Global Forum On Transparency and Exchange of Information For Tax Purposes: Peer Reviews: Global Forum On Transparency and Exchange of Information For Tax Purposes Peer Reviews: Malta 2012

GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES
Peer Review Report Phase 1 Legal and Regulatory Framework

MALTA
Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Malta 2012
PHASE 1
March 2012 (reflecting the legal and regulatory framework as at December 2011)
This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD or of the governments of its member countries or those of the Global Forum on Transparency and Exchange of Information for Tax Purposes. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Please cite this publication as: OECD (2012), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Malta 2012: Phase 1: Legal and Regulatory Framework, OECD Publishing. http://dx.doi.org/10.1787/9789264168848-en
ISBN 978-92-64-16883-1 (print) ISBN 978-92-64-16884-8 (PDF)
Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews ISSN 2219-4681 (print) ISSN 2219-469X (online)
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OECD 2012
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TABLE OF CONTENTS 3
Table of Contents
About the Global Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Information and methodology used for the peer review of Malta . . . . . . . . . . . . . 9 Overview of Malta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 A. Availability of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 B. Access to information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 B.1. Competent Authoritys ability to obtain and provide information . . . . . . . . 54 B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 59 C. Exchanging information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.1. Exchange-of-information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.2. Exchange-of-information mechanisms with all relevant partners . . . . . . . . C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 61 62 67 68 69 70
PEER REVIEW REPORT PHASE 1: LEGAL AND REGULATORY FRAMEWORK MALTA OECD 2012
4 TABLE OF CONTENTS Summary of Determinations and Factors Underlying Recommendations. . . . 73 Annex 1: Jurisdictions Response to the Review Report . . . . . . . . . . . . . . . . . . 75 Annex 2: List of all Exchange-of-Information Mechanisms in Force. . . . . . . . 76 Annex 3: List of all Laws, Regulations and Other Material Received . . . . . . . 80
ABOUT THE GLOBAL FORUM 5
About the Global Forum

The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 100 jurisdictions, which participate in the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004. The standards have also been incorporated into the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. Fishing expeditions are not authorised but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest. All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined Phase 1 and Phase 2 reviews. The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitoring of jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once adopted by the Global Forum. For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please refer to www.oecd.org/tax/transparency and www.eoitax.org.
EXECUTIVE SUMMARY 7
Executive Summary
1. This report summarises the legal and regulatory framework for transparency and exchange of information in Malta. The international standard which is set out in the Global Forums Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information, is concerned with the availability of relevant information within a jurisdiction, the competent authoritys ability to gain timely access to that information, and in turn, whether that information can be effectively exchanged with its exchange of information (EOI) partners. 2. Malta is an archipelago in the Mediterranean Sea and a member of the European Union. It is an international shipping center and has sought to afford a location for international financial services. 3. The legal and regulatory framework for exchange of information in Malta is in place. Ownership and identity information as well as accounting information is maintained by all relevant entities to the standard. In addition, much information must be filed with the government authorities, in particular the tax authorities and the commercial register. Full banking information is available in Malta, including records of all transactions. 4. The Maltese authorities have broad access to information for exchange of information purposes pursuant to the income tax laws, including bank and accounting information. Adequate rights and safeguards are in place that are compatible with effective exchange of information. 5. Malta has committed to the international standards of transparency and effective exchange of information and has a broad network of 66 treaties, almost all of which conform to the international standard in all respects. This includes agreements with all relevant partners and these agreements sufficiently protect the confidentiality of information received. Malta continues to expand its network of agreements. 6. Maltas response to recommendation in this report as well as the application of the legal framework to the practices of its competent authority will be considered in detail in the Phase 2 Peer Review which is scheduled for the second half of 2012.
INTRODUCTION 9
Introduction
Information and methodology used for the peer review of Malta

7. The assessment of the legal and regulatory framework of Malta was based on the international standards for transparency and exchange of information as described in the Global Forums Terms of Reference, and was prepared using the Global Forums Methodology for Peer reviews and Non-Member Reviews. The assessment was based on the laws, regulations, and exchange-of-information mechanisms in force or effect as at January 2012, other materials supplied by Malta, and information supplied by partner jurisdictions. 8. The Terms of Reference break down the standards of transparency and exchange of information into 10 essential elements and 31 enumerated aspects under three broad categories: (A) availability of information; (B) access to information; and (C) exchanging information. This review assesses Maltas legal and regulatory framework against these elements and each of the enumerated aspects. In respect of each essential element, a determination is made that either (i) the element is in place, (ii) the element is in place but certain aspects of the legal implementation of the element need improvement, or (iii) the element is not in place. These determinations are accompanied by recommendations on how certain aspects of the system could be strengthened (see table on pages 73-74). 9. The assessment was conducted by a team which consisted of two assessors and a representative of the Global Forum Secretariat: Ms. Melisande Kaaij, Senior Policy Advisor, Ministry of Finance, the Netherlands; Colin Chew Koo Chung, Director, Investigation & Forensics Division, Inland Revenue Authority of Singapore and Ms. Amy ODonnell of the Global Forum Secretariat. The assessment team examined the legal and regulatory framework for transparency and exchange of information and relevant exchange-of-information mechanisms in Malta.
10 INTRODUCTION
Overview of Malta
10. Malta is an archipelago in the centre of the Mediterranean Sea, lying south of Sicily and east of Tunisia. The territories of Malta comprise the Island of Malta, the Island of Gozo and the other islands of the Maltese Archipelago, including the territorial waters thereof. Only its three largest islands are inhabited: Malta, Gozo and Comino. Its total area is 316 square kilometres. 11. Maltese and English are the official languages of Malta, but Italian is also widely spoken. Its population is 412 970. Malta achieved independence from the United Kingdom in 1964 and established its Constitution then, which has since been modified. Malta became a member of the European Union on 1 May 2004 and adopted the euro as its currency in 2008. 12. Malta is a republic with a parliamentary system of government. The Constitution of Malta establishes three branches of government: the legislative, executive and judiciary. The executive branch consists of the President of Malta, who is appointed by resolution of the House of Representatives and serves a five year term without possibility of re-election. 13. Its unicameral House of Representatives is elected by direct universal suffrage to serve for a five year term. It has exclusive jurisdiction to enact all main and subsidiary legislation, including tax laws. Prior to its publication and coming into force, each legislative act must go through a number of parliamentary procedures. A bill is then presented to the President of Malta for his assent and published in the Government Gazette, thus becoming a Parliamentary Act. The European Court of Justice may determine whether a Maltese law is in accordance with the EU treaty and with other EU legislation. A Cabinet of Ministers, one of whom is the Prime Minister, is appointed in accordance with the Constitution and includes a Minister for Finance. 14. Maltas judiciary is independent and consists of Superior and Inferior Courts. The Superior Courts are made up of the Constitutional Court, Court of Appeal and the Civil Court. The Inferior Courts include Court of Magistrates for the Island of Malta and Court of Magistrates for the Islands of Gozo and Comino. The judges of the Superior Courts and magistrates of the Inferior Courts are appointed by the President acting in accordance with the advice of the Prime Minister. Several tribunals fall within the category of Inferior Courts, such as the Financial Services Tribunal, which acts as a court and has jurisdiction to review actions under financial services laws (i.e. the Banking Act, Central Bank Act, Financial Institutions Act). The Administrative Review Tribunal has jurisdiction to review administrative acts, including cases involving tax assessments. 15. Maltas legal system is a mixed one, largely based on civil law, but with English law influences, particularly in commercial and financial law.
INTRODUCTION 11
Where there is a lacuna in an area of the law having its origins in the law of the UK, the Common Law of the UK is referred to in order to interpret or fill it. Although the doctrine of precedent from Common Law was not inherited, Maltese judgements usually have a persuasive effect. Since Malta commenced the process of joining the EU in 1994, EU law has been the major external influence in the development of Maltese legislation. 16. The Maltese Constitution is the supreme law of the land, followed by Acts of Parliament (known also as primary legislation). Laws passed by Parliament need to be in conformity with full respect for human rights, generally accepted principles of international law and Maltas international and regional obligations in particular those assumed by the Treaty of Accession to the European Union. Malta has a comprehensive legal infrastructure with five main codes of law, namely: the Criminal Code, the Code of Police Laws, the Code of Organisation and Civil Procedure, the Commercial Code and the Civil Code. Primary legislation may enable and delegate power to Ministers to issue Regulations known as subsidiary legislation. By virtue of Article 10 of the Interpretation Act, subsidiary legislation is valid and has effect provided that it is lawfully made in accordance with the power that is conferred in the primary legislation. Implicit in the fact that this constitutes subsidiary legislation, it needs to be made in accordance with the power that is conferred in the primary legislation. Legislation, whether primary or subsidiary, needs to be passed through Parliament and is published by the Government Gazette. Authorities, like the Malta Financial Services Authority, on the other hand, may be empowered by Primary Legislation to make by-laws which usually take the form of an order or prohibition that are binding.
The Maltese Economy

