Malta is not in favour of a European Union tax being imposed on individual investor programmes such as Malta’s, the parliamentary secretary for citizenship, Alex Muscat, said.

However, the government is open to the possibility of a common set of rules for such programmes across the EU.

“We have always been clear that every member state should retain full authority over citizenship and taxation, so we oppose an outright tax on every state,” Muscat said.

“We won’t budge on these principles.”

Muscat was reacting to an extensive working report published by the EU parliament earlier this month.

The report, an academic document, proposes possible policy solutions to address controversial citizenship schemes which it says half the union’s 27 member states already operate in one form or another.

The suggestions range from accepting that such schemes are here to stay and, therefore, require a common set of rules, to completely abolishing them outright.

Launched in 2014, Malta’s so-called citizenship by investment scheme has generated €1.5 billion over six years.

In 2019, the European Commission identified ‘golden passport schemes’ as raising the risk of possible infiltration of non-EU organised crime groups, as well as money laundering, corruption, and tax evasion possibilities.

EP experts argue that a European tax would “reduce incentives” for wealthy people to use the scheme, thereby limiting the potential risks they pose.

The report also suggests a common regulation for all member states, and Malta is on board with that.

“To me, this seems like a step in the right direction. We have been pushing for common regulation for a long time, and the fact that the EU parliament is now considering it is positive news for us,” Muscat said.

Malta is currently involved in a dispute over the scheme with the European Commission, which is threatening to take the country to the European Court of Justice.

“We have now sent our replies to the EU commission for the second time and we’re waiting to hear back from them,” Muscat said.

“But we’re hopeful that we will find a solution that will benefit everyone.”

Government: security concerns are valid

Muscat conceded that Brussels’ security concerns over these schemes in recent years had been valid.

“I can understand the security concerns, which is why we have strengthened due diligence process to an incredible degree, making us one of the strictest member states when it comes to identifying applicants with the wrong intentions,” he said.

But defending the local scheme, Muscat said it has evolved drastically over the past years. Today, applicant screening is carried out by international experts engaged with UK and US national intelligence agencies.

The junior minister said that if current trends are anything to go by, then the  market for citizenship programs will go through the roof after the pandemic.

“Americans, British and Chinese people look at how Europe and Malta dealt with the pandemic and are now seeking citizenship in countries they know will offer them secure and prosperous health conditions,” he said.

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