Issue link: https://maltatoday.uberflip.com/i/934206
maltatoday WEDNESDAY 31 JANUARY 2018 News 4 CONTINUED FROM PAGE 1 The most transparent country – Slovenia – has a secrecy score of 41.8, out of a total possible score of 100. A score of 0 would represent ideal, competition and market-friendly transparency. "In other words, if the Finan- cial Secrecy Index were a school exam, Slovenia (the best stu- dent) would have barely passed, with less than 60% of the cor- rect 'transparency' answers. The worst countries only got close to 10% of the 'transparency' ques- tions right (a secrecy score close to 90). Following this analogy, practically all countries would have to repeat the school year," the Tax Justice Network said. Malta scored 60.53%, barely passing into the league of major offenders. This score has to be taken in context of the other high scor- ers, where in the case of the Ba- hamas, which placed 19th after Malta, the score was way higher at 84.5%. Switzerland and the United States ranked tops because they are resistant to the key policy of automatic information exchange between tax authorities. And while the US refuses to take part altogether, it has its own parallel system (FATCA) which seeks in- formation on US citizens abroad, but provides little, if any, data to foreign countries. Malta is a par- ty to FATCA. "As the FSI demonstrates, countries like Switzerland are fundamental to the flow of il- licit financial funds, such as the proceeds of corruption. Switzer- land's attempts to stop transpar- ency for funds they receive from countries with perceived high levels of corruption will sim- ply make tackling corruption in those countries harder," the Tax Justice Network said. The NGO published no narra- tive on Malta, which is known for having attractive tax incen- tives for multinationals who set up tax-resident holding compa- nies that can qualify for rebates on their taxed profits of up to 85%. The UK government continues to insist on the right of its satel- lite tax havens like the British Virgin Islands to maintain the secrecy of company ownership, and the German government, with others, has sought to im- pede attempts to make progress on the beneficial ownership is- sue within the European Union. Corruption versus secrecy A salient point is the fact that the countries that ranked high- est in the Financial Secrecy In- dex, like Switzerland, Germany, Luxembourg, the USA, and the Netherlands, are the ones which are deemed to be the least cor- rupt nations in the Transparency International index of 2016. "As long as tax havens and se- crecy jurisdictions keep offering banking secrecy and the ability to hide other assets or the iden- tities of criminals behind secre- tive companies, trusts, part- nerships or foundations, it will be impossible – both for poor countries and for rich ones – to stop the suffering resulting from corruption, tax evasion, money laundering and other financial crimes," the Tax Justice Network said. Additionally, the European countries ranking the highest in the FSI are billed as being "largely compliant" according to the OECD's peer reviews, a tax transparency system created by the rich nations club. "The EU and the OECD point fingers at jurisdictions that may indeed be more secretive than the top 10 jurisdictions in the Financial Secrecy Index. But is that really where action is most urgently needed?" Tax Justice Network asked. "If Trinidad and Tobago and four other jurisdictions black- listed by the EU became fully transparent, global financial secrecy would be reduced only by 3%, since all of these jurisdic- tions have only 0.15% of the mar- ket of offshore financial services – the global impact would be negligible. In contrast, if the Top 10 jurisdictions of the Financial Secrecy Index became more transparent, the impact would Countries with most financial secrecy are least corrupt How the world's leading study of financial secrecy is created The Financial Secrecy Index is aided by the European Commission's Joint Re- search Centre for methodological sup- port. Countries are assessed against cri- teria which include whether companies, trusts and foundations are required to reveal their true owners, whether annual accounts are made available online in open data format, or the extent to which jurisdictions' rules comply with anti- money laundering standards (FATF's 40 recommendations). A total of 20 Key Financial Secrecy in- dicators (KFSI) are used for the meas- urement of the secrecy score. A secrecy score is then combined with a figure representing the size of the offshore fi- nancial services industry in each coun- try. This is expressed as a percentage of global exports of financial services. The bigger a player you are, the more respon- sibility you have to be transparent.