17. Maltas economy is based on international trade and business. Its GDP for 2009 was EUR 5.7 billion. With limited domestic and natural resources, its economy depends on foreign trade, manufacturing and tourism. Tourism accounts for a significant percentage of Maltas GDP. Transhipment and maritime services and financial services are also important to Maltas economy. Since its establishment in 1973 Maltas shipping register has grown to be the 2nd largest in Europe and the 8th largest in the world according to the European Commission. Since the passage of the Malta Financial Services Authority Act in 1988 Malta has sought to provide a location for international financial services activities. Film production is also a growing industry. In addition there is a strong manufacturing base for high value-added products like electronics and pharmaceuticals. After tourism, manufacturing represents the next most significant percentage of GDP.
12 INTRODUCTION
Financial Services
18. Malta has a significant financial services industry, which has grown significantly in the past three years. The financial services sector consists of credit and financial institutions, the insurance and insurance intermediaries business, investment services, collective investment schemes and pension and retirement funds. The collective funds industry has grown gradually in Malta. The total number of new funds from 2004 to June 2011 amounted to 661, of which 204 were surrendered (essentially the license granted by the MFSA was relinquished by the fund). The net asset value of funds domiciled in Malta is EUR 7.8 billion as at June 2011. There are also 157 collective funds not domiciled in Malta. Malta opened a stock exchange in 1992. 19. All financial services in Malta are regulated, monitored and supervised by the Malta Financial Services Authority (MFSA). The MFSA may issue Rules regulating the procedures and duties of those licensed, authorised or supervised by it and may issue directives in writing which license holders must comply with. The Registry of Companies forms part of the MFSA. As at March 2011, the MFSA was responsible for regulating 25 credit and 13 financial institutions, 106 investment services companies and 49 insurance companies, among other entities and organisations. 20. The Central Bank of Malta oversees and regulates the operation of domestic payment systems, along with any form of cash or security transaction, whether domestic or cross border and no person can operate or participate in this system without approval and authorisation by the Central Bank. 21. The government in Malta is very welcoming to foreign investment and foreigners may own 100% of businesses in almost all sectors. There are more than 200 foreign companies with manufacturing operations in Malta. 1 There are also incentives which are administered by the Malta Enterprise Corporation. Incentives do not depend on whether a company exports or not, and include investment tax credits for projects that are approved a priori by the Malta Enterprise Corporation in writing, initial investment aid in respect of qualifying companies and special provisions for small businesses and incentives related to training and job creation. The Malta Enterprise Corporation was launched in 2004 and is tasked with attracting foreign direct investment into the island and providing the necessary support and assistance to businesses operating on the islands to improve their international competitiveness. It operates under an Executive Chairman and Board of Directors appointed by the Minister of Finance.
1.
According to Malta Enterprise, the agency responsible for the promotion of foreign investment and industrial development in Malta.
INTRODUCTION 13
22. Professions relevant to the financial sector, such as notaries, lawyers, accountants and auditors are regulated in Malta. Notaries are regulated by the Notarial Council. The Committee for Advocates and Legal Procurators under the Commission for Administration of Justice Act investigates misconduct by lawyers. The Chamber of Advocates also acts to uphold ethics and professionalism among lawyers. The Accountancy Board investigates cases of professional misconduct and other disciplinary proceedings among accountants and auditors.
Taxation
23. The tax system in Malta is historically based on UK law and English Case law is used to interpret the tax laws in Malta whenever there are words and expressions that are not known to the law of Malta but are known to the English legislation. Such reference is allowed insofar as is necessary to give effect to the income tax legislation. Currently, the two main legislative sources of tax law are the Income Tax Act and the Income Tax Management Act (collectively, the Income Tax Acts). 24. Any person (whether a natural or legal person) who is both domiciled and resident in Malta is subject to tax on a worldwide basis. A company incorporated in Malta is considered to be resident and domiciled in Malta. A company incorporated outside Malta is considered resident in Malta only if the management and control of the company is exercised in Malta. The term management and control is not defined in Maltese tax law, however Malta advises that in practice in order to establish that management and control is in Malta, the Inland Revenue Department would take into account whether the board meetings of the company are held in Malta, whether general meetings are held in Malta, and whether any other decisions of the company are taken except at meetings in Malta. 2 If a foreign company is treated as resident in Malta because it is controlled and managed in Malta it will be subject to tax on income arising in Malta and foreign income (excluding capital gains) received in Malta. The same applies to individuals who are resident but not domiciled in Malta. The statutory rate of tax for corporations is 35% and for individuals the rates are progressive, ranging from 15-35%. 25. Malta has a full imputation system of taxation. When a company distributes dividends out of profits on which it has already paid tax, the amount of credit or refund to which the shareholder is entitled depends on the nature
2. Other features typically present to give substance to a claim of residency are that the companys financial records are held and maintained in Malta with the audited financial statements prepared and filed in terms of the principles enunciated in Maltese company lay, the majority of the directors are physically present in Malta to attend board meetings and some of the directors are resident in Malta.
14 INTRODUCTION
and source of the income. Dividends paid out of trading income entitle a shareholder to a credit of 6/7 of tax paid, resulting in a net payment on corporate profits of around 5%. Distributions from passive income give rise to a credit of 5/7 of tax paid. When a company distributes profits on which it has not paid tax, it must withhold tax at a rate of 15%, although no withholding tax is due on dividends paid to non-resident shareholders. In addition, no tax is imposed on interest and royalties paid to a non-resident person, so long as the recipient is the beneficial owner of the income and does not carry on a trade or business through a permanent establishment in Malta. Income or gains from participating holdings in foreign companies are exempt from tax and there is no tax on gains realised from transfers of corporate securities by a non-resident, as long as the recipient is the beneficial owner of the gains and the securities are not held in a company whose assets consist principally of immovable property in Malta.
International Cooperation
26. Since Malta became a full member of the EU in 2004, EU legislation has become part of Maltese legislation. The extent to which EU legislation has an effect on Maltese law depends on whether the legislative instrument is a directive or regulation. As a member of the European Union, Malta is involved in the European common VAT system and as a consequence, in the VAT exchange of information that takes place under the EU regulation (EC) 1798/2003. 3 Malta also exchanges information automatically under the scope of the EU Savings Directive 48/2003/EC pursuant to which EU members (with the exception of Austria and Luxemburg), as well as other jurisdictions that are party to agreements, exchange data on an annual basis concerning the savings income received from Malta paying agents by taxpayers located abroad. 27. Malta has a network of 57 double tax conventions (DTCs) in force, with 9 DTCs and 5 Protocols to existing DTCs which are signed but not yet in force. Most recently, Malta signed a TIEA with Bermuda. Fifteen treaties currently await signature or further negotiation, two of which are tax information exchange agreements (TIEAs) that have been initialled.
Recent developments
28. Malta recently enacted a legal notice: the Cooperation with Other Jurisdictions on Tax Matters Regulations (Cooperation Regulations) on 22 July 2011. These regulations were enacted under enabling laws found in the Income Tax Acts and came into force on the date of publication. As subsidiary
3. A new regulation (EC) 904/2010 was adopted by the European Council on 14 October 2010 and will enter into force on 1 January 2012.
INTRODUCTION 15
legislation, they have the same force and effect as law. The Cooperation Regulations were enacted to implement Maltas continued commitment toward transparency as expressed by the Terms of Reference created and used by the Global Forum. These Regulations complement rules in other laws, particularly concerning the availability of ownership, identity and accounting information. Malta determined that the best way to implement this commitment was to consolidate the relevant regulations in one piece of legislation so that affected persons are easily guided rather than having various pieces of legislation relating to the same subject matter. Furthermore, the Regulations will eventually include the relevant implementation measures in Council Directive 2011/16/ EU on administrative cooperation in the field of taxation that need to be implemented by the end of 2012. This Directive also reflects a broader commitment toward transparency. 29. Malta recently signed tax information exchange agreements (TIEAs) with the Bahamas and Gibraltar.
COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 17
Compliance with the Standards
A. Availability of information
Overview
30. Effective exchange of information requires the availability of reliable information. In particular, it requires information on the identity of owners and other stakeholders as well as information on the transactions carried out by entities and other organisational structures. Such information may be kept for tax, regulatory, commercial or other reasons. If the information is not kept or it is not maintained for a reasonable period of time, a jurisdictions competent authority may not be able to obtain and provide it when requested. This section of the report assesses the adequacy of Maltas legal and regulatory framework on availability of information. 31. All companies are required to register and submit an annual return, which includes ownership information, to the Registrar of Companies. Upon registration with the Registrar of Companies, information is immediately forwarded to the Inland Revenue Department. All bodies corporate, whatever their type, constituted or incorporated outside Malta, which establish a branch or place of business within Malta or are resident for tax purposes in Malta are required to register in Malta with the Inland Revenue Department and in certain cases with other authorities depending on the type of entity. 32. The Cooperation Regulations under the income tax laws require all entities and trustees in Malta to maintain ownership and identity information. The definition of entity encompasses any body of persons that is resident in Malta; is created under Maltese law; has a permanent establishment in Malta;
18 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

is a property company or property partnership; or is required to be registered, licensed or otherwise authorised to conduct business in Malta. Therefore ownership and identity information is available on all relevant entities. 33. The requirement to maintain accounting records to the standard is found in the Income Tax Acts and the Cooperation Regulations made thereunder. Accounting standards are also found in the Companies Act, Commercial Code and Code of Conduct for Trustees. All relevant entities and trustees in Malta must maintain accounting records to the standard, including underlying documents, for a minimum of five years. In addition, all financial institutions must ensure that banking information is kept on all account holders in relation to their banking activity in Malta, which includes records of all transactions.
A.1. Ownership and identity information

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities.
Companies (ToR A.1.1)

34. Maltese law provides for the creation of limited liability companies, which, depending on the number of shareholders and their objects, can be either public or private. All companies are governed by the Companies Act. 35. A private companys founding documents, these being the memorandum or articles, must specifically restrict the right to transfer its shares, limit its members to fifty and prohibit any invitation to the public to purchase shares (Article 209(1) Companies Act). Private companies can have one member (single member companies). 36. Private companies may also be exempt private companies. Such companies are exempt from the requirement that a person cannot be both a director and company secretary and from the prohibition of making loans to a director of the company (or its parent company) or to enter into any guarantee or provide any security in connection with a loan made to that person. In addition to the general restrictions for a private company, the memorandum or articles of association of an exempt private company must also prohibit any body corporate from holding shares (except when the body corporate is itself an exempt private company), prohibit bodies corporate from acting as directors of the company and prohibit any of the directors from being a party to an arrangement whereby the policy of the company is capable of being determined by persons other than the directors, members or share holders of the company. An exempt private company may also be set up as a single member company. 37. Public companies typically have more than 50 shareholders and have greater disclosure requirements than private companies.
COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 19
Company ownership and identity information required to be provided to government authorities

38. Companies, both public and private, are formed pursuant to the Companies Act by entering a memorandum of association which, except in the case of private single member companies, must be subscribed to by at least two persons. The Companies Act sets out specific information which the memorandum must contain (Article 69, Companies Act). This includes the following: whether the company is public or private; name and residence of each of the subscribers; name of the company; registered office in Malta of the company; objects of the company; amount of its share capital with which it proposes to be registered, divided into shares of a fixed amount, the number of shares taken up by each of the subscribers and the amount paid in respect of each share. Where the share capital is divided into different classes of shares, the rights attaching to the shares of each class; number of directors, the name and residence of the first directors and, where any of the directors is a body corporate, the name and registered or principal office of the body corporate and the name of the first person or persons vested with its representation; and name and residence of the first company secretary. 39. As at June 2011 there were 42 370 private companies and 119 public companies registered in Malta. Of the total number of private companies, 17 120 are registered as exempt private companies. 40. Maltese law also provides for investment companies, which can be either a public or private company and can either have a variable (SICAV) or fixed (INVCO) share capital. Of the two types of investment companies (SICAV and INVCO), SICAVs, which are known as open ended investment companies, are the dominant form by far. They are subject to specific regulations issued by the MFSA. INVCOs have specific rules on distribution and capitalisation and may be retirement funds. None of the INVCOs holdings in companies that are not INVCOs can represent more than 15% of the value of the investing companys investments. The shares of an INVCO must be listed on an exchange for the company to be able to make any distribution. As at June 2011 there were 175 investment companies in Malta, none of which are INVCOs.

41. In addition, Societas Europea (or SEs) can be formed pursuant to EU law. There are currently two SEs registered in Malta. SEs are public limited companies regulated by EU Council Regulation (EEC) No.2157/2001 on Statute for a European Company.
Information filed with Registrar

42. Every company must register with the Registrar of Companies. A company is constituted once a Memorandum is entered into and a certificate of registration indicating an identification number is issued by the Registrar of Companies. The Registrar of Companies is part of the MFSA and all registered information and documentation is available to the public. 43. Every company must file an annual return with the Registrar on the anniversary of its registration each year. The annual return form requires a summary of the share capital of the company, a list of past and present members (shareholders), the names and address of the directors and the company secretary (Seventh Schedule, Companies Act). For an investment company with variable share capital (SICAV), it does not have to give details of its past and present members, but only the share capital of the company and the number of shares issued (Art. 84(8), Companies Act). The Registrar of Companies forwards the registration information to the Inland Revenue Department; therefore every company that registers with the Registrar of Companies is also automatically registered for tax purposes. The Inland Revenue Department then issues the company a nine digit tax identification number. 44. Companies must keep a share register of their members (see below), and in addition, when a share is transferred in a private company, the company must deliver to the Registrar a notice of the transfer stating the name and address of the transferee within 14 days of the transfer being registered with the company. The company has this information because a transfer cannot take place without the companys acceptance. Once the company accepts a transfer of shares, the transfer must be done in writing (Article 118(1), Companies Act) and the buyer must pay a stamp duty on the transfer. This written instrument must be submitted to the company. If the company is not informed of the transfer, it is not obliged to recognise the new shareholder or to accord any rights to the shareholder. 45. In the case of a share transmitted by reason of death, the name and address of the persons entitled to the shares must be registered with the company within one month from the date on which the share is transmitted (Article 120, Companies Act). For single member companies that become so by the acquisition of all of their shares by one person, the company must deliver to the Registrar of Companies within 14 days a notice specifying
this fact and stating the name and residence of the member (Article 212, Companies Act). The same applies when a company ceases to be a single member company.
Information filed with Tax Authority

46. All companies that are incorporated under Maltese law (and therefore are resident in Malta), or are foreign companies having a place of business and are registered as an oversea company (i.e. have a branch in Malta), have their management and control in Malta (i.e. are resident in Malta), or conduct any economic or commercial activity in Malta but do not fall into any of the above categories, must register for tax purposes with the Inland Revenue Department irrespective of any obligation to register with the Registrar of Companies. This requirement is implicit in the fact that all such companies must file an annual tax return pursuant to Article 10 of the Income Tax Management Act, whether they have taxable income or not, and the annual return requires a tax identification number, which can only be obtained by registering. The annual tax return must include ownership information, which includes the name of the shareholders, the tax identification number and the number and class of shares held and would also include any change in ownership (S.L. 372.09, Income Tax (Form of Return for a Company or Corporate Undertaking), Schedule A). 47. Along with its return, a company must also submit the records which are required to be kept under the Act, these being: in the case of companies registered in Malta, a balance sheet and profit and loss account with an audited report, and in the case of foreign companies not registered in Malta, records of the companys activities in Malta. 48. The Income Tax Acts require that documents be kept for a minimum of nine years from the year that the relevant acts (such as transactions, acts and operations of the entity) took place. This also applies to any person acting in an agency or fiduciary capacity (including nominees), lawyers, notaries and other independent legal professionals, accountants, auditors, tax advisors, company service providers, persons licensed to carry on investment business and stockbrokers when any of these people are acting in a professional capacity in relation to any such information or records that s/he holds in the carrying on of a business (Regulations 4 and 5, Cooperation Regulations). According to Malta, it is the practice of the Registry of Companies and the Inland Revenue Department to retain ownership information indefinitely.
Company ownership and identity information required to be held by companies

