Tonio Fenech says Mizzi should have registered trust with Inland Revenue

Minister had to notify Commissioner of Inland Revenue of his foreign trust within 30 days of setting it up

Tonio Fenech (right) in one of his first televised debates with Konrad Mizzi
Tonio Fenech (right) in one of his first televised debates with Konrad Mizzi

Nationalist MP Tonio Fenech has told Parliament that Konrad Mizzi was required at law to inform the Commissioner for Inland Revenue of his New Zealand trust within 30 days of its setting up.

MaltaToday filed a Freedom of Information request last week to confirm whether Mizzi’s trust was registered with the CIR as laid down in the Income Tax Management Act.

Article 24(B) states that “where the settlor of a trust is a person resident in Malta, and none of the trustees of such trust is a person resident in Malta; and property is settled into such trust… the said settlor shall inform the Commissioner of the property so settled together with a copy, where applicable, of the relevant trust instrument or of any other document evidencing the existence of such trust. This information shall be submitted to the Commissioner by not later than thirty days from the date of the relevant settlement.”

Speaking during his parliamentary adjournment, the former finance minister said that the law stated that any settlor who fails to provide such details was guilty of an offence under the act.

But Fenech said that Mizzi’s failure to come forward with such a seminal piece of information on his offshore trust. “Had he filed this document, Mizzi would have published it right away. Instead he chose to ask for an investigation from the Commissioner of Inland Revenue. But it doesn’t appear as though Konrad Mizzi notified the Commissioner, which would mean that he would have broken the law.”

Konrad Mizzi has admitted owning a Panamanian firm that is owned by Orion Trust, the trustees of his New Zealand trust Rotorua. Mizzi will be closing down the Panama offshore company.

However, Fenech argued that Mizzi had been caught out trying to twist his words when he said that he will declare his trust during an interview with MaltaToday, but failed to mention that it owns a Panamanian company before such information was leaked by blogger Daphne Caruana Galizia.

He said that Mizzi’s set-up was designed “perfectly” so as to avoid paying tax on any extra income in Malta.

“His wife and children, and not himself, are the beneficiaries of the trust and they are not Maltese or Maltese residents. Any income poured into the trust will be non-taxable in Malta in the eyes of the law.

“It is clear that the structure was designed in such a way for Mizzi not to pay tax in Malta on income placed in the Panamanian company.”

Moreover, the Opposition MP questioned why Mizzi chose to register the company in Panama in the first place, noting that it has been blacklisted by the European Commission.

“Why hasn’t he populated the company with his assets yet? Why did he form a company in Panama in the first place and not simply place his assets directly in the New Zealand trust? Is it possible that Nexia BT [his financial advisors] didn’t warn him about the risks associated with Panama?”

He also questioned why Mizzi registered his company in Panama ahead of other renowned tax havens such as Jersey and Guernsey, countries with whom Malta had double taxation agreements.

“It is clear that he intends to hide something. I feel sorry for the finance minister who is fighting tooth and nail in the EU to maintain Malta’s current tax system, and show that we are committed to clamping down on tax evasion and money laundering as rigidly as possible.”

He called on Konrad Mizzi to resign his ministerial position. “He either set up a company in Panama because he was incompetent and completely unaware of its common association with money laundering, or he set it up for far more sinister reasons thtat can carry prison sentences.”