Former finance minister Tonio Fenech said in parliament this evening that minister Konrad Mizzi appeared to be in breach of the Income tax Management Act because he did not appear to have declared the setting up of his New Zealand trust to the Commissioner of Inland Revenue.

Speaking on the adjournment, Mr Fenech said the minister was very careful in his choice of words when he spoke about his New Zealand trust and his company in Panama.

But although he had said he was inviting the Commissioner of Inland Revenue to audit him, he never declared that he had registered his trust as required by Maltese law. 

Mr Fenech said the minister had been trying to hide his actions and play with words and it was only when he was found out that he started giving some details, but not all the details. 

Initially he only spoke about the New Zealand trust, because he thought his Panama company would not be discovered since this was in a tax haven. 

The prime minister had defended Dr Mizzi, arguing that he did nothing wrong as long as the matter was declared. But no one knew whether any such declaration had been made.

In his statements, Dr Mizzi always spoke about the 'tax obligations he has in Malta.'

According to Maltese law, Mr Fenech explained, a Maltese person domiciled in Malta is not only obliged to pay tax on what he earns in Malta, but on whatever he earns worldwide. 

But the structure created by Dr Mizzi was designed so that the minister could argue that he was not obliged to pay tax in Malta on the funds he had abroad since the beneficiaries were not himself, but his wife and children, who do not live here. The Panama company was administered by trustees in New Zealand, who also did not live in Malta.  

In his statements, Dr Mizzi never said that he had declared the setting up of his trust to the Commissioner of Inland Revenue.

Yet the Income Tax Management Act said that:

Where the settlor of a trust is a person resident in Malta; and none of the trustees of such trust is a person resident in Malta; and property is settled into such trust, "the said settlor shall inform the Commissioner of the property so
settled together with a copy, where applicable, of the relevant trust instrument or of any other document evidencing the existence of such trust."

This information has to be submitted to the Commissioner within 30 days from the date of the relevant settlement. Any settlor who fails to comply with the
provisions of the law shall be guilty of an offence.

Mr Fenech said the biggest question was what need the minster have to set up a trust in New Zealand but then to form a company in blacklisted Panama and hide it under the trust.

Why did he make this arrangement and then, according to him, he did not populate it?

The minister had a London property, but he had said this had not been traded.

The obvious question therefore was why did he make this arrangement?

Indeed, Mr Fenech said, he had pity for the finance minister, who insisted in the EU that Malta fought tax evasion and it had effective laws, and now he would probably face questions on how a Cabinet colleague went to a country with which Malta did not even have an information-sharing agreement.  

Dr Mizzi had to decide. If he want to Panama because he was incompetent and never knew it was associated with money laundering or worse, he should resign because he was incompetent.

But it he did so for other reasons which are very serious and landed people in court, he did not deserve to be a minister.

Dr Mizzi needed to stop hiding and should resign, Mr Fenech said.