49. All companies must keep a register of members, which must include (Article 123, Companies Act): names and addresses of the members (shareholders) and the shares held by each, distinguishing each share by its number (when applicable), along with the amount paid on each share; the date when each person was entered into the register as a member; and the date when each person ceases to be a member. 50. In addition to their duties under the Companies Act to keep a register of members, public companies listed on the stock exchange in Malta are also subject to the Listing Rules issued by the MFSA. 4 51. The Cooperation Regulations were issued pursuant to the Income Tax Act and build upon the requirements in the income tax laws. The Cooperation Regulations provide that all entities must keep updated information that identifies their owners and the level and type of their respective ownership stake in the entity. The term entity includes any body of persons (and consequently all companies) that are: 1) resident in Malta, 2) created under Maltese law, 3) have a permanent establishment in Malta, 4) a property company, or 5) required to be registered, to be licensed, or otherwise authorised to conduct business in Malta (Regulation 2, Cooperation Regulations). Further, the definition of the term body of persons is in the Income Tax Act and includes any body corporate. 52. The information must be updated and documented within 14 days from the date the entity was notified or from the date it becomes aware of a change in ownership. For a company, owner means the legal owner, but when the legal owner acts on behalf of another person, the legal owner must keep the information that identifies the person on whose behalf s/he acts (Regulation 4). Identity information on an individual includes the full name
4. The Listing Rules define shareholder as any natural or legal person who holds, directly or indirectly, shares in its own name for its own account, shares in its own name but on behalf of another, or depositary receipts, in which case the holder of the depositary receipts is considered the shareholder of the underlying shares represented by the depositary receipts. If voting rights are attached to a share, any shareholder who acquires or disposes of shares at certain thresholds (5, 10, 15, 20, 25, 30, 50, 75 and 90%) must notify the company. In addition, the Rules also require that a listed company include in its annual report direct and indirect shareholdings that represent greater than 5% of the share capital.
and surname; passport, ID or tax identification number; or, if not available, the date and place of birth and the address of residence. For persons that are not individuals, it includes the name, date of inception or incorporation and the registered address (Regulation 4(5), Cooperation Regulations).
Regulated Entities
53. Protected cell companies (PCCs) carrying on the business of insurance have been possible in Malta since 2004 with the enactment of the Companies Act (Cell Companies Carrying on Business of Insurance) Regulations which made it possible for a company to be formed or constituted or converted into a cell company and to create within itself one or more cells for the purposes of segregating and protecting the cellular assets of the company (Regulation 2, Companies Act (Cell Companies Carrying on Business of Insurance) Regulations). In 2010 a new legal framework enabled the establishment of Incorporated Cell Companies (ICCs) under Maltese law (Companies Act (Incorporated Cell Companies Carrying on Business of Insurance) Regulations) 5, which came into effect on 1st February 2011. 54. Both PCCs and ICCs are limited to the business of insurance as defined under the Insurance Business Act 6 or of captive insurance in terms of the Insurance Business (Companies Carrying on Business of Affiliated Insurance) Regulations of 2003. 55. In a PCC, assets are segregated into protected cells, although the PCC remains a single legal entity. By contrast, an incorporated cell in an ICC has a separate legal personality and is treated as a separate company. Both PCCs and ICCs are required to file separate tax returns for each cell. 56. As they are created under the Companies Act, both PCCs and ICCs are subject to the requirements of the Companies Act. In the case of PCCs, the PCC itself is obliged to keep the register of members and indicate the owners of the PCC. The owners of the PCC are the owners of the cells (not necessarily each and every cell is owned by all the owners of the PCC). Furthermore the share capital of the PCC is the collective share capital of all the cells together. The directors of the PCC are obligated to keep cellular assets separate and separately identifiable from non-cellular assets and cellular assets attributable to each cell separate and separately identifiable from cellular assets attributable to other cells. In addition, the directors must keep separate records, accounts, statements and other documents for each cell distinctly (Regulation 10).
5. 6.
SL 386.13 Chapter 403, Laws of Malta.

57. In the case of ICCs, each cell is a separate limited liability company with separate legal personality, and therefore needs to register with the Registrar of Companies (Regulation 10). It is therefore subject to the requirements under the Companies Act in this regard, and each cell is obliged to keep a register of members and each incorporated cell must file a separate annual return (Regulation 16).
Foreign companies
58. The Companies Act also applies to all bodies corporate, whatever their type, constituted or incorporated outside Malta that establish a branch or place of business within Malta. The Companies Act refers to such a company as an oversea company. Oversea companies may perform any type of business that may legally be undertaken in Malta. An oversea company may establish a branch in Malta by setting up a place of business in Malta and notifying the Registrar of Companies (Article 384, Companies Act). Branches do not have a legal personality separate from that of the foreign company, nor do they have to reincorporate in Malta. As at June 2011 there were 357 branches of foreign companies in Malta. 59. An oversea company that establishes a branch in Malta must deliver to the Registrar of Companies an authentic copy of its charter, statute, memorandum and articles constituting the company, together with a list of the directors and company secretary, or the person vested with the administration and representation of the company, within one month of opening the branch. Where such person is an individual, the list must include the individuals name, address, nationality and business occupation. Where such person is a body corporate, the list must include its corporate name and the address of its registered office. An oversea company must also deliver to the Registrar of Companies a return containing the following (Art. 385, Companies Act): name under which the branch or place of business is carrying on its activities, where this is different from the name of the oversea company; address of the branch and where more than one branch or place of business has been established there shall be indicated the address of the principal branch or place of business; activities to be carried out; and names and addresses of one or more individuals in Malta authorised to represent the company and the extent of such persons authority. 60. Unless the articles of the company already provide this information, the information required to be submitted to the Registrar of Companies also includes the legal form of the company and the identity of the register in which the oversea company is registered and its registration number. If any
change is made in the companys charter, statutes, memorandum or articles, its directors, company secretary or person with the authority to act for the company, or the names or addresses of the people authorised to represent the company, such changes must be filed with the Registrar of Companies within one month of the change (Article 386, Companies Act). 61. Under the tax laws, a company that is incorporated under foreign law but managed and controlled in Malta, or is neither incorporated nor managed and controlled in Malta but has income arising in Malta, must register for tax purposes and file an annual return in the same way as a domestic company (see paragraph 45 above). Oversea companies that are registered with the Registrar of Companies, because they have a branch, are automatically registered for tax purposes and must file an income tax return even if the income is not subject to tax in Malta (S.L. 372.09, Income Tax (Form of Return for a Company or Corporate Undertaking), Schedule A). Such registration would include ownership information, including any change in ownership. Along with its return, a company must also submit the records which are required to be kept under the Act. For companies registered in Malta this includes a balance sheet and profit and loss account with an audited report. Companies not resident in Malta must instead submit records of the companys activities in Malta. Such companies would include those that are not incorporated in Malta or not managed and controlled in Malta but which have income arising in Malta. 62. Foreign companies clearly fall within the definition of entity in the Cooperation Regulations, which includes any body of persons either resident in Malta, with a permanent establishment in Malta or registered, licensed or otherwise authorised to conduct business in Malta (Regulation 2, Cooperation Regulations). These requirements cover all foreign companies resident in Malta for tax purposes. Foreign companies are therefore required to maintain ownership in the same way as a domestic company (see Company Ownership Information Required to be Held by Companies section, above), meaning that the foreign company itself is required to keep updated information that identifies its owners and the level and type of their respective ownership stake.
Nominees
63. Ownership information on shares held by nominees is available in Malta by virtue of the Anti-Money Laundering legislation. Under the AML laws, any person acting as a nominee shareholder or providing for another person to act as a nominee shareholder is subject to the AML laws and therefore required to undertake customer due diligence measures (Regulation 4, Prevention of Money Laundering and Funding of Terrorism Regulations). This is the case whether the nominee is acting by way of business or not. Customer due diligence measures include identifying the beneficial owner and taking reasonable measures to verify the identity, such that the person

knows who the beneficial owner is and takes reasonable measures to understand the entitys ownership and control structure (Regulation 7(1)(b), Prevention of Money Laundering and Funding of Terrorism Regulations). 64. Beneficial owner is defined in the AML laws as the natural person(s) who ultimately own or control the customer and/or on whose behalf the transaction is being conducted. In the case of a body corporate, the beneficial owner includes any natural persons who: ultimately owns or controls, whether directly or indirectly, more than 25% of the shares or voting rights of the company other than a company that is listed on a regulated market (that is subject to disclosure requirements); or a person who exercises control over the management of the body corporate. 65. In addition, the Cooperation Regulations provide that where a legal owner acts on behalf of another person in any stage in the ownership chain, including as a nominee, the nominee must keep information that identifies the person for whom he or she acts. This obligation is imposed on the nominee and so applies whether the nominee holds the shares in a foreign or domestic company. Ownership and identity information includes the full name and address or residence, passport, ID or tax identification number or date and place of birth in the case of an individual. In the case of persons who are not individuals, it includes the name, date of inception or incorporation and the registered address. Therefore, ownership and identity information on shares held by nominees would be available, consistent with the international standard.
Conclusion
66. All companies are required to register and submit an annual return with the Registrar of Companies. In addition, all companies, including those incorporated outside Malta which establish a branch or place of business within Malta or are resident in Malta, are required to register in Malta with the Inland Revenue Department and submit an annual return which includes ownership information. Finally, the Cooperation Regulations require that all companies, including foreign companies that are managed and controlled in Malta, keep updated information that identifies their owners. The Regulations also require nominees to retain updated ownership information on any person for whom he or she acts. Therefore, ownership and identity information for companies is available, consistent with the international standard.
Bearer shares (ToR A.1.2)

67. Bearer shares are not provided for under Maltese law and do not exist in Malta. Share warrants to bearer are possible, however, under the Companies Act for public companies and only if the companys Memorandum or Articles of Association authorise it (Article 121, Companies Act). 68. If a public company is not listed and offers share warrants to bearer it must inform the Registrar of Companies. This obligation arises under Article 103 of the Companies Act, which requires a company to submit a return to the Registrar each time it makes an allotment of shares. If a company fails to make this return it is considered to be in default and every officer of the company who is in default is liable to a penalty of EUR 465.87, and, for each day the default continues, to a further penalty of EUR 23.29. 69. According to Malta, the Registrar has never been informed of any share warrants to bearer. Further, the Cooperation Regulations imposed an obligation on public companies to notify the competent authority in Malta by 22 August 2011 if they had in fact issued share warrants. The competent authority received no such notifications and therefore concluded that no share warrants were issued. 70. From the date of enactment of the Cooperation Regulations onward (July 2011), a company that issues warrants in accordance with the Companies Act must inform the Competent Authority in Malta within 14 days from the date of the issue. Such companies must keep a register with information that identifies the owners of the share warrants. The Maltese Tax Administration notifies all public companies informing them of the obligation to notify the Competent Authority. Failure to comply with the requirements of this notice falls under the penalty provisions found in Article 50 of the Tax Management Act, which includes a fine of EUR 23 to EUR 10 000 and up to EUR 200 per day the default continues. A person who is in possession of a share warrant is not entitled to any rights in relation to the warrant unless the company has the information that identifies such person. A transfer of a share warrant is not valid unless the company has been informed of the transfer within 14 days (Regulation 4(3)(b)).
Partnerships (ToR A.1.3)

71. There are both limited partnerships (LPs) in Malta and partnerships en nom collectif (general partnerships). Both general and limited partnerships have a separate legal personality. 72. General partnerships, of which there are 932 in Malta as at June 2011, may be formed by two or more partners and the partnership has a separate

and distinct legal personality. All the partners are ultimately jointly and severally liable for all the obligations of the partnership. 73. By contrast, the limited partners of a limited partnership, of which there are 78 in Malta as at June 2011, are only liable up to their unpaid (if any) contribution. LPs must have at least one general partner, who is jointly and severally liable. At least one of the general partners must be either an individual or a body corporate which has its obligations guaranteed by the unlimited and joint and several liability of one or more of its members. An LP also has a separate and distinct legal personality from its partners. LPs can be ordinary, where the contribution of the partners is equal to the proportion of their interest, and LPs where the contributions are divided into shares. In the latter case, the provisions relating to shares of a company would apply (see Companies section above) to the extent that they are not inconsistent with the limited partnership provisions of the Companies Act. For tax purposes, an LP the capital of which is divided into shares is treated like a company (Article 2, Income Tax Act).
Ownership and identity information required to be provided to government authorities

