Amnesty gets off to slow start
The take-up of the government's amnesty for undeclared income has been very slow but Parliamentary Secretary for Finance Tonio Fenech is not yet concerned."I agree that take-up has been slow but this is very much in line with previous schemes which...
The take-up of the government's amnesty for undeclared income has been very slow but Parliamentary Secretary for Finance Tonio Fenech is not yet concerned.
"I agree that take-up has been slow but this is very much in line with previous schemes which always pick up in the last weeks," he said when contacted.
The registration scheme was launched last April and is open until the end of July.
Banking sources also said that people tended to leave things to the last moment.
"This is what we saw with the repatriation scheme a few years ago and we assume that it will be the same. It is simply too early to say what the take-up will be.
"However, it is also worth pointing out that there were changes made to the scheme since it was originally announced - it was extended to funds, for example. It is possible that people are waiting until the last minute in case there are any other changes."
James Blake of Global Capital is not as optimistic and believes that a government campaign would help.
"The government is not promoting the scheme, perhaps out of fear of controversy, but look how effective the euro information campaign was. We already advertise on the issue but it is not the same as a national campaign.
"It is possible that people have misunderstood the scheme. For example, we have clients who thought that the fact that they are paying 15 per cent withholding tax meant that the money was declared for tax purposes. But of course, it is the origin of that money that is relevant," he said.
Mr Blake said the lack of even enquiries was a concern.
"We are able to give advice to our clients but only once they contact us. When they do, we always advise them to consider the scheme. Those who took our advice and registered their overseas funds are now thanking us as it means they are able to do so much more with that money, without fear.
"The tax authorities are much more effective and people who pass up this chance should realise that there might not be another one.
"Most of the alternative ways to use undeclared income are risky if not downright illegal - and would still leave them exposed to tax investigations.
"Clients should also be careful as property transactions are visible and the tax authorities may still catch up with them. All they are doing is delaying the inevitable."
A spokesman for Rizzo, Farrugia and Co. (Stockbrokers) agreed that take-up has been slow.
"Although the actual registrations so far have been slow, we expect this to pick up next month following a number of enquiries over recent weeks. As is normal in such circumstances, many tend to take action towards the end of the specified timeframe after having consulted and given sufficient thought.
"We have had various enquiries regarding shareholders' loans and this scheme would have probably had a greater response if such loans were also eligible for registration," he said.
"Statistics by the Central Bank of Malta seem to indicate that the premature conversion of Malta liri into euros has continued even after the announcement of the Special Registration Scheme with investors probably preferring to risk conversion through unofficial channels rather than registering under the scheme and having to keep such funds in a non-interest special deposit account for a period of one year. However, in our opinion, the risk of ending up with fake euro currency notes is too great and we would expect many people to eventually opt for the scheme in the coming weeks."
In the meantime, the surplus cash is gradually depleting. According to Central Bank of Malta figures, the amount of currency in circulation went down by Lm47.3 million between April last year and April this year, 73 per cent of it this year.
Meanwhile, the net foreign assets of the Central Bank fell by Lm64.1 million in the first four months of the year.
Of course, it is not possible to say how much of either of these changes is due to euro conversions.
"I agree that take-up has been slow but this is very much in line with previous schemes which always pick up in the last weeks," he said when contacted.
The registration scheme was launched last April and is open until the end of July.
Banking sources also said that people tended to leave things to the last moment.
"This is what we saw with the repatriation scheme a few years ago and we assume that it will be the same. It is simply too early to say what the take-up will be.
"However, it is also worth pointing out that there were changes made to the scheme since it was originally announced - it was extended to funds, for example. It is possible that people are waiting until the last minute in case there are any other changes."
James Blake of Global Capital is not as optimistic and believes that a government campaign would help.
"The government is not promoting the scheme, perhaps out of fear of controversy, but look how effective the euro information campaign was. We already advertise on the issue but it is not the same as a national campaign.
"It is possible that people have misunderstood the scheme. For example, we have clients who thought that the fact that they are paying 15 per cent withholding tax meant that the money was declared for tax purposes. But of course, it is the origin of that money that is relevant," he said.
Mr Blake said the lack of even enquiries was a concern.
"We are able to give advice to our clients but only once they contact us. When they do, we always advise them to consider the scheme. Those who took our advice and registered their overseas funds are now thanking us as it means they are able to do so much more with that money, without fear.
"The tax authorities are much more effective and people who pass up this chance should realise that there might not be another one.
"Most of the alternative ways to use undeclared income are risky if not downright illegal - and would still leave them exposed to tax investigations.
"Clients should also be careful as property transactions are visible and the tax authorities may still catch up with them. All they are doing is delaying the inevitable."
A spokesman for Rizzo, Farrugia and Co. (Stockbrokers) agreed that take-up has been slow.
"Although the actual registrations so far have been slow, we expect this to pick up next month following a number of enquiries over recent weeks. As is normal in such circumstances, many tend to take action towards the end of the specified timeframe after having consulted and given sufficient thought.
"We have had various enquiries regarding shareholders' loans and this scheme would have probably had a greater response if such loans were also eligible for registration," he said.
"Statistics by the Central Bank of Malta seem to indicate that the premature conversion of Malta liri into euros has continued even after the announcement of the Special Registration Scheme with investors probably preferring to risk conversion through unofficial channels rather than registering under the scheme and having to keep such funds in a non-interest special deposit account for a period of one year. However, in our opinion, the risk of ending up with fake euro currency notes is too great and we would expect many people to eventually opt for the scheme in the coming weeks."
In the meantime, the surplus cash is gradually depleting. According to Central Bank of Malta figures, the amount of currency in circulation went down by Lm47.3 million between April last year and April this year, 73 per cent of it this year.
Meanwhile, the net foreign assets of the Central Bank fell by Lm64.1 million in the first four months of the year.
Of course, it is not possible to say how much of either of these changes is due to euro conversions.