Hon Dr Demarco, Distinguished Guests, Ladies and Gentlemen.
On behalf of the President and Council of the Malta Institute of Management I would like to welcome you to the 10th International Taxation Conference.
Today’s conference aims at discussing various challenges facing Malta with the upcoming EU Directives, changes in legislation, as well as the current political scenario.
It is not, of course, within the scope of this conference to enter into the merits of certain developments. Still, one cannot close one’s eyes to the impact of the current happenings and their potential repercussions.
One of the main open secrets of our taxation system was, for a good number of years, that it did not use to attract too much attention. I do recall the coordination of our industry from the presentation of financial statements, to the way we communicate and the way we address certain challenges even when some breached the trust that exist in the industry on certain things.
Over the years Malta has quietly managed to crystallise unique agreements with the European Commission. Different Governments have worked closely with the Opposition to achieve what we have today.
This was all very welcome.
However, the media and political environment is now experiencing a kind of unhealthy discussion which is attracting attention in the international scene and is not doing the country any good.
Whilst it is not my intention to delve into political aspects, I do feel astonished and shocked with the fact that professionals have been attacked unduly by certain sectors of the media.
For a few weeks there appeared to be the impression that what emerged were ‘Malta Papers’ and not ‘Panama Papers’ Such an impression is bound to harm the national professionals image and credentials.
Malta has adhered to all its international obligations and treasures the commitment of this sector towards its duties and responsibilities. Such well-being cannot and must not be damaged, perhaps irreversibly.
Media representatives have the right and duty to ask questions and politicians have the obligation to answer.
Still, there are ways and ways of carrying out such an exercise. One sincerely hopes that all concerned keep truly in mind the common good and our collective duty towards the best interests of our nation.
From a legislative point of view we are facing and will continue to face further challenging times together with our European counterparts.
However, the size of our island and the resources we have call on us to be even more cautious than other EU member states.
The various legislative changes, particularly the implementation of the BEPS directive and CRS (Convention on Mutual Administrative Assistance in Tax Matters) , may have a competitive impact on the sector, which has been growing year after year.There are also other requirements that may have particular effect on the attractiveness of Malta as an investment destination.
Last week, the European Commission sent a new communication to the European Parliament and Council regarding VAT. The statements made are strong and call for action.
What is being proposed is bound to put a strain on our tax authorities and on our businesses. We have yet to see the reaction of the member states tax authorities. However, one cannot but be concerned about the effects the proposals might have on Malta.
Certainly, another challenge could be the impact of a possible English exit from the EU.. Such a potential development could have an impact on certain EU derogations Malta has achieved and happen to be linked directly to the position of England. Of particular concern are the zero rated items under the VAT Act . On the positive side, there may be certain advantages for Malta with an English exit, as we will become the link between Commonwealth countries and the European Union.
We need to ensure that all of us, from the authorities to the practitioners, are well-equipped in terms of knowledge in order to be in a position to face such new challenges.
This Conference and the other activities of the MIM aim at contributing to the dissemination of knowledge and the continued good preparation of our practitioners.
An additional challenge are the EU rules regarding state aid, because they limit the Government more and more as regards to giving incentives to attract investment to Malta.
In this context, we need to be even more careful in our handling of relations with foreign investors. Over the past months we have been hearing certain declarations in the sense that foreigners need to respect us. Granted and agreed; but doesn’t it apply both ways? To who’s benefit are certain attacks on all sorts of investors, those present and potential ones? There is the right of expression, but does this mean that everything goes? Is it possible that in such a small island we cannot invariably ensure decent and constructive discussions, free from insults and attitudes that might jeopardise investment?
In spite of all the challenges ahead ,I firmly believe that if we stand united as we did in the past we will come out stronger than ever.
I trust that after today’s conference we will all be more equipped to come up with suggestions on how we can implement certain measures whilst ensuring that this sector continues to grow.
I would like to take this opportunity to thank all the sponsors of this conference; mainly; EY and KPMG.