74. Both general and limited partnerships formed under Maltese law must file a deed of partnership with the Registrar of Companies and are issued a certificate of registration (Article 13, Companies Act). The deed must state the name and residence of each of the first founding partners, the registered office in Malta of the partnership, the contribution of each of the partners and the object of the partnership (Article 14, Companies Act). For an LP, the deed must distinguish between limited and general partners (Article 4(a), Tenth Schedule to the Companies Act). 75. Both GPs and LPs must notify the Registrar of Companies in writing within one month when a partner (either general or limited) begins or ceases to be a partner. For new partners, the notice must specify the name and residence of the partner (Article 19, Companies Act). For an LP the capital of which is divided into shares, the partner vested with the administration or representation of the partnership must deliver a printed copy of the amended deed to the Registrar of Companies within 14 days of the alteration (Article 66(4), Companies Act). 76. A partnership may alter or add to the deed of partnership by means of a resolution, which needs to be filed for registration with the Registrar of Companies in order for such resolution to be effective. This also applies where a partner ceases to be a partner or where a person whose name does not appear in the deed of partnership or in any alteration or addition thereto becomes a partner of an already existing partnership. In such cases, a notice
to that effect, specifying the name and residence of any new partner, needs to be delivered to the Registrar of Companies for registration within one month by the partner or partners having the administration or representation of the partnership. The following partnerships must make an annual return: general partnerships or LPs the capital of which is not divided into shares where all of the partners have unlimited liability and partnerships or firms constituted or incorporated outside Malta which are comparable to a company or LP the capital of which is divided into shares. The return must specifically include a summary of the share capital, list of past and present members, particulars of directors and the company secretary (Seventh Schedule, Companies Act).
Income Tax Acts

77. LPs the capital of which is divided into shares are automatically registered with the Inland Revenue Department as is the case with companies. LPs the capital of which is not divided into shares and general partnerships that are engaged in a trade or business must separately register with the Inland Revenue Department, as the process is not automatic as in the case of companies. Like companies, the partnership is then given a nine-digit tax registration number. 78. LPs with capital divided into shares are treated like a company for tax purposes, and therefore subject to the same requirements as companies under the Income Tax Acts, including the requirement to file tax returns. Such return is identical to the return required for companies, and therefore includes information on the partners identities. 79. All other partnerships are transparent for tax purposes; the income of the partnership is assigned to the partners and must be included on each partners individual income tax return (Article 27(1), Income Tax Management Act). The partnership itself must also file an income tax return (Article 27(2), Income Tax Management Act). When the partnership includes a resident partner, the resident partner whose name appears first on the partnership deed has a duty to deliver the partnership return. The return must include the names and addresses of each of the partners and the income to which each partner was entitled that year. When the partnership does not have any resident partners, the return must be completed and delivered by the attorney, agent, or manager of the partnership resident in Malta.
Ownership and identity information held by the partnership

80. All partnerships fall within the definition of an entity under the Cooperation Regulations and therefore must keep updated information that identifies their owners as well as the level and type of their ownership stake in the partnership. This information must be updated within 14 days of any

change. For an individual, such information includes the full name and address of the partner residence; passport, ID or tax identification number; and date and place of birth (if no number is available). For persons that are not individuals, it includes the name, date of incorporation and the registered address of the entity. In any case the partnership must know who its partners are in order to complete its annual tax return.
Conclusion
81. Both general and limited partnerships must register with the Registrar of Companies and also with the Inland Revenue Department if engaged in a trade, business, profession or vocation in Malta. In addition, all partnerships are subject to the Cooperation Regulations and therefore required to maintain ownership and identity information on all of the partners.
Trusts (ToR A.1.4)

78. Express trusts can be created under Maltese law either orally or in writing and come into existence when a trustee holds property for the benefit of the beneficiaries (Art. 3, Trust and Trustees Act). The MFSA is the competent authority in relation to trusts and does not keep a trust register. By virtue of the enactment of the Convention on the Law Applicable to Trusts and on their Recognition, recognition of a trust is not dependent on registration. If a trust has income attributable to it, the trustee needs to register for tax purposes since a tax return needs to be filed with the Inland Revenue Department. Subsequently, there is no further requirement to register with any other authority. As at June 2011, there were 89 trusts registered with the Inland Revenue Department. 79. The Trust and Trustees Act defines a trustee as the person or persons holding property or in whom property is vested for the benefit of another person (Article 2). Both individuals and companies may act as trustees. A trustee must be authorised by the MFSA if s/he acts as a trustee of a trust and does any one of the following: received or is entitled to remuneration for acting as a trustee; does so on a regular and habitual basis; or holds him/ herself out to be a trustee (Article 43(1)), Trust and Trustees Act). This is the case whether all or part of the trust property is in Malta. Therefore, all trustees, except for certain non-professional trustees, must be authorised by the MFSA no matter where the trust was formed or whether all or part of the trust property is in Malta (Article 43(1)). Such authorisation is subject to the satisfaction of certain conditions provided for in the Act. 80. In order for a company to be authorised to act as a trustee, its object must include the possibility of acting as a trustee and the object cannot be incompatible with the provision of trustee services. In addition, it must have
at least three directors who are approved persons, it must establish adequate systems for maintaining proper records of identity and residence of beneficiaries, the dealings and the assets in connection with trusts and compliance with applicable law, and every person having a direct or indirect interest must be an approved person. When the trust is not constituted in Malta, it must be constituted or incorporated in an approved jurisdiction (Article 43(4)(i)). For an individual to be authorised, s/he must be a Maltese resident, an approved person and must have established adequate systems for maintaining proper records of the identity and residence of beneficiaries and of the dealings and the assets of trusts. 81. An approved person, for both a corporate and individual trustee, is a person with a good reputation who possesses experience and qualifications in financial, fiduciary, accounting or legal services and who is approved by the MFSA as fit and proper to carry out the duties of a trustee (Article 45(5)). 82. Authorisation to act as a trustee is not required where a trustee is carrying out an activity for which it is already licensed. This excludes persons licensed under the Banking Act, Investment Services Act, Insurance Business Act, or a person with a license for banking or insurance issued by an approved jurisdiction from the requirement to be authorised. An approved jurisdiction must be approved by the MFSA. 7 83. Non-professional trustees are referred to as private trustees pursuant to the Trust and Trustees Act and may act without authorisation from the MFSA (Article 43A, Trusts and Trustees Act). A trustee must be either authorised or private, otherwise s/he cannot act as a trustee in Malta. A private trustee is a person who is related to the settlor or has known the settlor for at least 10 years and in both cases is not paid for the services, does not hold him/herself out as a trustee to the public and does not act habitually as a trustee in relation to more than five settlors at any time.
7.
While there is no public list identifying approved jurisdictions, the MFSA, when determining whether a jurisdiction is reputable, refers to the definition in the Prevention of Money Laundering and Financial Terrorism Act which defines a reputable jurisdiction as any country having appropriate legislative measures for the prevention of money laundering and the funding of terrorism, taking into account that countrys membership of or any declaration or accreditation by any international organisation recognised as laying down internationally accepted standards for the prevention of money laundering and for combating the funding of terrorism, and which supervises natural and legal persons subject to such legislative measures for compliance therewith. Malta advises that MFSA would review the FATF and MONEYVAL statements which are issued regularly.
Information provided to government authorities

84. A trustee, whether professional or non-professional, holding property in trust must register and file tax returns with the Inland Revenue Department when there is income attributable to such trust (Article 27D(1), Income Tax Act). Where at least one of the trustees of a trust is a person resident in Malta, tax is payable on any income attributed to the trust. Such income is the aggregate of any relevant income (including capital gains) which has accrued to or is derived by a trustee of a trust from property which was settled in the trust or was acquired in the administration of the trust. Income includes both Maltese and foreign-source income as Article 4(1) of the Income Tax Act refers to income accruing or derived from Malta or elsewhere. In registering a trust for income tax purposes, the trustee must provide a copy of the written trust instrument, details of the settlor, including his/her income tax number (when applicable) and details of the beneficiaries, including the income tax numbers (where applicable) (Schedule 1, Trusts (Income Tax) Regulations). Upon registration, a trust is given a nine digit tax registration number. When there is no income attributable to the trust, the trust is not taxable in Malta, although the trustee is still subject to the requirements in the Cooperation Regulations (see paragraph 87 below). 85. Income attributable to a trust that is not distributed to beneficiaries is taxable in the hands of the trustee (Art. 27C, Income Tax Act). The annual tax return in relation to a trust must include any changes in the details filed at registration, including the new name of the trust, persons that are no longer resident trustees, new resident trustees and any change in beneficiaries, which is optional.
Information kept by the trustee

86. The Cooperation Regulations provide that trustees established under the laws of Malta or who are resident in Malta shall take all reasonable measures to ensure that updated information is kept that identifies the settlor, other trustees and beneficiaries of express trusts (whether the proper law of such trusts is that of Malta or elsewhere) (Cooperation Regulations, Reg\. 4(4)(a)). In addition, a person that is established under the laws of Malta or that is resident in Malta and entrusted with the administration of an express trust (whether the trust is established under Maltese or foreign law) has the same obligation (Regulation 4(4)(b)). The identity information includes (for an individual) the name; passport, ID or tax identification number; date and place of birth if no number is available; and address of residence; and (for an entity) the name, date of inception or incorporation and the registered address (Reg. 4(5)). The Maltese authorities interpret reasonable measures within the context of the following requirements: (i) the obligation that this information must be kept up to date (and the practical issues this may involve);
(ii) the provisions of Regulation 3 of the Cooperation Regulations which provides that the regulations apply in order to ensure the effective cooperation with other jurisdictions on tax matters where arrangements that enable such cooperation are in place and shall be interpreted accordingly; (iii) the provisions of Regulation 4(12) of the Cooperation Regulations that require that such updated information is to be kept in a way that it may be submitted without difficulty to the Commissioner; and (iv) the provisions of the Code of Conduct for Trustees (see below). 87. The MFSA issues a Code of Conduct for Trustees that applies to both authorised trustees in terms of the Trusts and Trustees Act and to persons who are not required to obtain authorisation but are nonetheless acting as trustees (Code of Conduct, Paragraph 2). Pursuant to Article 52(1) of the Trusts and Trustees Act, the Code is binding on trustees. 88. The Code requires that a trustee be fully aware of the objects of the trust and must be satisfied that it is being established for a lawful purpose. Trustees must have full knowledge of the trust arrangement and must retain a copy of all the records pertaining to the trust business in their files, have adequate policies and procedures in place to ensure that they know the identity of the co-trustees, custodians, each settlor, protector, enforcer and, where appropriate, the principal beneficiaries to the fullest extent possible. Although there is no definition of principal beneficiaries, Malta advises that the term is interpreted to mean beneficiaries that are individually appointed either through the terms of the trust deed or arrangement, or (in the case of a discretionary trust having a class of potential beneficiaries), those persons are individually appointed by the trustee as beneficiaries. Therefore, for purposes of the Code of Conduct, this requirement includes the identification of all beneficiaries. The trustee should have information on their personal circumstances and residence. This information must be kept up to date. They must also verify the source of all assets and be satisfied that they are not of illicit origin (Code of Conduct page 7-8). The Code of Conduct for Trustees requires trustees to keep and preserve the required records in Malta. The records must include such records as are appropriate for the trustees functions and as required by any applicable law and will enable the provision of information to persons interested in trusts and entitled to the information on a timely basis. 89. In addition to the above requirements under the Cooperation Regulations and the Code of Conduct for trustees, the AML laws require that a person providing trustee services, regardless of whether they are authorised under the Trusts and Trustees Act, is deemed to be carrying out a relevant activity (Regulation 2, Prevention of Money Laundering and Funding of Terrorism Regulations) and therefore must take due diligence measures to identify the customer. This applies to both professional and non-professional trustees. The AML laws define beneficial owner as the natural person who

ultimately owns or controls the customer and in the case of a legal entity or arrangement which administers and distributes funds, the beneficial owner includes: (a) where the beneficiaries have been determined, a natural person who is the beneficiary of at least 25% of the property of the legal entity or arrangement; (b) where the beneficiaries have not yet been determined, the class of persons in whose main interest the legal entity or arrangement is set up or operates; (c) a natural person who controls at least 25% of the property of the legal entity or arrangement (Article 2, AML law).
Conclusion
90. Ownership information on trusts, including the settlor and beneficiaries, is available in Malta for trusts established under Maltese law as well as foreign trusts with a trustee resident in Malta pursuant to the Cooperation Regulations which requires that a trustee keep such information. In addition, although trusts are not required to be registered in Malta unless they have income tax liability, all trustees, with the exception of private trustees, must be authorised by the MFSA and all trustees are subject to the AML laws. Where a trust is created under the laws of Malta but has no other connection with Malta, there may be no information about the trust available in Malta.
Foundations (ToR A.1.5)

