Euro adoption - The pros and cons of registering undeclared assets
It is a known fact, that Malta like other southern European economies has an informal economy. It is estimated that there are around Lm200 million in cash holdings that are driving our informal economy.In order to assist in the euro changeover process...
It is a known fact, that Malta like other southern European economies has an informal economy. It is estimated that there are around Lm200 million in cash holdings that are driving our informal economy.
In order to assist in the euro changeover process and facilitate the integration of this hoarded cash into the formal economy through the local financial system, the Ministry of Finance has launched a Special Registration Scheme that became operative on April 23 and runs until July 31.
Since the launch of this scheme, the commercial banks have received numerous enquires about this scheme.
The eligible assets that are covered by the scheme are: Maltese lira currency notes (minimum Lm 1,000); Euro currency notes (minimum EUR 2,500); Deposits denominated in Maltese lira and/or euro held with local banks as at April 16, 2007; Securities denominated in Maltese lira and/or euro with a primary listing on the Malta Stock Exchange, held on April 16. Such securities include: Malta Government bonds and Treasury bills, corporate bonds, equity and collective investment funds invested mainly in securities listed on the Malta Stock Exchange.
The scheme is clearly not intended for bona fede taxpayers particularly elderly persons that have paid all their taxes and prefer to retain their savings in cash at home instead of depositing them into the local financial system. Staff at bank branches have encountered a number of such cases.
We strongly recommend that the general public deposits surplus Maltese lira notes and coins into the financial system prior to December 31, 2007 to ensure a smooth changeover to the euro. One should remember that the banks will be placing a one time exchange limit of Lm250 for non-bank customers as from e- day.
Bank customers will be able to change up to a maximum of Lm250 each day but this will be raised if one informs the bank manager that he/ she intends to exchange in excess of this amount.
The public is reminded not to exchange Maltese lira to euro from non-authorised exchange dealers due to the risk of receiving counterfeits.
The advantages and disadvantages of the scheme are as follows:
Advantages
The conversion of the undeclared assets from Maltese lira to euro is facilitated thereby minimizing the risk of receiving counterfeit money;
Assets registered under this scheme are regularised under the Income Tax Act, the Succession and Donation Duties Ordinance, the Death and Donation Duty Act, the Duty on Documents Act and the Duty on Documents and Transfers Act;
Registration is covered by strict confidentiality and financial intermediaries and Central Bank of Malta staff are prohibited by law from disclosing information obtained in the process of registration;
A one-time registration fee of four per cent for notes in Maltese lira and/ or euro and six per cent for bank deposits in securities denominated in Maltese lira and/ or euro with a primary listing on the Malta Stock Exchange is considered attractive;
The special deposit account to be opened for all currency notes (that is Lm or EUR) for one year may be done at the discretion of the applicant, in the name of the beneficial owner or a nominee account held in the name of the registration agent on behalf of his clients.
Disadvantages
All currency notes registered under the scheme (that is Lm or EUR) must be duly deposited by the registration agent (that is local commercial bank, stockbroker, other authorized investment services provider, foreign exchange bureau or other financial institution license holder) in a special deposit account fixed in a local bank for a period of one year without interest.
This is certainly an interesting scheme that holders of hoarded money should consider. Further information is available from local commercial banks and financial intermediaries.
It is also recommended that one should download A Guide for a better understanding of the Special Registration Scheme, 2007 from the website of the Central Bank of Malta at www.centralbankmalta.com.
• Mr Cassar Torreggiani is the executive head responsible for the euro changeover programme at Bank of Valletta.
In order to assist in the euro changeover process and facilitate the integration of this hoarded cash into the formal economy through the local financial system, the Ministry of Finance has launched a Special Registration Scheme that became operative on April 23 and runs until July 31.
Since the launch of this scheme, the commercial banks have received numerous enquires about this scheme.
The eligible assets that are covered by the scheme are: Maltese lira currency notes (minimum Lm 1,000); Euro currency notes (minimum EUR 2,500); Deposits denominated in Maltese lira and/or euro held with local banks as at April 16, 2007; Securities denominated in Maltese lira and/or euro with a primary listing on the Malta Stock Exchange, held on April 16. Such securities include: Malta Government bonds and Treasury bills, corporate bonds, equity and collective investment funds invested mainly in securities listed on the Malta Stock Exchange.
The scheme is clearly not intended for bona fede taxpayers particularly elderly persons that have paid all their taxes and prefer to retain their savings in cash at home instead of depositing them into the local financial system. Staff at bank branches have encountered a number of such cases.
We strongly recommend that the general public deposits surplus Maltese lira notes and coins into the financial system prior to December 31, 2007 to ensure a smooth changeover to the euro. One should remember that the banks will be placing a one time exchange limit of Lm250 for non-bank customers as from e- day.
Bank customers will be able to change up to a maximum of Lm250 each day but this will be raised if one informs the bank manager that he/ she intends to exchange in excess of this amount.
The public is reminded not to exchange Maltese lira to euro from non-authorised exchange dealers due to the risk of receiving counterfeits.
The advantages and disadvantages of the scheme are as follows:
Advantages
The conversion of the undeclared assets from Maltese lira to euro is facilitated thereby minimizing the risk of receiving counterfeit money;
Assets registered under this scheme are regularised under the Income Tax Act, the Succession and Donation Duties Ordinance, the Death and Donation Duty Act, the Duty on Documents Act and the Duty on Documents and Transfers Act;
Registration is covered by strict confidentiality and financial intermediaries and Central Bank of Malta staff are prohibited by law from disclosing information obtained in the process of registration;
A one-time registration fee of four per cent for notes in Maltese lira and/ or euro and six per cent for bank deposits in securities denominated in Maltese lira and/ or euro with a primary listing on the Malta Stock Exchange is considered attractive;
The special deposit account to be opened for all currency notes (that is Lm or EUR) for one year may be done at the discretion of the applicant, in the name of the beneficial owner or a nominee account held in the name of the registration agent on behalf of his clients.
Disadvantages
All currency notes registered under the scheme (that is Lm or EUR) must be duly deposited by the registration agent (that is local commercial bank, stockbroker, other authorized investment services provider, foreign exchange bureau or other financial institution license holder) in a special deposit account fixed in a local bank for a period of one year without interest.
This is certainly an interesting scheme that holders of hoarded money should consider. Further information is available from local commercial banks and financial intermediaries.
It is also recommended that one should download A Guide for a better understanding of the Special Registration Scheme, 2007 from the website of the Central Bank of Malta at www.centralbankmalta.com.
• Mr Cassar Torreggiani is the executive head responsible for the euro changeover programme at Bank of Valletta.