Malta Refutes Claims of Slowing Anti-Tax Avoidance Measures

European finance ministers recently gathered in Malta. Unsurprisingly, the topic of tax avoidance was raised with Maltese Finance Minister Edward Scicluna on the sidelines of the meeting. This followed a Reuters report citing a document that suggested Malta was interested in a solution that would effectively "slow down" the fight against tax avoidance.

The Finance Minister strongly contradicted this view, making it clear that Malta has no interest in such an approach. Citing the recently implemented BEPS regulations and OECD agreements, he argued that the country is far from trying to keep tax loopholes open. On the contrary, Malta is working continuously to improve the situation for member states, agreeing that companies must be deprived of opportunities for aggressive tax avoidance.

Accordingly, Malta intends to advance further working papers by May or June to concretise the jointly planned steps. Scicluna views this as a key task during the country's EU Council Presidency, which concludes at the end of June.

However, the Minister made one thing clear in his remarks: when implementing these regulations, one must not blindly dismantle existing laws and thereby scare off investors. It is crucial to create clear, common structures. He emphasised that Malta does not wish to protect its own interests during its presidency, but rather to genuinely close tax loopholes.

To what extent these statements will translate into concrete implementation remains to be seen. While the EU is a monetary union, it is not a fiscal union; uniform tax laws and rates do not exist. Consequently, different tax laws and taxation models will continue to exist in the future. There is no doubt that a country's taxation directly influences corporate investment decisions, and it is equally clear that EU countries are, to some extent, in competition with one another.

In our experience, entrepreneurs who are resident in Malta with a Malta Limited company—and who generally live here—should not expect profound negative changes. The focus is more on corporations establishing "letterbox" companies solely to benefit from tax advantages. Such practices will likely become increasingly difficult to implement in the future.