91. Foundations can be formed under Maltese law pursuant to the Civil Code and may be either private foundations, established for a private benefit, or purpose foundations, established exclusively for a charitable, philanthropic or other lawful social purpose. 92. A foundation may only be established to carry on commercial activities when it is used as a collective investment vehicle (subject to the necessary authorisations from MFSA), as a vehicle for a securitization transaction, when it is endowed with commercial property or is a passive owner of a profit making enterprise, franchise, trademark or other asset which gives rise to income. 93. A foundation may have one or more founders and designated administrator(s). The administrators may be juridical persons, as long as they have at least three directors. The terms of the foundation may provide for the establishment of a foundation council consisting of at least one member or for the office of a protector with similar functions, but such provisions are not
mandatory (Art. 37, Civil Code). If there is a council it must have at least one member with no restrictions on residence (Article 37(1), Civil Code). Private foundations must have beneficiaries, either specifically identifiable or as a group. If no beneficiaries are identifiable, the foundation is deemed to be for the private benefit of the founders. The founder of a foundation may also be a beneficiary. 94. A foundation may establish segregated cells in order to achieve a particular purpose within each cell (Article 20(1), Second Schedule, Civil Code). A segregated cell exists when it is formally established either by the statute of the foundation at its creation or subsequently by the administrators pursuant to a power vested in them by the statute. A segregated cell is not a legal person, but does have its own distinct name or designation (Article 20(3)). The assets of the cell must be segregated from all other assets of the foundation and are held and administered separately and distinct accounts must be maintained in relation to each cell. The existence or termination of each cell must be disclosed in the reports and accounts of the foundation (Article 20(6)). For ownership information purposes (see below) the laws as applicable to the foundation apply to each cell.
Information provided to the Registrar

95. A foundation may only be constituted by virtue of a notarial deed. If a foundation is constituted inter vivos it must be done by means of a public deed, whereas if a foundation is constituted testamentary, it needs to be done by means of a will which will not necessarily be public (Article 29(1)), Second Schedule, Civil Code). Therefore the services of a notary are mandatory every time a foundation is constituted. 96. The administrators of the foundation must register the foundation by submitting various documents to the Register for Legal Persons within three months of the foundations formation (Article 30, Second Schedule, Civil Code). For a private foundation, these include an authenticated copy of the deed creating the foundation and a note of reference identifying the founder (Art. 31(1)(b), Second Schedule, Civil Code). For a purpose foundation, an authenticated copy of the instrument creating the foundation that clearly states the purpose of the foundation is required (Art. 32(1)). When a foundation (either public or private) is created by public deed, a copy of the deed must be delivered to the Registrar (Art. 31(3). The deed of a foundation (either purpose or private) must state the following in order for the foundation to be a valid legal entity (Art. 29(4), Second Schedule, Civil Code): name of the foundation which must include the word foundation and its registered address in Malta; purpose or object;

assets with which it was formed; composition of the board of administration and the names of the first administrators (if appointed). If administrators are non-residents of Malta, the name and address of a person resident in Malta who has been appointed to act as a local representative in Malta; legal representative; term for which it is established (if any); and the endowment of money or property worth at least EUR 1 164.69. 97. The identity of the founders will be indicated in the deed constituting the foundation itself (Art. 26, Notarial Profession and Notarial Archives Act). The notary is required by the Notarial Profession and Notarial Archives Act to personally identify the founder and indicate his/her identification information on the deed and is also subject to the AML laws and must carry out customer due diligence. 98. When a private foundation is created by public deed, the Notary publishing the deed must deliver a note of enrolment to the Director of the Public Registry within 15 days from the date of the deed, containing the date, nature of the act and designation of the founder (Art. 50(9), Notary Act). However, the deed of the foundation may specifically exempt the Notary from registering the note but only if the exemption is stipulated in the deed of the foundation and the administrator is a person who is either authorised or not required to be authorised to act as an administrator for a private foundation (Art. 50(9)). In such cases, the identity of the founder will still be known and indicated in the deed of the foundation. 99. The identity of the beneficiaries does not have to be disclosed to the Registrar upon registration, but their names must be in a written statement made to the Notary and signed by the founder. When the foundation is created by public deed, the beneficiary statement does not have to be part of the public deed, but must be authenticated by a Notary Public who publishes the deed of foundation (Art. 29(6), Second Schedule, Civil Code). In this case, the statement may be kept by the administrator. If the Beneficiary Statement is attached to the public deed, then it is conserved by the Notary who is bound to keep it private and confidential. 100. Where there is any change to the purpose of the foundation or the appointment of an additional founder, there must be an additional public deed registered with the public registry and kept by the relevant notary (Art.32(2)). Any change of registered address, change in administrator or person vested with legal representation or the local representative of the foundation, in the cases where the administrators are not resident in Malta, must be notified to the Registrar for Legal Persons within 14 days from the date of resolution or decision.
101. Founders may add to the assets of the foundation, in which case the administrators must notify any change in assets to the Registrar within 3 months of such change. For cash endowments, a certified copy of the relative bank deposit statement must be included and filed with the Registrar for Legal Persons (Article 34(3)). This applies to both private and purpose foundations equally. For private foundations, the founders may amend the deed and add or remove beneficiaries. While the founder may freely amend the deed and substitute or add beneficiaries, the Registrar for Legal Persons needs to be notified. When a purpose foundations statute is amended, the administrator of the foundation must notify the Registrar within 14 days of the change and deliver a copy of the amended document (Regulation 5, Civil Code (Second Schedule)(Notifications and Forms) Regulations). 102. The Registrar for Legal Persons may require any additional information from any person that it deems necessary for the foundations registration. However, for private foundations, this cannot include a copy of the statement of beneficiaries, although the MFSA could request this (proviso to Article 31(9), Second Schedule, Civil Code).
Information provided to the tax authorities

103. Foundations in Malta are treated in the same manner as a company that is resident and domiciled in Malta for tax purposes, and are subject to the same tax rules. Tax is payable on the foundations profits and distributions are treated as dividends distributed to shareholders. The administrator of a foundation is required to keep all records, submit all returns and documents and to pay tax in the same way as required by a company (Regulation 3, Foundations (Income Tax) Regulations). A foundation can also elect to be taxed as a trust by submitting a notice in writing to the Commissioner (Regulation 4). 104. All foundations that are liable to tax in Malta must register with the Inland Revenue Department and are given a nine digit tax identification number. Upon registration, the foundation must submit a copy of the certificate of registration and a copy of the written instrument establishing or evidencing the foundation. Where a foundation elects to be taxed as a trust, details relating to the name and income tax ID numbers of the founder(s) and beneficiary(ies) (which are optional) need to be indicated in the registration form. For tax purposes, foundations must have at least one resident administrator whose contact details must be indicated in the registration form. 105. Tax regulations do not distinguish between local and foreign foundations and there are not different registration requirements.
Information kept by the foundation itself

106. Maltese foundations must maintain information identifying their owners, which must be updated no later than 14 days from the date the foundation was notified or becomes aware of any change (Regulation 4(1), Cooperation Regulations). The term owners is defined to include the founders, administrators, members of the supervisory council and the beneficiaries (where applicable), as well as any other person with the authority to represent the foundation (Regulation 4(1)(b)). The information required to identify an individual is the full name and address, passport, ID or tax ID number, and date of place of birth (if no numbers available) of the individual concerned. For non-individuals, the information required includes the name, date of inception/incorporation and a registered address. 107. The same nine year requirement to retain ownership information applies as for other entities. This also covers the notary when acting in a professional capacity in relation to any such information or records that s/he holds in the carrying on of the business (Regulation 4(13), Cooperation Regulations). 108. Additionally, all original public deeds of constitution of foundations, deeds of enrolment of status as well as statements of compliance and any other public deeds must be kept in the records of the publishing Notaries and must eventually be submitted to the Notarial Archives for preservation (Article 55, Notarial Profession and Notarial Archives Act).
Conclusion
109. Ownership and identity information on the founders, administrators, supervisory council and beneficiaries of foundations would be available, as the foundation is required by the Cooperation Regulations, among other things, to maintain such information.
Other relevant entities and arrangements

110. Cooperatives and associations are also possible under Maltese law. As at August 2011 there were 22 associations and 68 cooperatives registered in Malta. 111. Cooperative societies are legal persons governed by the Cooperative Societies Act, made up of a minimum of seven members and can be formed for any lawful purpose. Cooperatives are autonomous, independent organisations controlled by their members. The administration of a cooperative is supervised by the Cooperatives Board, whose main function is to guide, assist and manage the cooperative. Every cooperative must register its statute, including any amendment to the statute with the Co-operatives Board. It must also submit annual financial statements. Both the registration and the
financial statements are available publicly, and the registration is published in the Government Gazette. 112. Cooperatives are required to keep records of their transactions and affairs, and must also do all things necessary to ensure that all payments from their accounts are correctly made and properly authorised and that adequate control is maintained over the assets of, or in the custody of, the society and the expenditures incurred by it. Cooperatives are considered to be companies for the purposes of income tax legislation and have identical annual return and registration requirements (see Companies section above). However, a cooperatives income is exempt from tax (Article 12(1)(q), Income Tax Act). Ownership information is publically available (Article 12, Co-operative Societies Act) 113. An association is made up of three or more persons, with assets and liabilities separate and distinct from its members, administrators and beneficiaries (Art. 27(1), Second Schedule, Civil Code). Civil partnerships are a form of association. Associations do not have to register with the Registrar for Legal Persons, but if they wish to be vested with legal personality they must do so (Art. 3(1)). 114. The agreement establishing an association must be in writing and will be null if it is not. This agreement must state: its name, registered address in Malta, its purpose, the method by which membership is granted, composition of the board of administration and names of the first administrators, manner in which administrators are elected/removed, legal representation, if administrators are non-residents, the name and address of a person resident in Malta who has been appointed to act as the local representative of the association in Malta, among other things (Article 49(2), Second Schedule, Civil Code). For associations that register, an authenticated copy of the constitutive instrument must be filed with the Registrar for Legal Persons An association can be created by public deed, but does not have to be. When the association is created by a public deed, an authentic copy of the deed must be delivered by either the administrators or the Notary publishing the deed at registration (Art. 51(2). 115. Associations (including civil partnerships) are treated as a body of persons for income tax purposes, therefore they have the same requirements as general partnerships under the income tax laws (see Partnerships section above for general requirements). In addition, because the definition of entities in the Cooperation Regulations includes any body of persons, and this term is defined in the Income Tax Code, the parent act of these Regulations, as any body corporate, including a company and any fellowship, society or other association of persons whether corporate or unincorporated and whether vested with legal personality or not (Article 2, Income Tax Act), the ownership and identity requirements in these Regulations would apply to both cooperatives and associations. Therefore, ownership and identity requirements consistent with the international standard and would be available for these entities.
Enforcement provisions to ensure availability of information (ToR A.1.6)

116. Jurisdictions should have in place effective enforcement provisions to ensure the availability of information, one such possibility among others being sufficiently strong compulsory powers. 117. Penalties under Maltese law are found in the Income Tax Acts, the Cooperation Regulations and the AML laws for entities generally, and there are also specific penalties depending on the laws governing each entity.
Income Tax Acts

118. A taxable entity (company, partnership, trust or foundation) that fails to submit a tax return annually must pay a penalty, which begins at EUR 50 if it is filed within 6 months, up to EUR 1 500 if its filed more than 60 months late (Schedule to the Income Tax Act). In addition, a person who does not comply with a notice, request or demand note under the Income Tax Act or who fails to answer any question lawfully put to him/her can be guilty of an offense and fined between EUR 23 and EUR 10 000 and an additional EUR 200 for each day the offense continues after conviction. 119. The Cooperation Regulations require an entity to keep updated information on ownership and identity. Where information is not provided, or is not provided in a timely manner to the Tax Authorities because such information was not kept or properly updated as required by the Regulations, the person that had the duty of keeping or updating the information is liable to a penalty of EUR 1 000 (Regulation 6(3), Cooperation Regulations).
AML laws
120. Under the AML laws, when a subject person carries out customer due diligence measures in an established business relationship, but doubts arise about the veracity or adequacy of the previously obtained customer identification or changes have occurred in the circumstances surrounding the business relationship, the customer due diligence measures must be repeated (Regulation 7(7), AML Regulations). A subject person who contravenes this obligation is subject to an administrative penalty of not less than EUR 250 to 2 500 without the possibility of recourse to a court hearing (Regulation 7(12), AML Regulations).
Companies
121. Both public and private companies are required to keep a register of members which must include both share and share warrants. The penalty for failure to keep a register of members is, for every officer of the company who is in default, a penalty of EUR 465.87, and a further penalty of EUR 23.29 for each day during which the default continues (Article 123(4), Companies Act and Eleventh Schedule, Companies Act). 122. Companies are also required to register with the Registrar of Companies. Although there is no specific monetary penalty for failure to register, an unregistered company cannot be said to have come into existence and therefore would not enjoy limited liability under the Companies Act (Article 68). Furthermore, all persons that carry on business or enter into agreements in the name of or on behalf of a company in respect of which a certificate of registration has not been issued under the Companies Act, or before the date indicated in the certificate of registration as the date on which the company comes into existence, shall, unless otherwise agreed, be personally and jointly and severally liable for their dealings with third parties entered into by them in the aforementioned capacity (Article 78(1), Companies Act). 123. All companies are required to register with the Registrar of Companies. When there is a transfer of shares in a company, a company is required to register the change with the Registrar of Companies within 14 days. If a company fails to register such changes, every officer including the director, manager or secretary, is liable to a penalty of EUR 465.87 plus EUR 23.29 for each day it continues. 124. When a company ceases to be a company its name is struck from the register of companies. The liquidator of the company must keep all of the documents of the company for ten years from the date of the publication of the companys name being stricken from the register. If the liquidator fails to comply with this, he/she is liable to a penalty of EUR 1 164.69 (Article 342(2), Companies Act). 125. An oversea company that fails to comply with registration requirements and obligations to registration of alterations is liable to a default penalty of EUR 465.87 and a further penalty of EUR 23.29 for each day the offence continues.
Partnerships
126. Partnerships must notify the Registrar in writing within one month from when a partner begins or ceases to be a partner or of any change to the deed (Article 19, Companies Act). Failure to do so results in a penalty of EUR 465.87 and a further penalty of EUR 23.29 for each day the offence

