Malta’s misplaced identity debate

Foreigners who live, work and pay taxes in Malta are denied the possibility to at least apply for citizenship; while the wealthy are encouraged to simply buy a passport

Cartoon by Mikiel Galea
Cartoon by Mikiel Galea

In January, Identity Malta announced a public consultation exercise aimed at revising, and possibly extending, the Individual Investor Programme (IIP) – Malta’s citizenship by investment scheme.

It was revealed that over 1,100 families had applied for the programme, generating over €590 million in direct payments to Malta’s posterity fund and consolidated fund. The programme is capped at some 1,800 main applicants (not including dependants). The number of main applicants is so far at just over 30% of the quota fixed at the start of the IIP.

In announcing the revision, Identity Malta pointed out that the government has an electoral mandate to extend the scheme. The public consultation was to focus on how the scheme could be improved, such as the criteria for eligibility, whether there should be a cap on the number of applicants, and what services can be offered to the applicants.

“The main objective of the updating and revision of the Programme is to ensure it remains at the forefront in reputation, attractiveness and rigorousness, and at the same time to address those administrative processes which require revisiting following the experience gained in their implementation,” Identity Malta said.

Certainly, there are many ways to improve the scheme: such as, for instance, by making it more transparent. The agency has so far resisted freedom of information requests calling upon it to disclose the identities of citizens who are acquiring their passports, or data as to which are the leading agencies securing the most successful applications for citizenship.

This becomes problematic in view of the overwhelming bad international press associated with this scheme, which is now the subject of a broader European Parliament investigation. For the first time, the Brussels parliament will look into tax privileges for new residents who benefit from citizenship programmes and non-domiciliary regimes in Malta, Portugal, Italy, the United Kingdom and Cyprus. The committee is expected to take an interest in Malta’s tax imputation scheme, which can levy an effective tax rate of 5% for foreign companies.

Admittedly, the initiative in itself exposes internal divisions within the EU when it comes to policing against tax evasion. While the EP condemned Malta’s IIP scheme, the European Commission approved it. But given the extent of the scepticism that exists, it is debatable whether Malta should even consider extending it. Even if the scepticism is misplaced, surely it would make more sense to await the outcome of the EP investigation before affecting any changes to the scheme.

Nor is this the only consideration. Regardless of current controversies, any discussion on Maltese identity should include all aspects of our country’s laws and policies... not just the ones associated with a single scheme, which even then caters only for the world’s wealthiest citizens. It is indeed unconscionable that a debate on the IIP scheme should precede a debate about Malta’s entire citizenship framework legislation: which, unlike the IIP scheme, is in urgent need of reform.

Malta employs a ‘jus sanguinis’ approach to the issue of nationality: meaning that at least one parent has to be a Maltese citizen for their children to qualify. Children born in Malta to foreign parents are not automatically given the possibility to apply for Maltese citizenship, as is the case in several other EU countries.

This may have made sense in decades gone by, where foreign residents were generally a rarity, and few ever applied for citizenship. But in a context where Malta’s population is expanding through legal (and encouraged) migration, it is giving rise to clear cases of social injustice. Foreigners who live, work and pay taxes in Malta are denied the possibility to at least apply for citizenship; while the wealthy are encouraged to simply buy a passport.

Even without the glaring injustice, we cannot ignore the plight of thousands of foreigners living here in a legal vacuum, while ostensibly ‘debating identity issues’ on a national level. The IIP scheme certainly has a place in that debate; but the debate cannot be limited to just that.

In the light of Malta’s constantly changing demographics, a debate is also needed on the ultimate significance of Maltese nationality. What are the eligibility criteria? Is ‘jus sanguinis’ still a justifiable policy? Should anyone who pays taxes locally be entitled to citizenship? Or should a proven affinity with Maltese culture or way of life also be a factor?

These are issues that have been ignored for too long. To continue to ignore them now – as we debate only one small aspect of the identity issue – is to add insult to injury.