evaluation methodology (Mid-Med Bank).

Raymond Sammut

MELLIEHA