Malta and U.S.A. sign a tax treaty, including increased cooperation and information exchange.

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.

About Philipp Sauerborn

In 2005, Philipp Sauer­born joined the firm of St. Matthew in Lon­don, one of the lead­ing Ger­man account­ing firms in Eng­land renowned for its exper­tise in cor­po­rate, com­mer­cial and tax law, as a depart­ment head. After three years, he was a part­ner and man­ag­ing direc­tor.
Towards the end of 2011, he decid­ed to move to Mal­ta, where he first worked at inter­na­tion­al law firms and con­sul­tan­cies in an employed and con­sult­ing capac­i­ty. Since the begin­ning of 2013, he has been a senior employ­ee at Dr. Wern­er & Part­ner. Mr. Sauer­born is cur­rent­ly com­plet­ing his ADIT ‑Advanced Diplo­ma in Inter­na­tion­al Tax.

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