Issue link: https://maltatoday.uberflip.com/i/208710
7 News maltatoday, SUNDAY, 10 NOVEMBER 2013 Footballers' 7.5% tax rate to bring secret top-ups out in the open Professional footballers' association want removal of paltry ceilings that cap salaries at €350 a month and encourage illegal top-ups as compensation JURGEN BALZAN THE Finance Ministry is in discus- sion with the Malta Football Association (MFA) to introduced a new 7.5% income tax rate, following the introduction of new rules by UEFA, that is believed will encourage football players to declare their income in full. "We want to ensure conformity and incentivise professional footballers, and we are hoping that with the help of the MFA, football clubs will conform and exit the black economy," finance minister Edward Scicluna announced last week during Budget 2014. But speaking to MaltaToday, MFA president Norman Darmanin Demajo explained that the tax cut would only apply to part-time Premier League footballers who have their salaries capped at €350 a month, plus a signing-on fee equivalent to half their yearly wage. Currently part-time footballers plying their trade in the top division cannot earn more than €350 a month, while those playing in the second tier have their monthly wage capped at €200. Players in the third and fourth tiers have their wages capped at €125 and €100 respectively. On the other hand, professional full-time footballers have their salaries capped between €720 and €1,200 a month and are also eligible to an additional €500 a month in allowances. This ceiling is mainly applied for foreign footballers, however around 12 Maltese footballers are currently registered as full-timers. Given the miserly ceiling, most clubs come to an agreement with their employees on a net wage, meaning that wages are either augmented by add-ons such as fuel, phone and gym allowances or else enhanced by undeclared payments. Despite the existence of the ceilings, Maltese and foreign footballers playing for the big clubs earn much more than the set salaries, in some instances earning up to €4,000 a month in topups that remain undeclared. Although such irregularities can land players and clubs hefty suspensions and penalties, these practices have been tacitly accepted by clubs, players and the Maltese football's governing body, however a committee has been set up within the MFA to review the out-dated regulations. The ceilings remained unchanged since their introduction in the early nineties and the MFA is set to review the ceilings before the start of the new season. Although players are advocating a complete removal of the ceilings, an MFA official explained that by June 2014, new revised ceilings would be introduced to reflect today's realities. Darmanin Demajo warned that clubs who pay their employees irregularly and fail to pay their national insurance, would risk losing their license as it would breach the UEFA Financial Fair Play Regulations, and deprive them from competing in European championships. The tax cut, which has been in the pipeline for over two years, seeks to offset wage discrepancies and to abide by the UEFA Financial Fair Play Regulations, Darmanin Demajo noted. "In an effort to address the miserly wages Maltese part-time footballers receive, the government has imple- MFA President Norman Darmanin Demajo: "Clubs who pay their employers irregularly and fail to pay National Insurance risk losing their license" MFPA President Konrad Sultana mented this favourable income tax rate to encourage Maltese sportsmen to declare their salaries at a lower income tax rate," he said. "The ball is now in the players' and clubs' court to abide by the new regulations and come clean with the salaries." Meanwhile, the MFA president underlined that as opposed to foreign countries, particularly the French government, the Maltese administration implemented a lower tax rate to reflect the 'massive' wage discrepancies between Maltese footballers and foreign-based footballers. This week, France's professional football clubs decided to go on strike on the last weekend of November in protest at President Francois Hollande's new 75% tax for anyone earning €1 million or more a year. Currently, in Malta part-time footballers theoretically earn up to €350 a month, a salary dwarfed by the rocket-high salary of foreign-based footballers. "As a result, the government and the MFA have agreed to enact this new favourable measure to help part-time footballers," Darmanin Demajo said of the 7.5% tax rate. He also explained that only parttime footballers can enjoy the new tax-rate and consequently, foreign players, who are often contracted on a full-time basis, are still bound to pay the regular income tax rates. Meanwhile, the Malta Football Players' Association (MFPA) welcomed the 7.5% income tax rate for football players, describing it as a step in the right direction towards enabling players and clubs regularising their position and status. Spokesperson Konrad Sultana praised the new measure which he believes increases transparency among players, and an incentive for footballers to declare salaries. "The measure offsets precarious employment conditions among footballers. Particularly, the new measure allows players to declare their salaries and enjoy their fully justified wage and allowances, such as gym and transport allowances and salaries." Echoing previous calls to tackle the 'ridiculous' wage discrepancies be- tween Maltese and foreign players, Sultana insisted that this discrepancy remains the Achilles' heel between players and their respective organisations and the MFA and clubs. "Despite creating disharmony among teammates, Maltese players often feel the subject of discrimination and injustice with their paltry €350 monthly wage when compared with the €1,200 their foreign counterparts receive for their full-time endeavours." Coupled with their wage discrepancy, Maltese players have to shoulder various parameters and pecuniary expenses upon the termination of their contracts. On the other hand, foreign players walk away as free agents, Sultana explained. "We expect to reach a decision in the coming months as to date, the clubs' only decision on addressing this wage discrepancy, was to increase the number of foreigners," Sultana said. Additional reporting by Daniel Mizzi – Franco Debono The defence lawyers who secured the groundbreaking decision, Cedric Mifsud and Michael Camilleri, have said that the Housing Decontrol Ordinance is being used by tenants to permanently reside in homes they had once leased, to the detriment of the legitimate owners. They have since called for MPs to amend the law, or it could be used in new claims for compensation by landlords. This predicament was voiced by Malta Developers Association president Michael Falzon, who said the judgement could presage big upheavals in the rental market. "The government should consider amending the law so that owners are given the right to ask for compensation based on the actual value of the property when temporary emphyteusis expired, rather than being arbitrarily based on the annual 'rent' agreed when the emphyteusis was established." However, professor of history of law at the University of Malta Raymond Mangion insists that the parliament is not obliged to amend the law, because the Constitution provides no imposition to change laws deemed unconstitutional by the courts. "By law, parliament is not tied by the court's judgment, irrespective of the jurisdiction of the court. There is no explicit provision in the Constitution imposing the parliament to adopt legislative amendments. It may instead opt to act against the court's decision, and not amend the rent laws. MPs can choose to wait for further judgments before drafting amendments to the law." Being two separate and autonomous entitles, the law courts cannot use its power to impose the House of Representatives to amend laws. But government is still open to the risk of more compensation claims brought against it by landlords, as Mangion says. "They might resort to the European Court of Human Rights, which is now considered the third level in judicial remedy. If the government is then found guilty of compromising the right of the landlords to enjoy one's property, the ECtHR may hold Malta liable for damages." ! HEAD (OPERATIONAL PROGRAMME II) Applications are invited for the position of Head (Operational Programme II) in the Planning and Priorities Co-ordination Division in the Ministry for European Affairs and Implementation of the Electoral Manifesto. Applications will be received at the Office of the Permanent Secretary, Ministry for European Affairs and Implementation of the Electoral Manifesto, 31B, Tal-Pilar, Marsamxett Road, Valletta, VLT 1850 by not later than noon of Friday, 15 November 2013. Further details may be obtained from the Government Gazette of 25 October 2013. Application forms may be downloaded from: http://pahro.gov.mt/file.aspx?f=371 . ! Operational Programme II – Cohesion Policy 2007-2013 Empowering People for More Jobs and a Better Quality of Life Position part-financed by the European Union European Social Fund (ESF) Co-financing rate : 85% EU Funds; 15% National Funds Investing in your future ! ! ! ! ! ! !