Issue link: https://maltatoday.uberflip.com/i/191652
7 News maltatoday, SUNDAY, 13 OCTOBER 2013 U, for €650,000 UNJO NU EW ROPE MALT A Joseph Vella Bonnici will head Identity Malta. A former investment promotion officer for the Malta Development Corporation (forerunner of Malta Enterprise), Vella Bonnici is behind the IIP result that gave Malta EU membership, it's this very commodity – EU citizenship – that the Labour government wants to cash in on. But the Maltese have never been strangers to the art of profiteering as the situation arises. Privatisation aside (and a good deal of that has taken place over the past 20 years), the former administration used low tax bases and unbeatable financial incentives to attract the bulk of Europe's and the world's e-gaming industry and other financial services firms to set up shop in Malta. To put it into perspective, the IIP passport-flogging is another piece in the jigsaw puzzle of Malta's beneficial tax regime. Foreign companies can get up to 85% discounts on the tax they pay on profits they remit to a subsidiary in Malta, which is why giants like Australia's Commonwealth Bank or the UK's Npower have set up small offices in Malta to pay lower taxes here. EU retirees can pay 15% on their pensions at a minimum liability of €7,500 if they own a property that costs at least €275,000 – or, if they are still working, avail themselves of the flat 15% tax rate under the Global Residence Programme, again if they buy a property and are subject to a minimum €15,000 tax. Or if you're a chief executive officer for a Maltese firm, you can get any income over €75,000 taxed at just 15%. Anything above €5 million is PASS APOR T Citizen Gains Er ic Major of Henl e y and Armand Arton of Arton Capital are arguably the leaders of the global immigration business that allows the rich and powerful to move between countries through the acquisition of passpor ts or to avoid high taxes in their countries of origin. Af ter Henley was chosen to be the Maltese government 's concessionaire, Arton Capital contested the decision. But its appeal was turned down by a board of appeal chaired by Malta Industrial Parks deputy chairman Critics: sociologist Michael Briguglio says Malta "is for sale" because it now sells citizenship to the rich and closes its doors to the poor, while University of Malmo academic Daniela De Bono says the new law offers no fair way for foreigners who already have a community bond in Malta to obtain citizenship within established parameters tax-free. So, what does it cost us to start selling off passports to people who really want them? Stability is the 'pull factor' Joshua Zammit, Reno Borg (a PL delegate on the Broadcasting Authority) and Adrian Said. Ar ton alleged that Henley had a special relationship with the government because it had A Unfair citizenship law Armand Arton of Arton Capital Eric Major of Henley izens in the government gazette. That means that not only will the public not have access to the names of people naturalised by the standard channels, as is current law, but neither will it know who are the powerful and rich who are acquiring Maltese passports. Malta is already home to a variety of characters who attract international attention. You may have stumbled across news of multimillionaire Rakhat Aliyev, Kazakhstan's most wanted, who is married to an EU citizen and therefore enjoys freedom of movement and residence in Malta. Or perhaps Vladimir Peftiev, dubbed the banker of Belarusian dictator Aleksander Lukashenko, who has a residence at Portomaso. They could be suitable candidates for the IIP because under the new rules, the minister may exercise discretion on applicants "who may be subject to politically motivated charges or convictions". The situation would be akin to that of ousted Thai prime minister and billionaire tycoon Thaksin Shinawatra, who left for Montenegro to buy himself a passport there so that he could evade corruption charges opened against him by the Bangkok authorities. There is no doubt that with this kind of secrecy contemplated for the IIP, the concerns about who is going to be buying the golden passport are well justified. As Dominica's former ambassador to the UN, Crispin Gregoire, told Reuters, the system "encourages people with something to hide. It must be a big source of income for the state, but they're not doing a good job of regulating it". already been associated with the for mer adminis t r at ion, in giving consultation to the government on a similar scheme or a p er manent r e s idence programme. But Major told the appeals board that Henley had never been involved in advising the government on 'citizenship by investment ', and instead was involved in the Maltese residence schemes of the last 10 years. Arton Capital was represented in the tender by counsel Tanya Camiller i of F ZD Advocates, whose senior par tner is Nationalist MP Francis Zammit Dimech. They have f iled a judicial protest in court, signed by Therese Commodini Cachia, c ur r en t ly r unning f or t he European elections on the PN ticket. Consider the allure of an EU passport for the people who really want it and for those who can afford it. Paying a $250,000 cash donation to the St Kitts' Sugar Industry Diversification Foundation allows new citizens to travel without a visa to over a hundred countries, including Canada and Europe – apart from not paying income taxes. In Malta, €650,000 will buy you an EU passport that allows you to move around 28 member states, take up residence in Germany if you wish, and repatriate profits to Malta for tax rebates – and visa-free travel across most of the world. They will not be coming here for the fantastic weather. As the people at Henley & Partners say – the concessionaire that will be marketing Malta's fast-track naturalisation – it is instability that drives the rich and powerful to stable countries that can offer them citizenship. As they told Reuters, Danish citizens in 2006 would have found themselves the target of extremists after the Jyllands-Posten cartoons set the Muslim world alight. "In some countries, you couldn't even enter. That is, unless you had a second passport," partner Christian Kalin said. There could be expected demand from people in China, Russia, and South Africa or Middle Eastern countries to want a Maltese passport. Henley throw parties for the jet set through invite-only social networks. But they could also be US millionaires who want to start paying tax outside the US, or rich migrants who can buy 'political' asylum – government dissidents, pro-democracy activists, multimillionaires in dangerous industries. Of course it's political Joseph Muscat, a self-declared economic liberal, says selling citizenship is the mark of a modern economy. Economically lucrative though it may be, the system is fraught with political pitfalls. In the first place, the government is striking off the obligation to have to publish the names of naturalised cit- But while Muscat is providing multimillionaires with citizenship against payment, the hard-earned naturalisation for foreign residents who have actively contributed to Maltese social life, paid taxes here and brought up their children on the island will not change. The home affairs minister will keep enjoying his singular, non-reviewable discretion to give citizenship by naturalisation; while under the IIP, he can grant the golden passport to rich exiles who might be facing "politically-motivated" charges back home. The minister's discretion in awarding naturalised citizenship is already an avenue of potential abuse or conflict of interest. So if the IIP has its own strict requirements for candidates, why aren't the common folk getting a proper framework where they too can be awarded citizenship? "Muscat wants Malta to move out of what he dubbed a 'prehistoric' economy through new mantras [like] selling citizenship rights to those who afford it," says sociologist and former Green Party leader, Michael Briguglio. "So now it is official, Malta is for sale. This is a taghna lkoll which gives citizenship and property rights to those who make millions from our resources, and which proposes pushbacks to those who have nothing. This is social justice in reverse, selling Malta to the rich and closing Malta's doors to the global poor." Daniela De Bono, an academic who carried out an analysis of Maltese citizenship laws for the EU's observatory on democracy, has said that it >>