Last Monday, December 12, 2013, both countries signed a treaty to improve corporation and exchange of tax-relevant data. The treaty, called “Foreign Account Tax Compliance Act” (FACTA), is a further development of an already existing treaty. The key content is an automatic information exchange to improve taxation. The negotiators announced a considerable improvement of the infrastructure that both countries will benefit from. Exactly what data is exchanged and considerated was not said.
The treaty was signed for Malta’s government by Finance Minister Edward Scicluna and the U.S.A. was represented by Gina Abercombie-Winstanley .
With this agreement, Malta draws level with other countries like Great Britain and Germany.
The U.S. representative described the new treaty as stepping up the relations of two good working economies, a great achievement in the cooperation for the battle against tax evation and as an example for further agreements.
Evaluating this treaty, I take a neutral point of view. In my opinion, it illustrates Malta’s economic significance, especially its importance with its tax system. I have to mention the fact that tax evasion is not profitable anyway, besides being illegal. Malta offers a wide range of legal opportunities to optimise taxes. This is why you could suppose that the U.S.A. assumed a leading role in reaching the agreement to improve the control of their citizens and to understand income flows of U.S.-residents better. The Maltese tax authorities also benefit from the treaty, receiving information on its citizens and their investment behaviour.
However, it does not affect our clients and nothing will change. I am generally in favor of mutual enhancement measures between authorities, with the individual protection of civil rights guaranteed. In Malta’s case it might also be useful to improve the communication between different authorities within the country before targeting international treaties.
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