An open letter responding to Maltese Finance Minister Edward Scicluna
On 11 January, you reacted to our recent report, which posed the important question “Is Malta a Tax Haven?”. You dismissed it first in a mere 123 characters tweeting that the report was “unprofessional” “hotchpotch” and contained “outright non-truths”. You took a similar line in response to journalists’ questions in Malta for the opening of the Presidency.
We would like to assure you that we have demonstrated the highest professional standards in preparing this report, focusing on Malta’s tax system and the consequences as your country takes over the EU presidency for the next six months. Our report was produced by Tommaso Faccio, Lecturer in Accounting at Nottingham University’s Business School. Indeed, our findings are consistent with those of the European Commission, who found Malta to be the EU’s fourth “top” facilitator of corporate tax avoidance. If you have evidence of “non-truths” we would invite you to present them.
Answering journalists, you gave your own definition of a tax haven. You stated that “any country that is competing on taxation but very strict on transparency and exchange of information and anti-money laundering should not be branded as a tax haven”. This is not in line with the European Union vision. Indeed, the EU will soon start screening third countries to check if they should be added to the future EU blacklist of tax havens. One of the three criteria is on “fair taxation” and looks at whether countries provide harmful tax measures (such as low taxation). Should we apply two set of standards then, one for third jurisdictions and one for EU countries?
We acknowledged in our report that Malta has committed to OECD automatic exchange of tax information and will implement the OECD Base Erosion and Profit Shifting Action Plan to fight corporate tax avoidance. While this is to be welcomed, Malta is merely committing to doing what all other EU states have also promised.
Let’s not get distracted from the main findings of the report: while we welcome that Malta doesn’t sign any tax ruling, it actually doesn’t really need to because by allowing corporations a super-low tax rate of 5%, Malta already provides very low taxation. By reaffirming your opposition to key ongoing tax reforms like a common consolidated corporate tax base or public transparency for multinationals, you have confirmed our concerns that the Maltese Presidency will not deliver an ambitious tax agenda over the next six months. The traditional argument on the risk of such reforms for the EU competitiveness cannot apply after the series of tax scandals and growing evidence that public transparency does not negatively impact standard measures of competitiveness, as Transparency International reported.
I look forward to working with you over the course of the Maltese presidency to address these concerns.
Sven Giegold MEP
Financial and economic policy spokesperson of the Greens/EFA group