More stories are continuing to emerge from the so-called Paradise papers on how the rich and mighty used companies registered in Malta to hide their wealth.
The OCCRP (Organised Crime and Corruption Reporting Project) reported today about the activities of Anton Prygodskyy,a close friend of Viktor Yanukovych, the former president of Ukraine.
Leaked documents from Appleby, a Bermuda law firm, show that Prygodskyy built a super luxurious 37-meter yacht lavishly decorated with marble and wood fittings.
To keep the construction of the yacht secret and minimize taxes, Prygodskyy worked through Maltese companies. For a yacht that cost some €13 million, he probably saved over €3 million in taxes, OCCRP said.
The Santa Maria T, as the yacht was christened, was launched in the spring of 2015 and impressed at an annual yacht exhibition in Cannes.
According to the documents obtained by OCCRP journalists, the Santa Maria T is mentioned in the financial reports of two firms: TUC Limited and Ala Int. Limited, both registered at the same address in Malta. The ultimate beneficiary of both is Prygodskyy.
2014 annual reports showed assets of under $2,000 for Ala Int. Ltd, and over €5.6 million for TUC Limited.
The only property mentioned in the TUC financial report was a motor yacht named Santa Maria T.
“Buying a vessel through a Maltese company using a specific leasing arrangement allows the buyer to reduce the VAT for yachts that are 24 or more meters long from 30 percent to 5.4 percent – a significant savings,” the report says.
The scheme usually works like this: A client registers a company in Malta, the company buys a yacht from a shipyard, the yacht is brought to Malta and the company leases the yacht to a third party – this is the yacht’s actual owner or his representative.
Once the lease agreement ends, the third party buys the yacht for 1 percent of its purchase price.
The buyer pays the minimum VAT and the yacht can now move freely within the EU.
In July 2015, Santa Maria T was leased by TUC Limited to a third party, Ala Int. Limited, through a leasing agreement.
Given that a yacht like Santa Maria T would cost over €13 million without VAT, using such a scheme with his Maltese companies could have saved Prygodskyy around € 3.25 million, the report says.
“These actions are perfectly legal under Maltese law, but are limited to wealthy persons with very large boats.”
EU to discuss tax havens blacklist after 'Paradise Papers' leaks
The EU said today that finance ministers of its member states will tomorrow (Tuesday) discuss plans for a tax havens' blacklist in a bid to tackle offshore tax avoidance.
The subject's inclusion on the monthly meeting's agenda of EU finance ministers came after weekend media reports citing the "Paradise Papers".
The latest revelations "put renewed emphasis on the work the European Commission is doing to fight tax avoidance", the vice president of the EU's executive arm, Valdis Dombrovskis, told reporters.
EU countries had planned for months to reach an agreement on a blacklist for tax havens by the end of this year. The new revelations prompted the discussion to be brought forward, EU officials said.
Some EU countries remain sceptical about the blacklist and are themselves under scrutiny for unfair tax competition.
Smaller EU states, like Luxembourg, Malta and Ireland, attract firms with lower corporate taxes. Some have been sanctioned for deals with multinationals that slashed their tax bills, reducing revenues in other EU states.
Malta 'has nothing to hide'
But Finance Minister Edward Scicluna was quoted as saying by the EU Observer today that Malta has nothing to hide.
He told reporters that all the names associated with Malta in the 'Paradise Papers' were listed on a public register.
"There was no secrecy whatsoever," he said, while noting the push for greater transparency is needed to fight tax evasion.
Prof Scicluna said many of the laws that had been agreed on at the EU level have simply yet to be implemented.
"It takes time to implement changes, companies need to know ahead that changes are there and they need to act accordingly," he said.
Reuters reported that in an attempt to win over resistance, the proposed EU blacklist would apply only to non-EU countries. Also, states which charge no corporate taxes will not be automatically considered tax havens, under a preliminary deal reached by EU finance ministers last year.
On tax matters the EU can take decisions only with the unanimous backing of its 28 member states, unless extraordinary procedures are launched - an option never tested so far.
To reduce the appeal of tax havens, Brussels has also proposed the setting up of public registries that would show the real owners of companies, which are often hidden by frontmen in shell firms in offshore jurisdictions.
It has also proposed compulsory reporting by large multinational firms of profits made and taxes paid in each state where they operate, in a bid to show how much of their revenues are booked in low-tax countries.
The leaked data was obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists and a network of more than 380 journalists in 67 countries.