Transparency index brands Malta among most secretive of international jurisdictions
Matthew Vella A global index of 60 tax havens has ranked Malta in 22nd place, claiming the island is “a long way from offering financial transparency”.
According to the Tax Justice Network’s study, Malta is awarded an 83% ‘opacity’ score (with 100 being the maximum opacity for the most secretive jurisdictions) because it retains a high degree of secrecy on financial flows.
The study says Malta still provides banking secrecy; does not put details of trusts on public record; does not comply sufficiently with international regulatory requirements; does not require company accounts be available on public record; does not require that beneficial ownership of companies is recorded on public record; does not maintain company ownership details in official records; has few tax information agreements; does not have adequate access to banking information; allows company redomiciliation (relocation of companies to Malta); and allows protected cell companies.
“Malta is a long way from offering financial transparency. If it is to play a full part in the modern financial community and wishes to impede and deter illicit financial flows, including flows originating from tax evasion, aggressive tax avoidance practices, corrupt practices and criminal activities it should take action on the points noted where it falls short of acceptable international standards,” the Tax Justice Network said.
Malta’s financial services industry generates 6% of the economy’s gross domestic product. The island also hosts subsidiaries from some 60 multinationals and the ‘Big Four’ auditors – Ernst & Young, PricewaterhouseCoopers, Deloitte, and KMPG. The industry has over 8,000 employees.
But despite its attempts at complying with OECD rules on financial transparency, Malta remains a blacklisted jurisdiction. A United States senate bill authored by Barack Obama also plans to come down heavily on tax havens – amongst them Malta – despite a double taxation agreement between the two countries.
The Tax Justice Network said Malta has a “significant dependence” upon financial services and is “widely used” by multinationals.
However, this was more due to political stability since it was not “considered significantly attractive by corporations usually associated with low or no tax jurisdictions.”
Satellites for evasion The Tax Justice Network’s index compiled its list of 60 jurisdictions from tax haven lists produced by regulatory agencies since 1977. Malta appeared in each of the 11 lists, along with the Bahamas, Bermuda, Cayman. Guernsey, Jersey, and Panama.
The top five tax havens are the State of Delaware (USA), Luxembourg, Switzerland, the Cayman Islands, and London (UK).
“Until now there has been no way of identifying and ranking the darkest and most dangerous corners of international finance. The index reveals for the first time which jurisdictions are most to blame for supplying financial secrecy, and provides new pointers for global action,” the Tax Justice Network said.
Indeed, the index reveals that the major suppliers of financial secrecy are not “tiny, isolated islands, but rich nations operating their own specialised jurisdictions of financial secrecy.”
Tax Justice Network recently estimated that about €170 billion is lost in taxes each year by governments worldwide, as a result of wealthy individuals holding their assets offshore.
Along with Malta, the index listed European Union member states Austria, Luxembourg, Ireland, the UK, Portugal (Madeira), the Netherlands, Hungary, Belgium and Latvia.
And of the 60 jurisdictions, 10 are overseas territories belonging to the UK and many others members of the British Commonwealth, underlining an Anglo-Saxon tradition of financial secrecy.
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