continues. The penalty for carrying on business as a partnership without registering is EUR 2 329.37 (Article 10, Companies Act). Although the Second Schedule to the Civil Code is silent in respect of specific monetary penalties concerning civil partnerships (and associations in general), they are subject to the Cooperation Regulations and therefore the penalties described at above would apply. 127. For limited partnerships whose capital is divided into shares, where the deed is altered or any additions are made to it, the partner vested with the administration or representation of the partnership must deliver a printed copy of the amended deed to the registrar within 14 days of the alteration (Article 66(4), Companies Act). The penalty for failure to do so is that every partner responsible for the administration of the partnership who is in default is liable to a penalty of EUR 465.87 and an additional EUR 23.29 for each day the default continues. 128. In the case of a general partnership or a limited partnership (not divided into shares) that must file an annual return pursuant to the Companies Act, the penalty for failure to do so is, EUR 2 329.37 as well as a penalty of EUR 46.59 for each day the default continues for every officer of the company who is in default. 129. An LP that qualifies as collective investment scheme and therefore must maintain a register of partners and fails to maintain these documents at the registered office of the partnership, both the partnership and each general partner are liable to a penalty of EUR 465.87 and a penalty of EUR 23.29 for each day the offence continues.
Trusts
130. The penalty for a trustee who fails to comply with any of the requirements of the Trusts and Trustees Act is, on conviction, liable to a fine of up to EUR 466 000 or to a term of imprisonment up to four years, or both (Article 51(6)). A trustee that contravenes or fails to comply with an authorisation, directive, obligation or other requirement made by the MFSA may be liable for an administrative penalty of up to EUR 93 174.94 (Article 51(7)).
Foundations
131. When a foundation (private or purpose) is not registered within the prescribed three month period, the persons responsible for such registration are liable to a penalty of EUR 232.94 each (Art. 31(10), Second Schedule, Civil Code).
Cooperatives
132. The statute of every cooperative must be registered with the Co-operatives Board, including any amendment to the statute. Failure to register a change of address with the Co-operatives Board exposes the co-operative to a penalty of EUR 116.47. Furthermore, every society must send an updated list of its members to the Co-Operatives Board at the end of December of each year, which list shall be open for inspection to the public at the office of the Board. The penalty for violation of this obligation exposes the co-operative to a penalty of EUR 116.47 and EUR 69.88 per month or part thereof. 133. For associations, although the Civil Code is silent with regard to specific monetary penalties concerning associations in general, associations are subject to the Income Tax Acts and the Cooperation Regulations and the penalties are the same as for other entities.
Determination and factors underlying recommendations
Phase 1 determination The element is in place.
A.2. Accounting records

Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements.
General requirements (ToR A.2.1)

134. The Terms of Reference sets out the standards for the maintenance of reliable accounting records and the necessary accounting record retention period. It provides that reliable accounting records should be kept for all relevant entities and arrangements. To be reliable, accounting records should; (i) correctly explain all transactions, (ii) enable the financial position of the entity or arrangement to be determined with reasonable accuracy at any time; and (iii) allow financial statements to be prepared. Accounting records should further include underlying documentation, such as invoices, contracts, etc. and need to be kept for a minimum of five years. 135. All relevant entities and trustees in Malta are required to keep accounting records to the international standard pursuant to the Cooperation Regulations, which require that entities and trustees keep reliable books of account that correctly explain all transactions of the entity, enable the financial position of the entity to be determined with reasonable accuracy at any time and allow the financial statements to be prepared. Where information

has not been kept in the proper manner, resulting in information not being provided at all or in a timely manner, the person who has a duty to keep such information is liable to a penalty of EUR 1 000. 136. In addition to the requirements under the Cooperation Regulations, the Income Tax Acts require that every person carrying on a trade, business, profession or vocation must keep proper and sufficient records of his income and expenditure to enable his income and allowable deductions to be readily ascertained (Article 19(1), Income Tax Management Act). The required records must include proper accounts with respect to: (a) all sums of money received or expended and the matters with regard to the receipt or expenditure takes place; and (b) all sales, purchases or services rendered, as well as any other transaction, act, or operation pertaining to the trade, business, profession or vocation. 137. The entity must also keep a profit or loss account or an equivalent annual statement as well as a statement of the assets and liabilities as on the date the annual accounts are made, or a balance sheet (Article 19(2), Income Tax Management Act). 138. Under the Income Tax Acts, a trustee may opt to have the income attributable to such trust taxed as if it were a company. In this case, the accounting records required to be kept by a trustee are the same as for a company (Article 27D(1)(c), Income Tax Act). In addition the Cooperation Regulations provide that a trustee must ensure in all cases (i.e. whether the above-mentioned option is taken or not) that the conditions for reliable books of account outlined above are met. 139. In addition to these general requirements, there are specific requirements depending on the type of entity, outlined below.
Companies Act
140. Additional accounting requirements for both companies and partnerships in Malta are found in the Companies Act. The Companies Act requires that companies and partnerships the capital of which is divided into shares keep proper accounting records with regard to: (a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (b) the assets and liabilities of the company; (c) if the companys business involves dealing in goods: statements of stocks held by the company at the end of each accounting period of
the company; all statements of stock takings from which any such statement of stocks has been prepared and, except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased showing the goods and the buyers and sellers in sufficient detail to enable all these to be identified (Article 163(1), Companies Act). 141. Records are considered to have satisfied the requirements of the Companies Act if they are sufficient to explain and show the companys transactions such that they disclose with reasonable accuracy, at any time, the financial position of the company at that time; and enable the directors to ensure that any balance sheet and profit and loss account prepared under company law comply with the requirements of such legislation (Article 162(2), Companies Act). For failure to comply with the accounting requirements of the Companies Act, the penalty, upon conviction, is a fine of up to EUR 11 646.87 for every officer of the company. If an officer can show that s/he acted diligently and that the default was excusable, s/he can avoid the conviction and penalty (Article 163(6), Companies Act). 142. The Companies Act also requires that directors file annual financial statements and that parent companies file consolidated accounts. These statements must include a profit and loss statement, balance sheet, notes to the accounts, and anything else required under the relevant accounting standards adopted in Malta. 8 Smaller entities are subject to simplified annual financial statement requirements pursuant to the General Accounting Principles for Smaller Entities Act (GAPSE). These standards can be used by companies that generally have fewer than 250 employees, assets below EUR 17.5 million, revenue below EUR 35 million, are not publicly traded, and are not financial institutions. All companies accounts must be audited in accordance with generally accepted auditing standards and a report must be made to the companys members. The auditors report must state whether the accounts have been properly prepared in accordance with the Companies Act, and in particular whether they give a true and fair view of the state of affairs of the company (Article 179, Companies Act). 143. LPs that are expressly limited to the collective investment of their funds must maintain accounting records under the Companies Act that are: sufficient to show and explain the partnerships transactions; disclose with
8. These include International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and related Interpretations (SIC-IFRIC interpretations), which standards and related interpretations are issued or adopted by the International Accounting Standards Board (IASB). These rules are contained in subsidiary legislation to Maltas Accountancy Profession Act and the Accountancy Profession (Accounting and Auditing Standards) Regulations.

reasonable accuracy, at any time the partnerships financial position at that time; enable the general partners to ensure that the partnerships balance sheet and profit and loss account are prepared properly and in accordance with generally accepted accounting principles and practice in accordance with any relevant enactment for the time being in force in Malta; contain day to day entries of all sums of money received and expended by the partnership and the matters in respect of which the receipt and expenditure takes place; and a record of the assets and liabilities of the partnership. 144. The general partners of every limited partnership must prepare individual accounts for each accounting period comprising a balance sheet at the last day of the accounting period to which they refer, a profit and loss account for the same period, the notes to the accounts and any other financial statements which may be required by generally accepted accounting principles and practice (Art. 14(2), Tenth Schedule (Article 66A, Companies Act). These individual accounts must give a true and fair view of the partnerships assets, liabilities, financial position and profit or loss. The accounting records and returns of such partnerships must also disclose, with reasonable accuracy, the financial position of the business of the partnership at intervals not exceeding six months (Item 13(6), Tenth Schedule, Companies Act). These accounts must be kept by the partnership for a minimum of 10 years.
Commercial Code
145. The Commercial Codes accounting requirements apply to all traders and acts of trade done by any person, even though not a trader (Article 2, Commercial Code). Trader is further defined as any person who, by profession, exercises acts of trade in his own name (Article 4). This includes commercial partnerships (but not companies and partnership en commandite the capital of which is divided into shares as record keeping for these is regulated by the Companies Act. All traders must keep books, letters, invoices and telegrams they receive. The books consist of the following: waste-book: with evidence of every commercial transaction a trader makes, along with the conditions or terms to which the transaction is subject (Article 14); journal: must show the day-by-day transactions concluded by the trader, along with debts, credits, negotiations, acceptances and endorsements of bills (Article 15); cash-book: must show in detail, daily sums received and paid out, balanced at least once per month (Article 16);
inventory book: yearly inventory with a description and value of the whole estate, assets and liabilities along with their nature and origin, with a balance showing profits and losses (Article 17). ledger: must show and accurate and up-to-date record of transactions classified as personal and impersonal accounts that may be used to draw and true and correct picture of the state of affairs of the business at any time (Article 19). 146. Civil partnerships, which are a form of association (see paragraphs 114-116 above) must have at least one administrator responsible for keeping records. These must include records of all assets and liabilities along with all income and expenditures of the partnership for the annual financial period (Second Schedule, Civil Code). In addition, if the civil partnership meets the definition of trader under the Commercial Code it is also subject to those accounting obligations.
Trusts and Trustees Act

147. In addition to the accounting requirements under the Income Tax Acts and the Cooperation Regulations, trustees that are resident in Malta must keep accounting records pursuant to the Trust and Trustees Act and the Code of Conduct for Trustees, which is issued by the MFSA. The Code of Conduct for Trustees applies to both trustees authorised by the Trusts and Trustees Act and to persons who are not required to obtain authorisation according to the Act but are acting as trustees (Code of Conduct, paragraph 2). The Code of Conduct is binding on trustees. 148. Under the Trust and Trustees Act, trustees must keep accurate records of their trusteeship (Article 21(4)). A trustee also has a duty to provide full and accurate information as to the state and amount of the trust property including the accounts of the trust, within a reasonable time of receiving a request in writing to that effect (Article 29(1)). This information must be provided to the following: the Court; subject to the terms of the trust, the settlor; the protector of the trust; and subject to the terms of the trust, any beneficiary of the trust who is of full age and capacity, or if a minor, to his lawful guardian or representative. 149. In addition, the Code of Conduct which applies to all trustees, requires that trustees keep and preserve appropriate records in Malta, which must at least include records that are appropriate for their functions as a trustee and enable the trustee to provide information to those with an interest in the trust and who are entitled to the information on a timely basis. Financial records that can be used for trust audits and the thorough and satisfactory supervision of the trust activity must also be maintained. The records must be sufficient to enable the trust to comply with any notification and reporting requirements (Paragraph 9.6, Code of Conduct).
Civil Code
150. Foundations are subject to the accounting requirements in the Civil Code. Pursuant to the Civil Code, administrators must keep records of all assets and liabilities and income and expenditures of the foundation for annual financial periods (Article 10(1), Second Schedule, Civil Code). A beneficiary has a right to inquire about the conduct of the administration and the administrators must provide full and accurate information about the state and the amount of the foundation property, including the accounts of the foundation (Art. 38(1), Second Schedule, Civil Code).
Cooperative Societies Act

