Issue link: https://maltatoday.uberflip.com/i/1042376
BUDGET 2019 maltatoday | TUESDAY • 23 OCTOBER 2018 10 MATTHEW VELLA BUDGET 2019 saw Finance Minister Edward Scicluna tell- ing the House that Malta will be introducing the EU directive for mandatory reporting and imple- ment the EU Dispute Resolution Mechanism, in a bid to improve the island's financial regulatory structure. "We are against the abuse of our tax system and I will declare – against much I have said before – that we did not create nor shall we create any opportunities for tax evaders or foreigners to live in Malta under one scheme or another to avoid tax here," Sci- cluna said. "We are in favour of investment that offers a return and of serious enterprise, so we will not tolerate anyone using Malta or its regula- tory framework for undue profit through tax avoidance." Scicluna said Malta will be co- operating with other countries in the fight against tax avoidance, strengthening the regulatory framework to collect tax more efficiently, and that transparency will be increased in taxation sys- tems. Scicluna said Malta was already an OECD partner in the BEPS (base erosion profit-shifting) programme aimed at fighting tax avoidance, and that Malta had adopted the first Anti-Tax Avoidance Directive and worked on the second ATAD. As part of the ATAD rules, as from 1 January, a change of residence of a company, or the movement of its assets or of its business to another territory will be treated as a taxable exit event. In such a case, the company will become subject to tax in the same manner as if it has disposed of its assets. The accrued gains will be calculated by reference to the market value of the asset at the time of the exit. Where the country of the new residence of the taxpayer or of the new loca- tion of the assets is another EU Member State, the payment of the tax can be deferred. No exit tax will be chargeable in the case of a temporary move- ment of assets that is linked to certain financial transactions as long as the assets are returned within 12 months. An entity will be considered a controlled foreign company where it is subject to more than 50% control by a parent company that is tax-resident in Malta and its associated enterprises, and the tax paid on its profits is less than half the tax that would have been paid had the income been subject to tax in Malta. This will not apply to CFCs with profits not larger than €750,000 and non-trading incomes not greater than €75,000, and to CFCs whose accounting profits amount to no more than 10% of their operating costs for the tax period. The implementation of the above measures will bring Mal- tese provisions in line with inter- national standards, but they will not bring about any changes to the Maltese general tax system. The regulations implementing these changes will establish the same anti-tax avoidance regimes that will be applicable through- out the EU, but the current rules on the taxation of company prof- its will remain fully in force. The same applies to Malta's tonnage tax regime, which has recently been cleared both by the OECD Forum on Harmful Tax Practices and under the EU State Aid rules. "The transposition of these measures constitutes a confir- mation of Malta's support for international anti-tax avoidance initiatives. Malta's commitment is also evidenced by the obliga- tions it assumed in 2017 when it joined the OECD Inclusive Framework and by its rating un- der the OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes," Scicluna said. A national risk assessment has also been prepared for an action plan against money laundering, with 45 actions to be taken over a period of three years. The first action will be the creation of a national coordinating commit- tee currently led by its secretariat which will forge ahead with the action plan proposals. In the coming months, the Mal- ta Development Bank will be of- fering new facilities and schemes for SMEs' investment plans. The Malta Stock Exchange will also be evaluating the prospect of real estate investment trusts (REITS) which allow investors the option for an indirect investment in the property market. Apart from a Digital Innovation Authority (MDIA) that will regu- late the application of Malta's rules on distributed ledger tech- nologies such as Blockchain, and the MFSA's specialised Fintech unit, a new entity will be created to promote Malta's industrial at- tractiveness for disruptive tech- nologies such as Artificial Intelli- gence and 'the internet of things' – the entity will be called Tech. mt Malta Enterprise will be offer- ing a business advisory service to SMEs which depend on the Brit- ish market and will be affected by Brexit. TAX & COMPETITIVENESS Scicluna says Malta on board with EU's anti-tax avoidance rules ENVIRONMENT JAMES DEBONO THE take-up of more land for landfills and the export of waste are not viable options to dispose of waste which is not recycled and in view of this the government has made a "clear choice"for a technology which transforms waste into energy. The Budget speech claims that this reality was al- ready understood in the waste management plan approved in 2014, which included no commitment for incineration. But even with incineration taking 40% of Malta's waste 2020 Malta has a long way to go to recycling 50% of mu- nicipal waste as required by EU targets. Malta currently recycles less than 15% of its waste. The Budget describes waste separation, which is essential for any waste manage- ment strategy as a "moral, civic and legal duty." But while the government has already hinted at fines against those who do not separate their waste, the Budget, which is de- void of any fiscal pain, makes no reference to this. Signifi- cantly the Budget refers to a new proposal, which will be drafted over the next year to regulate "commercial waste", but no indication is given on the measures being contem- plated. The most significant measure contemplated in waste management is "a deposit system" for plastic beverages, which was first announced in last year's Budget and was a subject of public consultation in subsequent months. The Budget promises more "discussions" which should lead to "an agreement with a consortium of operators and import- ers." The first reference to such a scheme was made in the Budget presented in November 2014. Back than the Minis- ter had referred to a "financial incentive" for consumers "to return plastic bottles and containers in deposits located in supermarkets and petrol stations." The Budget also includes plans for the rebuilding of a new Material Recovery Facility instead of the one which burned down in 2017. This will include a "multi-material recovery facility" aimed at recycling more waste. No time to waste Budget reaffirms commitment for waste incineration