Issue link: https://maltatoday.uberflip.com/i/1389761
9 EDITORIAL BusinessToday is published every Thursday. The newspaper is a MediaToday publication and is distributed to all leading stationers, business and financial institutions and banks. MANAGING EDITOR: SAVIOUR BALZAN EDITOR: PAUL COCKS BusinessToday, MediaToday, Vjal ir-Rihan, San Gwann SGN9016, Malta Newsroom email: bt@mediatoday.com.mt Advertising: afarrugia@mediatoday.com.mt Telephone: 00356 21 382741 T ax evasion is not a subject the commercial community likes to talk about but the issue has been thrust into the limelight by the Financial Action Task Force. Malta cannot avoid having an hon- est discussion on tax evasion and how it harms the community, threatens so- cial cohesion and undermines the level playing field business operators require to flourish. e discussion is long overdue and now has been forced on us by an in- ternational organisation that acts as a watchdog on financial crime. From Panama Papers to the impunity people close to power enjoyed; from the laissez affaire attitude adopted by regu- latory authorities to poor police work on financial crime; from complacent politi- cians to the murder of a journalist, a lot can be said on the reasons that underpin FATF's decision to greylist Malta. But while all these reasons have con- tributed to the state of affairs, tax eva- sion and its corollary offence of money laundering are also part of the equation. e FATF conclusions on Malta clearly mentioned tax evasion as a problem and asked for more focussed intelligence gathering on such a crime by the Fi- nancial Intelligence Analysis Unit. And while FATF did make particular refer- ence to criminal tax evasion – tax eva- sion coming from illegal activities such as drug trafficking and corruption – it also mentioned ordinary tax evasion. Prime Minister Robert Abela yester- day made it clear to the social partners during a special session of the MCESD that serial under-reporting of proceeds and the resultant evasion of tax by com- panies is a serious problem that has to be tackled. He called for cooperation from the social partners in weeding out the tax dodgers and the professionals who help them to squirrel away funds. e Prime Minister insisted the gov- ernment will not introduce new taxes and sought to assure bona fide business- es. "Legitimate businesses have nothing to worry about, but we cannot tolerate abusers," he told the MCESD. What is being questioned here is the 'Maltese way' of trying to evade tax at every turn. From the VAT receipt that is not given, to the use of offshore com- panies to purchase equipment without paying taxes, to the lax attitude adopted by the tax authorities on outstanding tax bills, FATF has made it clear this is not acceptable. And of course, there is the far more se- rious crime of laundering funds coming from an illegal activity and channelling these into legitimate businesses. Malta has done a lot over the past 18 months to beef up regulatory authori- ties like the FIAU and the Malta Finan- cial Services Authority, change laws and give the police force political independ- ence to go after financial crime. It would be childish to ignore the changes. Even FATF recognised the improvements and last month Malta received the green light for technical compliance from Moneyval. But the issue now is implementing the laws and taking concrete action on the ground. Within this context, government needs to find consensus. Clamping down on tax evasion will inevitably lead to the usual complaints of heavy-hand- edness – we have already seen this when the FIAU and MFSA started dishing out hefty fines for non-compliance – that will provide fertile ground for appeasing politicians to exploit. e government knows that it needs to have the Opposition on board in tack- ling tax evasion because the matter hits at an unsavoury characteristic of the Maltese. Having a high-level action task force chaired by the Finance Minister with in- clusion of the Opposition and key stake- holders will enable action to be taken with full consensus. Tax evasion: the 'Maltese way' challenged 1.7.2021