Issue link: https://maltatoday.uberflip.com/i/1393937
maltatoday | SUNDAY • 18 JULY 2021 10 NEWS NICOLE MEILAK THE Maltese government has pledged to robustly tackle tax avoidance in a bid to receive EU funding for its post-COV- ID recovery and resilience plan (RRP). In its plan, government com- mitted itself to adopt specific transfer pricing legislation to avoid losing public revenues through international tax arbi- trage. The reality is that local rules on transfer pricing are long overdue. Due to OECD and EU regulations, Malta has in- directly introduced transfer pricing rules so as to abide by international conventions and directives. However, Malta is yet to formally adopt the OECD Transfer Pricing Guidelines, but could reasonably do so un- der the recovery plan. Tthe government also pledges to undertake a study for laws on dividends, interest and royalty payments between Malta-based companies and related compa- nies established in zero-tax or low-tax jurisdictions. The post-COVID RRP was put forward to Parliament on Wednesday 30 June, one week after Malta was placed under increased monitoring by the Financial Action Task Force to address money laundering defi- ciencies, colloquially known as the grey list. Current FATF President Mar- cus Pleyer had clarified that Malta's deficiencies lie in the area of beneficial ownership transparency and financial in- telligence, especially with re- gards to tax crimes. Tax evasion and money aundering Lax and low-taxing jurisdic- tions are a prime location for those looking to launder ill-got- ten profits while evading taxes in one's home country. When a Sicilian mafia clan set their minds on evading taxes in their home country, they used Malta to set up a sports betting site called RaiseBet24. By having criminal associates collect cash bets in Malta, and having this cash paid into various Maltese companies, this concealed the fact that these funds were gen- erated through organised crime in Italy. Additionally, Malta's generous rebate for tax-resident compa- nies with foreign sharehodling means very few of the funds are actually lost in tax collection. But not all avoiders of tax are laundering criminal proceeds. Multinational companies ex- ploit legal loopholes and loose tax treaties to maximise af- ter-tax profits, often through transfer pricing or other aggres- sive tax planning measures. Transfer pricing is when one company branch sells goods or services internally to another branch or sister company, al- lowing company funds to move freely and legally between juris- dictions, and often to the low- est-taxing jurisdiction. Apart from efforts to combat aggressive tax planning, gov- ernment outlined that it will be engaging in spontaneous ex- change of information with tax authorities relating to individu- als that gain Maltese citizenship through the golden passports scheme. This will see Maltese authori- ties share tax-related informa- tion to authorities in relevant countries for administration and enforcement purposes. Climate mainstreaming and digitalisation Malta's RRP will grant govern- ment €345 million to be spent on areas of their choosing. Be- tween the country-specific rec- ommendations and other prior- ity areas, government identified six components to be covered by the recovery plan. These include climate neutral- ity, carbon neutrality, digitalisa- tion, health, education, and the institutional framework. Almost half of the funds will contribute to climate main- streaming, with the environ- mental retrofitting of public hospitals and schools. Govern- ment also hopes to construct a pilot near-carbon-neutral school with the funds allocated, for a total €78 million climate investment. The second component cen- tres around sustainable trans- port and the reduction of traffic congestion. This will see a new ferry landing facility at St Paul's Bay or Buġibba as a means of promoting alternative modes of transport. A large aspect of this compo- nent is the promoting of electric vehicles. One proposed invest- ment involves enhancing the uptake of electric vehicles in the private sector, and decarbonis- ing the public service fleet. This is estimated to cost €111 mil- lion. The third component centres on the digital transition, and will see the digitalisation of the Merchant Shipping Directorate within Transport Malta, as well as the further digitalisation of the public administration, in- cluding data sharing and digital tools for remote-working solu- tions. This is set to cost €55 million. Component Four relates to the resilience of the health sys- tem, and will see the establish- ment of a Blood, Tissue and Cell Centre for Malta. Together with digitalisation and the introduction of new technologies, component 4 is set to cost €50 million. Heavier on the reform as- pect, component five concerns ESLs and the gap between ed- ucational provision and labour market needs. However, it will see the set- ting up of a Centre for Voca- tional Education Excellence at the ITS Campus, with an esti- mated cost of €41 million. Component six sees govern- ment focus more robustly on crime, corruption, and money laundering. COURT NOTICE The Registrar, Civil Courts and Tribunals notifies that the First Hall of the Civil Court ordered the sale by Judicial Auction of the following property to be held in room numbered 78, nearby the Courts Archives, Level -1, Courts of Justice, Republic Street, Valletta. Date Time Judicial Sale No Property 03 rd August, 2021 11.00am 21/20 – AZ Muscat Maria (ID110530M) Vs Muscat Bastjan (ID935449M) et The tenement with two doors numbered 31 and 33 in Triq San Bastjan, Ħal Qormi with direct access from the street valued at €285,000. Further details can be obtained from the website: https://ecourts.gov.mt/onlineservices/JudicialSales The bidders taking part in the auction must present their identity card Gaetana Aquilina For the Registrar of Civil Courts and Tribunals COURT NOTICE The Registrar of Civil Courts and Tribunals informs that the Civil Court, First Hall ordered the following sales by auction: Date Time Judicial Sale No Place Items 04 th August, 2021 10:00am 3/21 – AZ Sammut Ian (ID275777M) Vs Entree Limited (C36821) et Garage number 12 in Triq San Valentin, Balzan Computers, keyboards, LCD and other items Further details can be obtained from the website: https://ecourts.gov.mt/onlineservices/JudicialSales The bidders taking part in the auction must present their identity card Gaetana Aquilina For the Registrar Civil Courts and Tribunals Malta makes tax avoidance pledge in EU recovery plan Government pledges to combat international tax arbitrage one week after being placed on the FATF's grey list Government also pledges to undertake a study for laws on dividends, interest and royalty payments between Malta-based companies and related companies established in zero- tax or low-tax jurisdictions