EIC describes island as 'pirate base' for tax avoidance

Malta is a target for firms linked to the Italian mafia, Russian loan sharks and the highest echelons of the Turkish elite, according to a damning report issued by a group of investigative journalists.

Over the last three months, journalistic network European Investigative Collaborations (EIC) said it had dug into over 150,000 documents that show how international companies take advantage of this system, using Malta as a pirate base for tax avoidance in the EU.

The so-called #Maltafiles, put online last night appear to back claims which have been made for several months and backed by controversial comments made by a German minister who said that a data leak has revealed information about 70,000 offshore companies in Malta.

Malta operates a tax system where companies pay the lowest tax on profits in the EU - only five per cent. Although benefiting from the advantages of EU membership, Malta also welcomes large companies and wealthy private clients looking to dodge taxes in their home countries.

The research was undertaken by the EIC, which has brought together 12 media and over 40 journalists in 16 countries.

Around half a million names from some 60 countries are cited in the files. L'Espresso newspaper said it will be publishing the names tomorrow, saying politicians and individuals linked to the Mafia were involved.

Among the reports carried overnight, the #MaltaFiles say the son-in-law of Turkish President Recep Tayyip Erdoğan, Berat Albayrak, helped establish an offshore structure in Malta and Sweden to evade millions of dollars in taxes for his company - Turkey’s massive energy, textile and construction group conglomerate Çalık Holding.

Another report explains how Fashion TV investor and Russian billionaire Oleg Boyko and his Latvian partners use Malta as a tax haven for operations in Europe and the US, while earning vast profits from emergency loans to Europe's "poorest and most vulnerable citizens".
Malta has not met all the requirements to control possible fraud cases

It said the scheme works in this way: a company in Geneva, London or Paris can open a parent firm in Malta, where it is taxed at 35 per cent, the highest income tax band.

However if the shareholders of the company are not based in Malta, and the bulk of the firm’s business does not take place in Malta, the Maltese Inland Revenue can refund up to 6/7 of this amount to the company.

De facto, this makes corporate tax in Malta only five per cent in comparison to an EU average of around 22 per cent.

Even if the process appears legal, it seems Malta has not met all the requirements to control possible fraud cases.

Maltese leaders have long argued that controlling tax policy is the only tool left for small EU countries to remain competitive.

Using leaked documents and the Maltese company registry, the organisation Black Sea is made up of media giants like L'Espresso, Le Soir, and Der Spiegel and Maltese newspaper Malta Today.