Greens strike out at Malta's 'unjust' taxation system

The European Greens, including their Maltese partner Alternattiva Demokratika, have hit out at Malta taxation system, warning that it goes against the principles of basic tax justice.

German MEP Ska Keller, who co-chairs the European Greens in the European Parliament, told a press conference in Birgu that EU loopholes that allow for tax avoidance must be closed, arguing that EU member states shouldn't be allowed to steal tax money from other member states.

The Malta Files recently revealed that Malta receives over €240 million every year in international tax receipts thanks to its unique tax system, which gives foreign shareholders up to six-sevenths of the 35% corporate tax they pay on profits generated overseas and booked in their Malta holding companies. 

Keller warned that the Maltese system, as well as those in place in Belgium, the Netherlands and Cyprus, is essentially robbing other European countries of public funds.

"The EU can no longer afford to accept national tax schemes that allow wealthy people and companies to dodge taxes in their home countries," she said. "We need serious reforms so that Malta and other member states do not remain accomplices in tax avoidance. It is crucial for social justice in the EU that companies and wealthy individuals pay their fair share of tax to finance good schools, renewable energy and quality jobs.

"It is not right or fair for countries to base their economies on taking taxes from other countries. Economies must be diversified, it's not smart to base an economy on just one sector."

Keller also called for an independent inquiry into the Panama Papers revelations, warning that accusations of money laundering have damaged Malta's credibility in its current role at the helm of the EU rotating presidency.

"The involvement of [minister] Konrad Mizzi and [OPM chief of staff] Keith Schembri, and allegedly even of the Prime Minister himself is being taken extremely seriously in the European Parliament," she said. "It is primarily in the interest of the Maltese people to get to the bottom of things, but the European Parliament also demands full transparency and accountability for any wrong-doing."

Alternattiva Demokratika chairperson Arnold Cassola said that Malta's sixth-sevenths discriminates against Maltese companies, as it is only applicable to foreign companies. 

"While foreign companies can qualify for discounts that allow them to pay 5% in tax, Maltese companies have to pay the full 35%," he said. "Maltese companies are faced with unfair competition, and the system is a form of tax injustice."

He urged the government to diversify the economy and stop relying so heavily on the financial services sector, warning that change will be forced upon it eventually.

"The EU should close its loopholes that allow for tax avoidance, and the Maltese will have to adapt to these new laws," he said. "In Malta, all the eggs are being put into the financial basket, but things will change whether we like it or not."

He also referred to a recent report that Playmobil is paying its sub-agents in Malta €3.99 an hour, and that these sub-agents in turn pay their workers a measly €2 an hour, over 60% less than the minimum wage.

"This is scandalous and tantamount to modern-day slavery. €2 can hardly buy you a cappuccino," he said. "We have no problem with companies like Playmobil coming to Malta, but they mustn't be allowed to abuse their workers."