151. Cooperatives are required to keep accounts that conform to the standards of the International Accounting Standards of the Committee of the International Federation of Accountants, which are incorporated into Maltese law by the Accountancy Profession Act (Article 48(5), Cooperative Societies Act). The accounts must also be audited and a financial statement prepared. A penalty of EUR 116.47 applies for failure to do so.
Underlying documentation (ToR A.2.2)

152. The Cooperation Regulations require that all entities keep accounting books and records that include underlying documents, such as invoices and contracts. The underlying documents must also reflect the details of all sums of money received and expended and the matters in respect of which the receipt and expenditure takes place, all sales and purchases and other transactions and the assets and liabilities of the relevant entity so that financial statements (if required) can be prepared and audited. 153. Entities subject to the income tax laws also have requirements to retain underlying documents to the international standard. Under the Income Tax Management Act, records required to be kept include underlying documents as may be appropriate in the circumstances (Article 19(4)). For a company registered in Malta, the documents include the balance sheet and profit and loss account drawn up pursuant to the Companies Act along with the report from the certified public auditor. A company not resident in Malta must keep the same documents, but these must refer to the companys activities in Malta (Article 19(4), Income Tax Management Act). 154. In addition to the above, the entity must also keep bank statements and passbooks (Article 14, Income Tax Management Act) as well as any statements, accounts, computations or other documents that may be necessary to enable the taxpayers income and deductions or tax payable to be readily ascertained because they can be required to be produced at any time.
It must also keep wage sheets and payroll records in order to substantiate any deductions taken (Article 23(12), Income Tax Management Act). An entity that owns immoveable property in Malta must also keep an account of all proceeds and expenditures relating to transfers of the property that would be subject to the property transfer tax.
Document retention (ToR A.2.3)

155. Under the Income Tax Management Act and the Cooperation Regulations, records that are required to be kept must be retained for a period not less than nine years from the completion of the transaction, acts, or operations to which they relate (Article 19(5)). All persons (this includes all entities companies, partnerships, foundations, associations, cooperatives and trustees) are subject to the same requirement. 156. The Companies Act requires that companies, limited partnerships expressly limited to the collective investment of its funds and commercial partnerships keep accounting records for ten years from the date the last entry was made (Article 163(5)). Failure to keep such records for the ten year period results in a fine for every officer of the company who is in default of EUR 1 164.69 (Article 163(7), Companies Act). If default is made in complying with this obligation, the partnership and each general partner will be liable to a penalty of EUR 1 164.09 (Item 13(7), Tenth Schedule, Companies Act). Where the name of a company is struck off the register, the liquidator is obliged to keep the accounts, accounting records and documents of the company for a period of ten years from the date of publication of the striking of the companys name from the register. If the liquidator fails to comply with this obligation he shall be liable to a penalty of EUR 1 164.69. Officer in relation to a company includes a director, manager or company secretary. 157. For foundations, the Civil Code requires that all accounts are held for 10 years after the relevant annual period to which they refer (Article 10(3), Second Schedule, Civil Code).
Conclusion
158. All relevant entities in Malta are required to keep accounting records to the international standard pursuant to the Cooperation Regulations, which require that entities keep reliable books of account that correctly explain all transactions of the company, enable the financial position of the company to be determined with reasonable accuracy at any time and allow the financial statements to be prepared. These accounting records include underlying documents, such as invoices and contracts, and must be retained for a minimum of nine years.

A.3. Banking information

Banking information should be available for all account-holders.
Record-keeping requirements (ToR A.3.1)

159. Banking information should be available for all account holders and should include all records pertaining to the accounts as well as to related financial and transactional information. The Financial Institutions Act provides that financial institution business cannot be transacted in Malta by a company that is not licensed under the Act. Similarly, banking business cannot be carried on in Malta by a company unless it is issued a license under the Banking Act by the MFSA. 160. The requirement for banks to retain records of all transactions is found in the Cooperation Regulations, which are issued pursuant to the Income Tax Acts. Banks and other financial institutions that are either: resident in Malta, created under Maltese law, have a permanent establishment in Malta, or are required to be licensed in order to conduct business in Malta fall within the definition of entities according to the Cooperation Regulations (Regulation 2). The Regulations require that banks ensure that banking information is kept on all account holders in relation to their banking activity in Malta (Regulation 4(11)). The regulation goes on to define banking information to include all records pertaining to the accounts as well as to related financial and transactional information. The penalty for failure to provide information because it has not been properly kept or updated as required is EUR 1 000, unless the default was due to a reasonable excuse. Banking information retained pursuant to the Cooperation Regulations must be kept for a minimum of nine years from the end of the year in which the relevant transactions took place (Regulation 4(13). 161. Prior to the passage of the Cooperation Regulations, the source of the requirement to maintain bank information was found in the Prevention of Money Laundering and Funding of Terrorism Regulations (S.L. 373.01) as the law covers any business of banking. Specifically, any business of banking or any business of an electronic money institution 9 carried on by a person or
9. Electronic money institution means any person, other than a credit institution, which issues means of payment in the form of electronic money, such that the value represented by a claim on the issuer issuing such money is stored on an
institution that is for the time being authorised or required to be authorised. It also includes any activity of a financial institution carried on by a person who is authorised or required to be authorised under the Financial Institutions Act. 162. As subject persons for AML purposes, banks and other financial institutions are required to retain documents and information for use in any investigation or an analysis of possible money laundering (Article 13(1), Prevention of Money Laundering and Funding of Terrorism Regulations).
electronic devise, issued on receipt of funds of an amount not less in value than the monetary value issued and accepted as a means of payment by undertakings other than the issuer. The licence of such institution is restricted to issuing of electronic money (Article 2(5), Banking Act).
B. Access to information
Overview
163. A variety of information may be needed in a tax enquiry and jurisdictions should have the authority to obtain all such information. This includes information held by banks and other financial institutions as well as information concerning the ownership of companies or the identity of interest holders in other persons or entities, such as partnerships and trusts, as well as accounting information in respect of all such entities. This section of the report examines whether Maltas legal and regulatory framework gives the authorities access powers that cover the right types of persons and information and whether rights and safeguards would be compatible with effective exchange of information. 164. The Maltese authorities have broad powers to access information, including ownership and identity information as well as accounting records, pursuant to the Income Tax Acts and this power can be used to obtain information for exchange of information purposes. These powers apply whether Malta could access the information for its own tax purposes or not. Malta also has sufficient compulsory powers in place in order to compel information, including fines and imprisonment. 165. There are no bank secrecy provisions in Maltas laws that would impede access to bank information pursuant to a request for information under a treaty. Further, the attorney-client privilege standards that would apply to information pursuant to an EOI request is found in the Cooperation Regulations and is identical to the standard found in the OECD Model. 166. Rights and safeguards, including notification requirements with exceptions in specific cases, are in place that would not unduly delay or impede exchange of information.
B.1. Competent Authoritys ability to obtain and provide information

Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information).
Ownership and identity information (ToR B.1.1); accounting records (ToR B.1.2); and use of information gathering measures absent domestic tax interest (ToR B.1.3)
167. Competent authorities should have the power to obtain and provide information held by banks, other financial institutions, and any person acting in an agency or fiduciary capacity including nominees and trustees, as well as information regarding the ownership of companies, partnerships, trusts, foundations, and other relevant entities including, to the extent that it is held by the jurisdictions authorities or is within the possession or control of persons within the jurisdictions territorial jurisdiction, ownership information on all such persons in an ownership chain. 10 Competent authorities should also have the power to obtain and provide accounting records for all relevant entities and arrangements. 11 168. Pursuant to the Income Tax Management Act, the Commissioner of Inland Revenue in Malta has broad powers to access information as often as s/he deems necessary. This includes such information as may be necessary in order to provide information, including documents, to foreign tax authorities where arrangements between Malta and the respective State or its tax authorities exist for the reciprocal exchange of information for tax purposes (Article 10A(1)). The statute specifically provides that the powers apply even if the Commissioner could not collect the relevant information for the purposes of Maltas income tax acts (Article 10A(2)). The term arrangements is defined in the Cooperation Regulations to include: any agreement, convention, protocol or EU Directive pursuant to which Malta may cooperate on tax matters with another jurisdiction through the exchange of information and any administrative agreement or MOU reached between the competent authority of Malta and another jurisdiction with which an arrangement is in place, provided that it is not contrary to the arrangement (Regulation 2). 169. Procedurally, the Commissioner must notify in writing the person from whom the information is being requested (Article 10A(1)). Notification must either be served on a person individually or be sent by registered mail to the persons last known business or private address.
10. 11. See OECD Model TIEA Article 5(4). See JAHGA Report paragraphs 6 and 22.
170. to:
The Commissioners power to access information includes the power require a person to complete and deliver any return specified in the notice; summon any person the Commissioner has reason to believe is able to give information required for the purpose of the request, to attend before him and to examine such person under oath or otherwise; require any person to produce for examination any books, documents, accounts (including bank statements, passbooks and other bank documents) and any other documents which the Commissioner may require or a copy or extract thereof; require any person to give information by means of written statements; require any person to authenticate in an appropriate form any document or copy of a document prepared or held by that person or an extract thereof; require any person to confirm on oath any declaration made by him or any document prepared by him; require any person to provide information, documents or written statements in such other form as the Minister may prescribe (Art. 10A(4), Income Tax Management Act).
171. The Cooperation Regulations elaborate on and strengthen these requirements by providing that the Commissioners powers should be interpreted so as to give the widest possible powers to obtain and provide information to the competent authorities of jurisdictions with which Malta has an arrangement. In this respect, the Commissioner may use any information-gathering powers granted under the Income Tax Acts in order to obtain the information requested, notwithstanding that the information may not be required for purposes of the Income Tax Acts in Malta (Regulation 5(2), Cooperation Regulations). Such powers include those under the Income Tax Management Act to require the production of information (above), as well as the Commissioners audit powers under Article 24C, or powers to access the premises under Article 20 (below). 172. When information is held by a person or entity subject to the AML laws, the tax authority may recover the information either directly from that person or it may require the Financial Intelligence Analysis Unit (FIAU, which is the competent authority in Malta for AML matters) to provide the information if it is held by the FIAU.
Compulsory powers (ToR B.1.4)

173. Malta has compulsory powers in place, including penalties for failure to provide information, pursuant to the Income Tax Management Act and the Cooperation Regulations. Every person who fails to comply with the requirements of a notice, intimation, request or demand note given or made to him/ her or served under the Income Tax Act, fails to answer a notice issued under the Act or fails to answer any question lawfully put without sufficient cause is guilty of an offence punishable, on conviction, by a fine of from EUR 23 to EUR 10 000 and up to an additional EUR 200 for each day the default continues (Article 50, Income Tax Management Act). 174. When a person fails to comply with a request for information made by the Commissioner in relation to a request made by a treaty partner, the requested person is liable to a penalty of EUR 200 where information is not submitted within the time limit specified in the Commissioners request and EUR 50 for each day the default existed, not to exceed EUR 10 000 (Regulation 6(1), Cooperation Regulations). 175. Further, where such failure persists for 183 days from the date of the original request from the Commissioner, when the Commissioner has sent a reminder, criminal penalties may apply, and the person is deemed to have wilfully, with intent to evade or assist another person to evade tax under the Income Tax Acts, made use of a fraud, art or contrivance. The same is true where the information submitted is found to be incorrect in such a way that is misleading or false (Regulation 6(2), Cooperation Regulations). The penalty for this, on conviction before a court of magistrates, is a fine of EUR 700 to EUR 3 500 or a fine of EUR 6 000 to EUR 10 000, depending on the offence committed. In addition to the fines, a requested person who has either failed to comply with a request made by the Commissioner for longer than 183 days or the information submitted is found to be incorrect, may be liable to imprisonment for up to six months (Article 52(1), Income Tax Management Act). 176. The Commissioner also has powers to access businesses or professional premises in order to inspect any books, documents, accounts, etc. and may have full and free access to any property or other assets whose value is required to be determined for the purposes of the act (Art. 20, Income Tax Management Act).
Secrecy provisions (ToR B.1.5)

