A total of 55 people will face an investigation by the tax authorities over possible tax evasion linked to the Panama Papers, the Sunday Times of Malta has learnt.

Inland Revenue Commissioner Marvin Gaerty told this paper that 30 cases are being investigated and the persons involved notified, while another 25 would be notified in due course.

He said that limited resources made it impossible to audit all individuals at the same time. Information on the Panama Papers investigations has been limited, as Commissioner Gaerty is prohibited by law from commenting on specific cases.

Mr Gaerty said the objective of these tax audits was to determine whether a person had declared the correct income in his or her tax returns.

Minister Without Portfolio Konrad Mizzi publicly declared that he was undergoing an Inland Revenue audit after having been outed in the Panama Papers as having set up a company in Panama sheltered by a trust in New Zealand.

The Prime Minister’s Chief of Staff, Keith Schembri, was found to have a similar offshore set-up to Dr Mizzi’s, which they established through their financial advisers Nexia BT.

E-mails show the two men wanted to avoid alerting Maltese banks to their secretive set-ups

Both men faced fines for breaking income tax laws, which required them to register their trusts with the authorities.

E-mails in the Panama Papers seen by this paper also show that the two men wanted to avoid alerting Maltese banks about their secretive financial set-ups.

Mr Gaerty explained that the audit process involved information provided by the individuals being investigated, as well as information from overseas obtained through agreements with foreign tax authorities.

“One needs to keep in view that the reason for evading tax and the method used is not relevant for the purpose of determining the sanctions to be applied.

“For example, if Mr X did not declare €1 million in profits, it is not relevant for tax purposes whether such funds have been held in cash at home or transferred to a Panama company. The bottom line is that Mr X has failed to declare the €1 million,” Mr Gaerty said.

The investigations are all the more difficult, as the authorities do not have access to the full Panama Papers database.

The database includes far more detailed information than that which is publicly available.

It includes names, dates, company details and e-mail exchanges, whereas the public data merely shows which individuals are linked to an offshore company.

A total of 714 companies linked to Malta are listed in the public data.

Mr Gaerty said the tax authorities were exploring all possibilities to obtain the actual detailed information available in the database. The government’s anti-money laundering agency (FIAU) also conducted separate investigations into the Panama Papers revelations.

The FIAU’s head, Manfred Galdes, resigned in July.

Will tax evaders be prosecuted?

If the audit findings result in undeclared income, Mr Gaerty says the taxpayer is required to adjust his declarations and pay the tax, penalties and interest due. If the taxpayer does not submit an adjustment form, an assessment is raised and the taxpayer must submit an objection within 30 days, otherwise the assessment will be final and conclusive.

How much lost tax revenue may be recouped?

Mr Gaerty says it is too early at this stage to state the amount of revenue resulting from these cases, however there are many cases which are at an advanced stage and where adjustment forms have been submitted.

jacob.borg@timesofmalta.com

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