The ‘Malta Files’: Much ado about nothing

The Society of Trust and Estate Practitioners (Step) Malta branch notes with great concern the import and effect of sensationalist reports from a section of the printed media that have been made in the context of the so-called “Malta files”, where various confidential files and other information appear to have been leaked for public consumption.

At a time when public statements are being made in connection with the incorporation of offshore companies in tax havens, it is very easy for press reports to overlook important distinctions, and paint everything in broadbrush. This often results in unfair generalizations being made by both sides to any argument, and confuses perfectly legitimate investments through Malta with illegal activities and tax evasion.

In the interest of honest public debate, Step Malta branch would like to make the following statements, in order to distinguish legitimate international activity from illegal activity:

Malta is a well regulated juris- diction that is a member of the EU and its laws are fully compliant with EU laws. Maltese financial services practitioners are regulated by the competent authorities and operate within a regulatory and legal environment that is of an EU standard. It is worth noting that Malta adopted the very first EU Anti-Money Laundering Directive 10 years before it became an EU member and has also consistently adhered to all relevant international agreements, both within and outside the EU, that provide for exchange of information for the purposes of tax investigations and promote tax transparency. Malta is also consistently one of the first jurisdictions to transpose applicable EU legislation and has actively participated in all EU initiatives aimed at tax transparency, including the recent Anti-Tax Avoidance Directive (ATAD) which will shortly have those elements not already found within Maltese law, transposed therein;

The Maltese jurisdiction is absolutely not a secretive one and a great deal of the information relating to Maltese companies is publicly available at the Registry of Companies online portal ( http://registry.mfsa.com.mt/). To suggest that Malta is a “tax haven” or even an “offshore jurisdiction” is false and could not be further from the truth. Malta has an EU-compliant legal and regulatory system that applies indiscriminately to all Maltese companies, irrespective of their sphere of activity and their ownership and is therefore absolutely not discriminatory, nor harmful. Its tax system is fully compatible with OECD principles and just as Malta was an early-adopter for CRS (and FATCA) purposes, it too has become a BEPS associate, fully committing itself to the OECD’s efforts in this field. Under Maltese law, either the regulators or the tax authorities, or both, have free access to any information held by operators;

Certain offshore tax havens, on the other hand, such as Panama and the like, do not adhere to these international agreements and secrecy remains a key element;

The EU upholds various fundamental freedoms, one of which is the freedom of establishment, which recognises the freedom of investors to choose the jurisdiction in which to set up structures from which to operate internationally;

It is perfectly legitimate for companies and entrepreneurs within the EU to invest in other EU jurisdictions, and all countries within the EU openly court investment in their jurisdictions by international operators. Within the EU there are common standards on many aspects;

Attracting investment into a country on the basis of elements of attraction such as an appropriate legal and regulatory framework (and possibly also the availability of legal institutes not available elsewhere), lower costs of production, labour and taxation, geographic location and logistical support, availability of professional services and particular features of a legal and regulatory system, to name a few, is perfect- ly legal. What is illegal, on the other hand, is tax evasion, i.e. the failure to disclose for tax purposes any investment made, and then shrouding the investment in secrecy, and the two should absolutely not be confused together;

Naturally, it goes without saying that the Maltese government will need to urgently and without delay address not just perceptions of corruption (which are damaging enough to a financial services industry) but much more actual allegations of tangible corruption that can cause irreparable harm to such industry and will undermine confidence in the rule of law and in the institutions entrusted with the task of upholding the rule of law;

Step is the global professional association for practitioners who specialise in family inheritance and succession planning. We work to improve public understanding of the issues families face in this area and promote education and high professional standards among our members.