Serbian magnate Dragan Solak outed by MaltaFiles over tax avoidance, is Malta’s newest citizen

Malta’s latest list of naturalised citizens suggests Serbian media magnate Dragan Solak has acquired a passport through the €650,000 IIP scheme

Dragan Solak
Dragan Solak

One of Malta’s newest citizens is a Serbian media magnate who was outed in the Malta Files as yet another millionaire tax avoider.

Dragan Solak appears in the latest list of Malta’s naturalized citizens, although it can be surmised that the businessman acquired his Maltese passport through the Individual Investor Programme – which sells Maltese citizenship at €650,000. The government refused to give a breakdown of which of the names had been granted citizenship through naturalisation, and which had purchased their passport through the IIP.

MaltaToday identified his name together with that of his wife Gordana, and two other dependents Njegos and Srna Solak, with addresses in two different locations in Sliema, one of them in the luxury residential zone of Tigné Point.

The Malta Files, a project led by the European Investigations Centre of which MaltaToday forms part, revealed the extent through which high net worth individuals used the Maltese tax system to transfer their profits here and pay less tax than they would have done back home.

According to the findings by EIC’s Croatian partner Nacional, tax could have been avoided when Solak’s media group was paid €6.7 million in sporting TV rights by various Balkan television stations, which money ended up in Malta, Cyprus and Liechtenstein.

Solak’s United Media is one of the largest telecommunication groups in the Balkans, providing internet, telephony and TV programmes to a host of stations with some €440 million in revenue in 2016.

Solak, whose passion is golf, owns a 22.11% stake in United Media Group through his ownership of Gerrard Enterprises in Isle of Man; his wife Gordana is touted as the owner of another 4.99% stake through a BVI company called Cable Management Company Ltd.

In 2014, the group set up United Media Malta, in Malta. Although this company does not have a single employee, between August 2014 to August 2015 United Media Malta Limited received €6.7 million from Croatian Telekom, Iskon and VIPnet, and paid only €27,000 in tax in Malta.

Malta’s tax imputation system allows shareholders whose dividends are from activities that are not resident in Malta, to get an 85% rebate on the 35% tax they pay to the exchequer. This ultimately gives them an effective tax rate of some 5%.

The Maltese company was liquidated at the end of 2015.

Dragan Solak did not answer to questions from Nacional about the tax paid in Malta and in Croatia.

Another set of documents revealed Solak to be the owner of Prestige Media Ltd, a Maltese company, which was nominally owned by a Seychelles offshore company Salvado Investment Corp, Cohengen Holdings Limited from Cyprus and IKO Balkan S.r.l. from Romania.

Prestige Media booked a total of €10 million in revenue and over €9.6 million in profits, with tax paid in Malta. According to a document sent by the shareholdings to Nexia BT, the audit firm, the distribution of profits was €9.8 million, through the payment of a loan at just 0.125% interest rate. The company was liquidated in February 2015.