Edward Scicluna denies Malta’s intention ‘to slow down’ tax avoidance drive

Finance Minister Edward Scicluna has denied it was the Maltese Presidency’s intention to “slow down” its drive against corporate tax avoidance, insisting that Malta will continue working on pushing forward the files.

“Not at all… I don’t know how one got that idea,” the Maltese minister told reporters ahead of a meeting of the European Union’s finance ministers who are meeting in Valletta.

Reuters reported that Malta's presidency of the European Union presented a paper on Friday, suggesting that the EU should slow down its drive against corporate tax avoidance because it might hurt Europe's economy by increasing legal uncertainty.

The paper, seen by Reuters, said, "a certain amount of time is needed in order to properly formulate, assimilate and apply such legislation".

But this morning, Scicluna insisted that this was a misinterpretation.

To combat tax erosion and profit shifting, the OECD launched a global initiative against tax avoidance.

The finance minister reminded that the Maltese Presidency has already presented amendments to rules against tax avoidance practices, amounting to a compromise solution which was accepted. The solution provides rules regarding corporate hybrid mismatches and third countries. He said that Malta was now working on VAT files, amongst others.

“We want the European Commission to show its opinion at EU level. We are working on multiple files which will be brought up in May or June, before the end of the president,” he said.

Scicluna insisted that it was “a big misinterpretation” to interpret discussing tax certainty papers as “slowing things down”.

“It’s not,” he said. “The OECD’s base erosion and profit shifting (BEPS) strategy is a major roadmap which involved a lot of reforms in taxations. Whilst seeing that companies receive a clear signal against tax avoidance and that they cannot play around, at the same time we must ensure dispute resolution mechanisms.”

He argued that, in view of the tax reforms requires, one should look at having clear rules that deter tax evasion but do not scare investors away.

During the doorstep comments, Scicluna was asked whether Malta was “focusing on its interests”. The news report by Reuters recalled that the European Commission’s proposals on closing legal loopholes following the Panama Papers revelations that had exposed widespread tax evasion and money laundering.

“Not at all,” Scicluna replied. “Malta always said that it was against tax avoidance. There are loopholes across several jurisdictions and our task is to close them.”