Regulatory coordination essential for Malta’s reputation
OECD’s Malta peer review on tax information sharing highlights problems with reporting of data as reason for downgrade.
The IFSP duly notes the outcome of the Global Forum on Transparency and Exchange of Information for Tax Purposes: Malta 2020 (Second Round) Peer Review Report (‘the Report’) on the Exchange of Information on Request, published recently by the OECD, which downgraded Malta from ‘largely compliant’ in 2013, to ‘partially compliant’ in 2020.
The fact that the Report is based upon data as of March 2019, which is therefore 18 months old, is lamentable, given that it misses a critical period during which Malta took steps to address the shortcomings mentioned and which seem to have formed the basis for the rating. Indeed, the Report appears both to not take into account the various substantive and substantial developments and changes effected over the past year, and to equate shortcomings in the way the competent bodies report data with a lack of supervision and non-compliance.
The Institute strongly believes that had the true current picture been taken into consideration, such downgrade would not have occurred.
Concurrently, the IFSP is aware that there is always room for improvement and the Institute is fully confident that Malta is appropriately committed to continuing to effect improvements in this sector to ensure full compliance within the shortest possible timeframe.
In this respect, the financial services industry has been cooperating fully with the many data gathering exercises carried out by the competent authorities, including various units of the MFSA, the MBR, the FIAU, the Commissioner for Revenue and the NSO.
The Institute suggests that in future it would be opportune to have the various authorities coordinate their respective data gathering requirements, as against each going its own way, in instances issuing multiple questionnaires. The consequential effect of such a siloed approach has led to inefficiencies in terms of time and effort required both from respondents as well as the said authorities, reflected in the quality of the data reported to such bodies as the OECD, the EU and the Council of Europe.
Such representations have already been made with the respective competent bodies and authorities, who however claim that they are not in a position to align their procurement requirements for the IT systems required for data gathering. The IFSP notes that, along with other financial services associations, it has been calling upon both Government and the authorities to coordinate its data gathering and to set out clear requirements in advance, so that IT systems can be configured accordingly and the correct data fields gathered at time of input, rather than as a reaction at the time of a request, often mandating manual reconfiguration.
To this end we advocate a more coordinated approach among government agencies, leading to increased efficiency.
The Institute reiterates that the industry has to continue doing its part. For the absolute majority, practitioners take their role as gate keepers seriously, while concurrently putting pressure on lagging or errant practitioners to adhere to best ethical practices and pursue the right continued professional education, or else face the right sanctions, including suspension.
Furthermore, the IFSP strongly holds that for Malta to be able to provide a viable and attractive alternative for business, effective coordination between the public authorities concerned with the regulation of financial services is essential so that the administrative burden is proportionate. This requires a pragmatic Malta strategy for institution building and rationalization. In this, the authorities can look forward to the full cooperation and support of the industry.
It goes without saying that the IFSP is both ready and willing to contribute to and fully participate in the formulation and implementation of any such far reaching policy, which can only be of benefit to the industry and to the country as a whole.