Malta and EU Tax and Compliance Policy Bulletin 84

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Malta and EU Tax and Compliance Policy Bulletin 84

David Marinelli

September 1, 2022

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EU Council Reviews Tax Blacklist

On 24 February, the Council of the EU reviewed its List of Non-Cooperative Jurisdictions for Tax Purposes (“Blacklist”). No jurisdictions were added to the list during the review.

The following jurisdictions remain on the Blacklist: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu. The state of play in Annex II of the Blacklist also details steps taken by various jurisdictions to undertake reforms in order to comply with tax good governance standards. More detail on this can be found in the Code of Conduct (Business Taxation) report to the Council of the EU.

The Blacklist is reviewed twice per year, and will next be reviewed in October 2022.

Investment Tax Incentives Database

Following on from the creation of an online database which compiles information on corporate income tax (CIT) incentives for investment, the OECD has now published a paper setting out the methodology employed for the development of the database and on initial data collected using the database from 36 developing countries.

According to the OECD, “the data reveal that tax exemptions are the most widely used CIT instrument across the 36 countries and identifies notable differences between the incentives used within and outside of Special Economic Zones (SEZs). In 80% of countries covered, at least one tax incentive supports an area related to the Sustainable Development Goals”.

ECOFIN: Agreement on Carbon Border Adjustment Mechanism

On 15 March, EU Finance Ministers at the Council of the EU’s Economic and Financial Affairs Council meeting reached agreement on the Carbon Border Adjustment Mechanism (CBAM). The EU proposal aims to level the playing field by targeting imported goods from countries which do not apply the same standards as Europe, thus preventing carbon leakage. To do so, the Directive aims to put a price on carbon-intensive imports, such as steel, electricity and fertilisers, thus encouraging trade partners to implement similar green policies at home. As a result, global reduction of carbon emissions could be achieved simultaneously.

The Directive also foresees a registry of CBAM declarants (importers) centralised at EU level, as well as a minimum threshold which exempts importers from obligations where goods have a value of less than €150, in order to reduce administrative complexity.

Although agreement has been achieved on the wording of the CBAM, work on closely related aspects under the Emissions Trading Scheme Directive, such as the phasing-out of allowances to industry sectors and solutions for limiting carbon leakage must first be achieved. Once progress of these matters has been made at Council level, the file will thereafter be progressed to the European Parliament for negotiations.

EU Parliament: Public Hearing on the New Anti-Money Laundering Package

On 22 March, the EU Parliament’s ECON and LIBE Committees held a joint public hearing concerning the new Anti-Money Laundering Package proposed by the EU Commission in July 2021. They highlighted the outstanding elements of the EU Commission’s legislative package from their perspectives. Interestingly, the Financial Action Task Force also updated its Recommendations to add new definitions of “nominator” and “nominee shareholder or director”, to strengthen the standards on beneficial ownership of legal persons, and recommended governments set up beneficial ownership registers where this is not already in place.

New FATF Anti-Money Laundering Standards

The Financial Action Task Force (FATF) updated its Recommendations to add new definitions of “nominator” and “nominee shareholder or director”, to strengthen the standards on beneficial ownership of legal persons, and recommended governments set up beneficial ownership registers where this is not already in place. These measures would reportedly be of use in identifying assets targeted by sanctions introduced by the international community following the Russian invasion of Ukraine.

Other changes to the FATF Recommendations include:

Combating the financing of the proliferation of weapons of mass destruction through the consistent implementation of targeted financial sanctions when these are called for by the UN Security Council.
Improved transparency to make it harder for criminals and terrorists to conceal their identities or hide their assets behind legal persons and arrangements.
Stronger requirements when dealing with politically exposed persons (PEPs).
Expanding the scope of money laundering predicate offences by including tax crimes.
An enhanced risk-based approach which enables countries and the private sector to apply their resources more efficiently by focusing on higher risk areas.
More effective international cooperation including exchange of information between relevant authorities, conduct of joint investigations, and tracing, freezing and confiscation of illegal assets.
Better operational tools and a wider range of techniques and powers, both for the financial intelligence units, and for law enforcement to investigate and prosecute money laundering and terrorist financing.

Source: Malta Institute of Taxation Click here, CFE Tax Advisors Europe Click Here

Please contact David Marinelli should you wish to discuss any matter relating to your Malta registered company.

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