The OECD has downgraded Malta to ‘partially compliant’ for tax transparency purposes after it found that local authorities had not done enough to implement recommendations made several years ago.
Malta had been classified as ‘largely compliant’ by the OECD in 2013.
In a new report issued earlier this month, the Global Forum of the OECD explained that in 2013, Malta was found to have the legal and regulatory framework fully in place to ensure access to information on legal ownership and accounting and banking information for the relevant entities. At the time, Malta was told to ensure that its supervisory and enforcement powers were sufficiently exercised in practice.
Since then, however, Malta "has not taken sufficient measures to appropriately and fully address" that recommendation.
“This may cause concerns regarding the availability of accounting and banking information of all entities in all cases, in particular considering that the annual filing rates of companies and partnerships and the tax filing rates of taxpayers in Malta are very low and no sufficient enforcement measures have been taken by the Maltese authorities to address those issues,” the report says.
Inactive companies
The Global Forum also observed that there were over 10,000 inactive companies registered with the Malta Business Registry.
“Malta confirmed action has been taken to strike off those inactive companies, but since some of the actions were recently taken in 2020, their effectiveness cannot be tested.
“In addition, there are over 12,000 inactive companies registered with the tax authorities. Those inactive companies not only caused concerns regarding the availability of ownership information and accounting information of those companies, but also actually caused failure in practice for Malta to provide the related information to its partners.”
Malta was therefore urged to take effective action to reduce the large number of inactive companies and to ensure the availability of ownership and accounting information of all companies in Malta.
Another blow to Malta’s international reputation – PN
In a statement, the Nationalist Party said the downgrade in the OECD report was another blow to Malta’s international reputation, particularly in financial services. It contrasted sharply with the impression which the prime minister was trying to give about Malta having changed course and about good governance.
The PN observed that the downgrade put Malta in one of the lowest rankings among EU member states.
This development did not augur well ahead of the forthcoming assessment by the Council of Europe’s Moneyval group after the country failed the first assessment of its anti-money laundering actions.
All this was the result of policies which had weakened supervisory authorities and seen the police failing to act when information was actually provided to them.
The PN statement was signed by Mario de Marco, Kristy Debono and Claudio Grech, shadow ministers for finance, financial services and the economy respectively.