Malta has been downgraded by the OECD for tax transparency. Back in 2013, the OECD had classified Malta as ‘largely compliant’, whilst recently downgrading the country to ‘partially compliant’.
A new report published by the OECD recently explained that back in 2013, Malta had the right framework from a legal and regulatory point of view to ascertain the required access to information on legal ownership, accounting and banking details. During this period, Malta was instructed to ensure that the supervisory and enforcement powers were exercised in practice as necessary. In this regard, Malta was reprimanded for not taking the necessary measures to address this.
The lack of measures to address this may cause future concerns to procure accounting and banking details. This is combined with the fact that the rates of annual filing are very low and enforcement measures are weak.
It was also noted that there are thousands of companies that are inactive and are still registered with the Malta Business Registry. Malta did indeed confirm however, that action was taken to have these inactive companies struck off the Malta Business Registry. Some of the actions to remove these inactive companies were taken in 2020, which means that the effectiveness of these measures is still yet to be understood.
Together with this is the fact that there are over twelve thousand companies that are inactive and also registered with the Maltese tax authorities. Certain information could not be provided by Malta about these companies. In this regard, Malta has been urged to rectify the situation.
The Nationalist party reacted to this news and highlighted that this is once again another blow to the country’s financial services sector and Malta’s international reputation. The statement implies that the impression created by the Government, that Malta is adopting a better governance approach is not true.
It is also emphasised by the Nationalist party that this recent downgrade places Malta as one of the least ranking when compared to other European Union members. This development comes just in anticipation of the Moneyval assessment, scheduled to take place in October.
Consistent reports point out that although Malta has the policies, the supervisory authorities are weak. This is combined with the fact that the police are also seen to be failing to act when information is given to them.
The statement was signed off by Mario de Marco, Kristy Debono and Claudio Grech, shadow ministers for finance, financial services and the economy.