The US Senate has approved a new tax treaty with Malta in what Finance Minister Tonio Fenech said was 'a critical step in deepening Malta's relationship with the USA, not only at the political and social levels, but also in trade and investment.'
The treaty is based on the internationally recognised Organisation for Economic Cooperation and Development (OECD) Model Tax Convention..
"The potential created through this treaty is excellent for all industry sectors of Malta. Malta already has a good base of quality and substantial US organisations operating in Malta, providing the evidence required to show potential investors that Malta offers a quality environment to operate," the Finance Ministry said.
Mr Fenech thanked US Senators Kerry and Lugar, respectively Chairman and Ranking Member of the US Senate Committee on Foreign Relations, as well as their teams for the support they had always shown in the ratification process. He also thanked the US Treasury and the US Embassy in Malta, Malta's International Tax team, and Ambassador Miceli and his people in Washington for their professional support throughout.
The ministry said that potential US investors had been seeking this treaty to clear the way for fresh investment here.
US Ambassador Douglas Kmiec in a statement thanked Republican Senator Dick Lugar of Indiana for his central role in securiing the Senate ratification.
"Sometimes it helps to have friends in both political parties," said Ambassador Kmiec, who backed the Democratic candidate Barrack Obama in the last US election.
"Dick Lugar is known and revered throughout America as the Dean of foreign policy in the U.S. Senate, and his assistance in ensuring the final ratification by unanimous consent of the U.S. - Malta avoidance of double taxation treaty was invaluable and consistent," said the ambassador.
However, Professor Kmiec and Senator Lugar go back a long way - to Lugar's home state of Indiana, where Ambassador Kmiec taught and directed the University of Notre Dame Center on Law and Government for nearly 20 years.
"Sen. Lugar is the gold standard of public servants," said Amb. Kmiec. "His very demeanor and analysis of issues quickly reveals that merit, not partisanship, is his lodestar. This is why it was important to have Sen. Lugar on Malta's side during the tax treaty consideration.
"There was some worrisome opposition at several points in the process, including some competing foreign nations, that tried to defeat Malta's tax treaty by painting an older picture of Malta as a "tax haven" for monies can be hidden.
"These misstatements didn't have a chance with Dick Lugar, who studied the matter and saw the importance of the treaty to economic growth."
Neil Roberts, a member of Lugar's foreign relations staff praised the ambassador for his own efforts and said that avoiding double taxation was both equitable and good economic policy.
Sen Lugar said that as the United States considered how to create jobs and maintain economic growth, "tax treaties lowered effective tax rates for American companies selling American goods overseas while ensuring that foreign companies paid their fair share of taxes when operating in the United States.