January 11 2004
How Malta has earned its reputation as a tax haven
offshore regime established between 1989 and 1996, already had tongues
wagging about Malta being a tax haven, and the introduction of International
Trading Companies (ITC’s), which are onshore companies, would seem
to have kept Malta’s bad reputation intact.
ITC’s are advertised widely via the internet on websites such as
www.Malta-Tax.com, www.inter-shore.com and www.euromalta.com; but is
known to be a mainstay of the business of auditors Deloitte and Touche
and PricewaterhouseCoopers among others. One website www.taxhavenco.com
lists Malta as a tax haven and offers to set up companies for Euro 3,850.
An International Trading Company is a corporate vehicle with a resulting
effective tax rate of 4.17 percent, in the sense that although the companies
pay 35 tax as other Maltese companies, the individual shareholders are
entitled to tax refunds which bring their effective tax outlay to 4.17
percent, a very attractive proposition for companies wishing to avoid
high tax rates. ITC’s are perfectly legal, but the EU is not entirely
happy with Malta’s tax regime.
The only major condition for the setting up of such companies is that
business is not done in the Maltese islands, but between foreign countries.
While the companies are registered as onshore, Malta-Tax.com, for example
advertises: "An ITC is a very effective offshore vehicle. It can
be adopted to: receive commission income; receive management or operational
fees hold patents, copyrights, franchises and other intangible rights
perform re-invoicing operations."