On January 1st, Malta, Europe’s smallest island state, took over the EU presidency amidst cries from tax justice supporters who claim the island is a tax haven.
The Maltese government led by Prime Minister Joseph Muscat will have the next six months to establish an agenda and lead Europe forward during a year that promises plenty of action.
Migration & Protecting Europe’s Borders
One of the main working points during the Maltese presidency is expected to be migration and securing Europe’s borders.
During a press conference held earlier this week alongside the European Commission President Jean-Claude Juncker, Maltese Prime Minister Joseph Muscat stressed the need to join forces to protect Europe’s borders.
“We need to discuss the positive aspects of migration, but we have to put ourselves in the place [of European citizens] who feel they are being disenfranchised,” he said.
The European Commission President mirrored this sentiment and asserted that the organization is looking forward to working with Malta in the area of migration.
Juncker said, “I am quite confident that the Prime Minister and his team will allow us to make the progress which is desperately needed… And I am quite confident that on the internal side and on the external side of this dramatic problem progress will be achieved. We will try, together with our Maltese friends, to have the border and coast control, where all the relevant decisions have been taken, being in a position to be more workable.”
Malta Accused of Being a Tax Haven
Work will also continue in the area of curtailing tax avoidance and Malta’s presidency concerns many tax justice proponents.
According to The Guardian, “Tax campaigners are questioning whether Malta has the political will to push this agenda, pointing out that the government does not mention tax in its presidency priorities.”
A recent report commissioned by the Green MEPs and written by Tommaso Faccio at Nottingham University Business School purports that Malta “helped multinationals avoid paying €14bn (£12.1bn) in taxes between 2012 and 2015 that would have gone to other countries.”
Sven Gielgold, a German Green MEP involved in the aforementioned report, said, “The tax system in Malta is generous to say the least, with large companies routinely paying as little as 5% tax on their profits. This is completely unacceptable and raises serious questions.”
“This is completely unacceptable and raises serious questions for the forthcoming EU presidency,” Gielgold added.
According to Faccio’s study, “the Maltese tax system shows the presence of preferential tax measures that could be regarded as harmful and facilitating offshore structures or arrangements aimed at attracting profits which do not reflect real economic activity in the country.”
As reported by The Guardian, “A government spokesperson rejected the claims in the report, pointing to a range of technical standards the Maltese government had adopted through the EU and the Organisation for Economic Cooperation and Development.”
Furthermore, a Maltese governmental spokesperson told EurActiv, “The fact that a country offers competitive tax rates does not make it a tax haven. Indeed, tax competition is something which many jurisdictions, including now the US and the UK, are embracing.”
How Will Maltese EU Presidency Handle Brexit?
In terms of Brexit, Prime Minister Muscat announced that his government will push for a tough stance on the United Kingdom, stating that under his Presidency the EU will look for “a fair deal for the U.K. but that fair deal needs to be inferior to membership.”
Juncker agreed and said during the press conference launching Malta’s Presidency, “If we are considering the Brexit case as the beginning of the end, we will make a major mistake...The Rome summit will bring together the best energies of the European nations.”