Is Malta a tax haven?

Tax evasion and tax havens have become a subject of much discussion on a global level. International revelations such as the Panama Papers and the Paradise Papers have only served to put the spotlight on the tax regime of a number of countries. The same revelations have also served to cast attention on the topic of efficient tax structures and the way such structures are operated. Some of the information contained in these revelations can be said to be interesting and worthy of further investigations whilst other elements are quite simply sensationalism at its worst, twisting facts and perhaps giving space to untruths.

What a lot of misinformation making the rounds on the internet one question worth examining is the one on whether Malta can be classified as a tax haven. Malta’s tax laws originally date back to 1948 when Malta was a British colony. Since joining the EU in 2004 Malta has built its tax legislation on models in the UK, the Netherlands, Spain, Luxembourg and even Germany.

In an interesting article on The Times Francis J Vassallo writes that, “Tax havens are jurisdictions where companies are not subject to tax and where the information about the ownership of those companies is usually kept secret, either through bearer shares or because the information is not disclosed in the jurisdiction’s public registry”.

Indeed Maltese companies are registered with the Registry of Companies which in turn is a register available for public viewing online. Thus it would be factually incorrect to state that Malta is a tax haven since any individual intent on creating structures meant to hide ownership would choose other jurisdictions which cater for such an intent.

Malta has over 70 double taxation treaties, including with some of the most important OECD member states, including the US. Malta also adheres to the Common Reporting Standard established by the OECD.

Salient features of Malta’s tax regime such as the Participation Exemption where introduced into Maltese law following a full consultation with the EU and after the approval of the Council of Finance Ministers. The Exemption System on the other hand is practically identical to that found in Holland, Spain and Luxembourg.

Malta is thus not only not a tax haven but indeed it is a European Union member which has managed to adopt a tax-efficient framework whilst at the same time respecting all the obligations which a modern European democracy should respect.

On the other hand in a black list issued in December 2017 the Council of Finance Ministers of the European Union classified American Samoa, Bahrain, Barbados, Grenada, Guam, South Korea, Macau, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Samoa, Trinidad and Tobago, Tunisia and United Arab Emirates within a tax haven blacklist.