Justice Minister Owen Bonnici yesterday played down a breach of tax laws by the Prime Minister’s chief of staff, insisting it was merely an “administrative offence”.
The Times of Malta yesterday reported how Joseph Muscat’s right-hand man Keith Schembri, currently at the centre of the Panama leaks scandal, had only declared his overseas trust in New Zealand once the story had become public. As a result, he is now facing fines for breaking income tax laws.
Asked if he would tolerate such a situation from his own chief of staff, Dr Bonnici did not give a straight reply and instead said that a failure to declare such a trust was the kind of offence which was normally straightened out through administrative measures.
“If I understood the story correctly, then as often happens, the Tax Commissioner has his remedies. Normally these are administrative and one is given the opportunity to regularise his position. I’m sure Mr Schembri, as many others often do, will regularise his position,” Dr Bonnici said.
In a statement last Wednesday, Mr Schembri, who is facing increasing calls to resign over the Panama Papers leaks, said that “the trust was immediately declared to the relevant authorities in New Zealand and eventually with the Maltese authorities”.
However, this newspaper has revealed how Mr Schembri had only declared his trust after news of its existence emerged in the media seven months after it was created. Until then, he did not declare the setting up of his overseas financial vehicle – which includes a trading company in Panama – with the local tax authorities as obliged to do under Maltese law.
Contacted by this newspaper to confirm that the Income Tax Department had started procedures against Mr Schembri similar to those already started against Minister Konrad Mizzi, a spokesman for the department said: “We cannot deny or confirm anything as the law precludes us from divulging information about taxpayers.”
However, a senior government source at the Finance Ministry confirmed that following media reports, the department made its enquiries and found that Mr Schembri had not abided by the law.
Consequently, administrative procedures were started against Mr Schembri in order to regularise his position and impose a fine.
According to the provisions of the Income Tax Management Act, Mr Schembri was obliged to declare his overseas trust and other interests within 30 days from the creation of his new financial vehicle.
However, the source said he only started this procedure when news about his overseas financial arrangements started being divulged by the media.
Mr Schembri did not reply to questions about the date he declared his new set-up with the Income Tax Department or whether it was acceptable for a person in his position to break the law.