Malta target for ‘Italian mafia, Russian loan sharks,’ says report

Malta Files leak claims companies use the island to avoid paying tax.

Maltese Prime Minister Joseph Muscat | Riccardo Savi/Getty Images

International companies use Malta as a base to avoid paying tax elsewhere, according to a large-scale leak of documents from the financial services industry in the EU’s smallest country.

A pan-European journalistic network called European Investigative Collaborations (EIC) is behind the Malta Files leak. It says it “dug into over 150,000 documents that show how international companies take advantage” of a tax regime in which firms can end up paying the lowest tax on profits in the EU — 5 percent.

The EIC claims that more than 53,000 Maltese-registered entities avoided between €1.5 billion and €2 billion in tax revenues.

While regular income tax in Malta is 35 percent, a reduction is available for a shareholder if they don’t live on the island or the company’s activity don’t take place there.

The EIC says that makes Malta “a target for firms linked to the Italian mafia, Russian loan sharks and the highest echelons of the Turkish elite.”

When Finance Minister Edward Scicluna visited Germany last week, he told local press that Malta had “nothing to hide” regarding its tax system, Malta Today reported.

Malta was embroiled in the 2016 Panama Papers revelations, the largest data leak in history.

In April, it was alleged that the wife of Joseph Muscat, the Maltese prime minister, received $1 million from the daughter of Azerbaijan’s president through a company set up by Mossack Fonseca, the law firm at the heart of the Panama Papers scandal.

Muscat called a snap election for June 3.

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