Mur Lura
SPEECH BY THE HON. JOHN DALLI, MINISTER OF FINANCE, AT THE OPENING OF THE THIRD MEETING OF THE GLOBAL FORUM WORKING GROUP ON EFFECTIVE EXCHANGE OF INFORMATION – HILTON HOTEL MALTA
pr1046
10/07/2001
10/07/2001
| It is indeed a pleasure and an honour for me to welcome you to Malta and | to address this distinguished gathering. I gather that this meeting will concentrate mainly on the continuation of the development of a legal instrument for effective exchange of information. |
| I do not want to take much of your valuable time but | I think it is opportune to dwell briefly on the OECD initiative on harmful tax competition particularly how it has affected co-operative jurisdictions since they were involved in the process. This I will do by outlining Malta's case although, I am sure, every other committed jurisdiction has its own story to tell. |
| On the 22 July 1998 Malta received the first | notification from the Chairman of the Committee on Fiscal Affairs, OECD that they had created a "Forum on Harmful Tax Practices" that may examine our jurisdiction under the criteria set out in the OECD Report on Harmful Tax Competition. The first spontaneous reaction was one of exasperation. We were told that the Committee had targeted jurisdictions whose names appear frequently on published lists of tax havens. We did not really understand this rationale considering that we were not told what these publications were and that the Maltese authorities did not have any control on such publications. Moreover, it was Malta's policy not to project itself as a tax haven particularly in view of the fact that our systems are modelled on and have clear parallels with those found in other respectable European tax jurisdictions. |
| In his letter, the Chairman of the Committee on | Fiscal Affairs had also specifically asked what measures Malta had taken to offset any harmful effects that our tax regime may have on other countries. In our view, Malta had set a precedent in the world of international finance by unilaterally taking corrective action and introducing legislation way back in 1994. This legislation ended the offshore regime in Malta and established an orderly phasing out of all the existing offshore companies by 2004. This exercise developed a comprehensive set of laws for the financial services sector that totally integrated into the total legal framework in Malta. It achieved our purpose to establish a comprehensive legal package that would provide a solid basis for Malta to establish itself as a reputable financial centre. The complexity of the exercise can be gauged from the fact that about 14 pieces of legislation were enacted that ranged from the enactment of totally new laws to enhancement, amendment and consolidation of existing legislation at the time. The legislation that was approved unanimously by the Maltese Parliament in 1994 follows general internationally accepted practice and conforms largely to EU standards. |
| Malta explained all this to the OECD and although it | did not fully agree with the original approach of the OECD with non-member countries, it did not see any reason why it should not co-operate fully with the process that had been commenced once Malta's regulatory and tax legislation was already very much in line with that of other European jurisdictions. |
| Malta recognises also that it still needs to adjust | its legislation in certain areas to upgrade its profile and to honour the commitments that were made. We are already working very actively in developing the required legislation although we are not obliged to implement before 2005. A meeting has also been held in Malta with OECD officials with a view to discussing some details regarding Maltese legislation relating to the commitment that Malta has given. |
| The OECD initiative has resulted in a substantial | increase in work and expense which have a large impact on small countries with rather limited resources. This besides the fact that these developments have created certain problems particularly in assuaging the concerns of operators in the relevant sectors. |
| It is vital that the OECD will recognize the efforts | made by the Advance Commitment jurisdictions and keep them constantly abreast with all developments in the progress of this project. |
| Recently certain information has been circulated | which seems to suggest that pressure may be building up which could result in a rethinking on some aspects of the OECD project on harmful tax competition. In fact, the original timetable established by the OECD has been changed. Moreover, it is not very evident to non-OECD member countries whether or not there will be consensus by all OECD member countries on effective exchange of information. Certainty is very important in this area and non-member countries need to know what the actual position is since transparency is essential for the ultimate success of this project. I must stress, that any implementation plan by committed jurisdictions should be conditioned to an assurance that they will be competing on a level playing field with all other respectable jurisdictions and their dependencies. |
| I hope that you have a fruitful meeting and that your | sojourn in Malta will be a pleasant one. Thank you. |
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