MALTA: Heightened scrutiny on foreign companies using jurisdiction to evade tax.

As published on maltatoday.com.mt, Thursday 9 September, 2021.

Foreign companies registered in Malta will face heightened scrutiny for serious tax evasion, the head of the money laundering watchdog has said.

As efforts to get off the greylist intensify, the director of the Financial Intelligence Analysis Unit, Kenneth Farrugia, has told TVM’s Xtra Sajf the added scrutiny addresses concerns highlighted by international monitors on serious tax evasion.

The recorded hour-long interview with programme host Saviour Balzan will be broadcast on Thursday.

Malta was placed on the greylist by the Financial Action Task-Force (FATF) in June. The greylist includes jurisdictions subjected to increased monitoring because of deficiencies in the fight against financial crime.

The FATF flagged two issues linked to tax evasion – the need for the FIAU to focus intelligence gathering on serious tax evasion and increased scrutiny on companies using Malta to launder money derived from tax evasion.

Farrugia said the FIAU had already started addressing serious cases of tax evasion by Maltese nationals and companies but is now increasing its scrutiny on foreign companies.

“You cannot have 25,000 foreign companies registered here and all of them have perfect records,” he said, adding the FIAU has drawn up a plan of action to fight serious tax evasion.

“A distinction has to be made between companies that take advantage of Malta’s tax system for tax planning reasons and others that are simply set up to hide proceeds derived from tax evasion,” he said.

He ruled out a quick exit from the greylist but insisted the FIAU was trying to anticipate the timeframe agreed with the FATF.

“It is not impossible to exit the greylist but the least time that a country has spent on the greylist is 18 months. We are targeting 18 months or even less. We have a plan and strategy, and we are implementing it,” Farrugia said.

Malta agreed with the FATF to implement a plan of action by January 2023. The FATF meets three times a year – February, June and October – which makes it almost impossible for the country to exit the greylist before the next general election, which is due at the latest by September 2022.

Opposition leader Bernard Grech has pledged that a government led by him will take Malta off the greylist in three months.

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