Malta’s tax advantages are not unique in the EU, making the country an investment opportunity for international businesses, an Italian entrepreneur insists.
Sergio Passariello, CEO of Malta Business, an agency that helps Italian companies open shop in Malta, came to the defence of the island in the wake of the Malta Files revelations that targeted the attractive tax regime.
“Rather than being a Panama in the Mediterranean, Malta is a strategic partner for Italian and international companies and an investment opportunity,” he said.
Malta Files was a coordinated exercise between international media organisations that dug up the names of foreign nationals who had opened up companies in Malta to avoid higher taxes at home.
Malta was even described as being a Panama in the Mediterranean in the Italian media.
Malta’s tax system sees companies paying 35 per cent tax and receiving a refund that effectively reduces the tax rate to around five per cent. The system has often been targeted by competing jurisdictions.
The government and the Opposition have refuted the suggestion that Malta is an offshore jurisdiction, insisting the tax regime is fully compliant with OECD rules and approved by the European Commission when the country joined the EU. Mr Passariello said Malta’s regime offered a tax incentive, just like other incentives offered by other EU member states to attract business.
Malta’s tax regime is fully compliant with OECD rules
“Over the last year, Germany has introduced a tax exemption for venture capital investment in research and development companies that are resident there,” he said.
Italy, Mr Passariello added, was considering a 30 per cent tax deduction for those investing in innovative SMEs and a “super-depreciation” of 140 per cent of the purchase cost of new assets. He said France and Spain also offered various exemptions on profits for start-up companies.
“Tax competition is at the forefront of the policy of all European national governments because it is the key to attract investment in their own country.”
As for accusations that Malta was a magnet for money laundering, Mr Passariello noted that a 2015 European report, Fifty Shades of Tax Dodging, had placed Luxembourg and Germany far ahead of Malta in terms of risk.
“Germany offers a rich menu of possibilities to conceal true corporate property and facilitate the recycling of dirty money, while Spain is far from being the most aggressive tax treaty negotiator,” he added. Malta has a well-established anti-money-laundering regime in line with EU directives, and the proliferation of illegal cash from organised crime is a risk in every jurisdiction.