177. Jurisdictions should not decline on the basis of its secrecy provisions (e.g. bank secrecy, corporate secrecy) to respond to a request for information made pursuant to an exchange of information mechanism.
Bank secrecy
178. Some of Maltas laws contain provisions that would protect bank secrecy, however, these provisions are overridden in the laws themselves, and therefore bank secrecy would not impede Maltas ability to exchange information. Specifically, the Income Tax Management Act provides that no request for information can be made to certain licensed persons unless the request concerns their own personal tax liability. The definition of licensed persons includes licensees under the Banking Act, the Insurance Business Act, the Investment Services Act, or the Financial Markets Act (Article 17). According to the Income Tax Management Act, the Commissioner can only request this information in cases related to tax evasion. However, the access powers in Article 10A of the Act (discussed above) expressly override any secrecy requirement when the information is necessary in order to provide information to foreign tax authorities where there is an exchange of information agreement between the parties. Therefore, Article 10A would apply notwithstanding any restriction relating to the disclosure of information. Furthermore, Regulation 5(1) of the Cooperation Regulations makes it clear that the provisions of Article 10A are to be interpreted to give the widest possible powers in order to obtain and provide information. 179. The Banking Act provides that no person, including past and present officers or agents of a bank, shall disclose any information relating to the affairs of a bank or its customers which s/he has acquired in the performance of his duties under the Act and its regulations. However, there is an exception when authorised to do so under a provision of any law or to enable the Central Bank of Malta or the competent authority, as the case may be, to satisfy their respective obligations arising under Maltas international commitments (Article 34(2), Banking Act). Therefore, this does not serve to restrict access to bank information. 180. For financial institutions generally, the Financial Institutions Act provides that past or present officers or agents of a financial institution, shall not disclose any information relating to the affairs of that institution or of its customers that is acquired in the performance of their duties. However, there is an exception when the employee is either authorised to do so under the Act, or when lawfully required to do so by any court or provision of any law (Section 25(2), Financial Services Act). 181. The Professional Secrecy Act provides that when employees and officers of financial and credit institutions become the depositaries of any secret confided in them that is secret because of their office, they cannot be compelled to give information to the public authority unless there is a law that requires them to do so (Article 3(1)). Disclosing of a secret is treated as a criminal offence (Article 257, Criminal Code). However, the Commissioners access powers under Article 10A of the Income Tax would override this,

as the Article specifically provides that the Commissioners power apply notwithstanding any obligation to secrecy or confidentiality or to any other restriction relating to the disclosure of information. Further, the Cooperation Regulations provide that the Commissioners powers under the income tax acts are to be interpreted as widely as possible. 182. In addition, the Cooperation Regulations specifically provide that the Commissioners access powers are to be interpreted as widely as possible and apply irrespective of any legal obligation that may be imposed on a person to maintain secrecy of information. In this respect, the Regulations state that the Commissioner has the power to obtain and provide information that is held by or is in the possession or control of any of the following persons: banks and other financial institutions; insurance companies; persons acting in an agency or fiduciary capacity including nominees and trustees; lawyers, notaries and other independent legal professionals, real estate agents, accountants, auditors, tax advisors, company service providers, people licensed to carry on the investment business, stockbrokers, companies, collective investment schemes partnerships, foundations and any other body of persons, the stock exchange in Malta and any regulatory authority or body in Malta (Regulation 5(1), Cooperation Regulations).
Attorney-client privilege
183. Maltese law includes protections for information subject to attorneyclient privilege. Specifically, the Cooperation Regulations have a provision that is very similar to the OECD Model TIEA and states that no person may be requested to provide information that would disclose any trade, business, industrial or commercial secret, or information which is the subject of attorney client privilege or information the disclosure of which would be contrary to public policy. The Regulations further define information which is the subject of attorney client privilege as confidential communications between a client and a lawyer or other legal representative produced for the purposes of seeking or providing legal advice or for the purposes of use in existing or contemplated legal proceedings (Proviso to Regulation 5(1)). This is consistent with the international standard.
B.2. Notification requirements and rights and safeguards

The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information.
Not unduly prevent or delay exchange of information (ToR B.2.1)

184. Rights and safeguards should not unduly prevent or delay effective exchange of information. 12 For instance, notification rules should permit exceptions from prior notification (e.g. in cases in which the information request is of a very urgent nature or the notification is likely to undermine the chance of success of the investigation conducted by the requesting jurisdiction). 185. Malta has rights and safeguards in its Cooperation Regulations, including a notification requirement. Upon receipt of a valid request, the competent authority in Malta must notify the person (or his/her authorised representative) that such person is the subject of a request for exchange of information (Regulation 7(1)). This must take place regardless of whether the Maltese tax authorities are already in possession of the information. The Regulations state on receipt but do not stipulate a specific time period within which such notification is to take place. Malta advises that in practice such notification is done as soon as possible, and therefore the process is not delayed. 186. There are exceptions to the notification requirement in the following cases: where the requesting authority has specifically requested that no such notification is made; where the competent authority in Malta determines that the request is of a highly urgent nature and that notification could delay the forwarding of information requested; or where the competent authority in Malta determines that such notification is reasonably expected to jeopardise the relevant investigation or audit being carried out in the relevant jurisdiction. 187. The Regulations also provide that any determination made by the competent authority in Malta cannot be questioned in any appeal by any person. The Income Tax Acts and Regulations do not give the right to oppose or challenge the provision of information to the requested party (Regulation 7(1)).
12.
See OECD Model TIEA Article 1.

COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION 61
C. Exchanging information
Overview
188. Jurisdictions generally cannot exchange information for tax purposes unless they have a legal basis or mechanism for doing so. This section of the report examines whether Malta has a network of information exchange that would allow it to achieve effective exchange of information in practice. 189. Malta has a network of 65 DTCs and 1 TIEA developed over almost four decades. It continues to negotiate new agreements and to update old agreements through Protocols and new treaties. 190. As a member of the European Union, Malta is involved in the European common VAT system and therefore the VAT exchange of information that takes place under the EU regulation (EC) 1798/2003. 13 Malta also exchanges information automatically under the scope of the EU Savings Directive 48/2003/EC pursuant to which EU members (with the exception of Austria and Luxemburg), as well as other jurisdictions that are party to agreements, exchange data on an annual basis concerning the savings income received from Malta paying agents by taxpayers located abroad. Malta also exchanges information under the scope of the EU Mutual Assistance Directive 77/799/EEC. 191. Maltas agreements generally provide for exchange of information to the standard. These agreements cover all relevant partners (any jurisdiction who has asked to enter into an EOI agreement) as well as Maltas significant economic partners. Each of its agreements contains a confidentiality provision that conforms to the standard, and its domestic laws adequately protect the confidentiality of information received as well as the rights and safeguards of taxpayers and third parties.
13.
A new regulation (EC) 904/2010 was adopted by the European Council on 14 October 2010 and will enter into force on 1 January 2012.
62 COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION
C.1. Exchange-of-information mechanisms

Exchange of information mechanisms should allow for effective exchange of information.
Foreseeably relevant standard (ToR C.1.1)

192. The international standard for exchange of information envisages information exchange to the widest possible extent. Nevertheless, it does not allow for fishing expeditions, i.e. speculative requests for information that have no apparent nexus to an open inquiry or investigation. The balance between these two competing considerations is captured in the standard of foreseeable relevance which is included in paragraph 1 of Article 26 of the OECD Model Tax Convention set out below: The competent authorities of the contracting states shall exchange such information as is foreseeably relevant to the carrying out of the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the contracting states or their political subdivisions or local authorities in so far as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2. 193. Of the agreements signed by Malta, those concluded since 2009 generally use the term foreseeably relevant, whereas the agreements concluded by Malta prior to 2009 instead use the terms necessary or as may be relevant. The commentary on Article 26 of the Model Convention considers that the terms necessary or relevant mean the same thing for exchange of information purposes as the expression foreseeably relevant. Malta interprets its treaties in accordance with the OECD Commentary and therefore, these treaties may be recognised as conforming to the standard with regard to foreseeable relevance. 194. Maltas DTC with Malaysia is specifically limited to exchange of information for purposes of the convention and therefore would not extend to all foreseeably relevant information.
In respect of all persons (ToR C.1.2)

195. For exchange of information to be effective it is necessary that a jurisdictions obligation to provide information is not restricted by the residence or nationality of the person to whom the information relates or by the residence or nationality of the person in possession or control of the information requested. For this reason, the international standard for exchange of information envisages that exchange of information mechanisms will provide for exchange of information in respect of all persons.
196. Of the agreements signed by Malta to date, the majority specifically are not restricted by Article 1, meaning that exchange of information is possible in respect of all persons. Treaties with Austria, Bulgaria, the UK, Pakistan, Norway, Canada, India, Tunisia, Libya, and Isle of Man do not contain specific language to say that the treaty is not restricted by Article 1, however, these treaties all extend to exchange of information for purposes of implementing the domestic laws of the states, and to the extent that the domestic laws apply to residents and non-residents alike, the exchange of information provisions apply to all persons. 197. Maltas DTC with Malaysia does not contain specific language to say that it is not restricted by Article 1. As discussed in C.1.1., the treaty is specifically limited to exchange of information for purposes of the convention, does not extended to the domestic laws of the contracting states and the scope of the treaty applies to residents of one or both contracting states. Therefore, Malta cannot exchange information under this treaty in respect of all persons. It is recommended that Malta update this agreement to conform to the international standard. Malta advises that this treaty is currently being renegotiated.
Obligation to exchange all types of information (ToR C.1.3)

198. Jurisdictions cannot engage in effective exchange of information if they cannot exchange information held by financial institutions, nominees or persons acting in an agency or a fiduciary capacity. Both the OECD Model Convention and the Model Agreement on Exchange of Information, which are the authoritative sources of the standards, stipulate that bank secrecy cannot form the basis for declining a request to provide information and that a request for information cannot be declined solely because the information relates to an ownership interest. 199. Maltas TIEA with Bermuda contains Article 5(4)(a) and (b) from the Model TIEA which provides that information held by banks, financial institutions, agents and fiduciaries must be exchanged as well as information regarding ownership. The terms of this TIEA therefore meet the international standard in this regard. 200. As most of Maltas DTCs were concluded before the update of the OECD Model Tax Convention in 2005, they generally do not contain a provision corresponding to Article 26(5), which was introduced at that update. Of Maltas 66 agreements, 22 14 contain Article 26(5) of the OECD Model, which
14. Treaties with Belgium (Protocol), France (Protocol), Italy (Protocol), China (new DTC), Spain, Singapore (Protocol), Ireland, US, San Marino, Isle of Man, Georgia, Jersey, Saudi Arabia, Bahrain, Uruguay, Switzerland, Hong Kong,

allows for exchange of bank information. However, the absence of this provision does not automatically create restrictions on the exchange of information held by banks, other financial institutions, nominees, agents and fiduciaries, as well as ownership information. The Commentary to Article 26(5) indicates that while paragraph 5 represents a change in the structure of the Article, it should not be interpreted as suggesting that the previous version of the Article did not authorise the exchange of such information. Maltas domestic laws allow it to access and exchange the information covered by Article 26(5) even in the absence of such provision in the DTC. 201. Of those that do not specifically contain Article 26(5), treaties with Norway, Australia, Canada, Hungary, Germany, the Netherlands, the UK, India, Denmark, Qatar, and Barbados nonetheless allow for exchange of bank information, as neither Malta nor any of these jurisdictions contains restrictions in its domestic laws. 202. Maltas treaty with Austria does not contain Article 26(5) or its equivalent and Austria has restrictions in its domestic laws that prevent it from exchanging bank information, therefore Malta and Austria cannot exchange bank information to the standard under this agreement. Maltas agreement with Malaysia has similar limitations because of Malaysias domestic laws and therefore this treaty is not to the standard either. It is recommended that Malta update its DTCs with relevant partners to remove this limitation. Further, Estonias domestic laws could impede access to bank information; therefore its DTC with Malta is currently not to the standard. Such restriction may also exist in other jurisdictions with which Malta has concluded a DTC. 203. Maltas DTC with Spain, specifically restricts exchange of bank information to the cases of tax fraud and is therefore more restrictive than the standard. However, as EU member countries, Malta and Spain can nonetheless exchange bank information to the standard.
Absence of domestic tax interest (ToR C.1.4)

204. The concept of domestic tax interest describes a situation where a contracting party can only provide information to another contracting party if it has an interest in the requested information for its own tax purposes. An inability to provide information based on a domestic tax interest requirement is not consistent with the international standard. Contracting parties must use their information gathering measures even though invoked solely to obtain and provide information to the other contracting party.
China, Israel, Luxembourg (Protocol), Poland (Protocol), Turkey and Bermuda (TIEA).
205. Maltas TIEA with Bermuda is identical to the OECD Model and provides that information shall be exchanged without regard to whether a jurisdiction needs it for its own tax purposes. 206. Of Maltas 66 agreements, 22 15 contain Article 26(4), which provides for exchange of information without regard to whether a jurisdiction needs it for its own tax purposes. Of those that do not specifically contain this provision, treaties with Austria, Malaysia, Norway, Australia, Canada, Hungary, the Netherlands, the UK, India, Denmark, Qatar, and Barbados allow for exchange of information without a domestic tax interest restriction in its domestic laws. Although there are no restrictions in Maltas domestic law, such restrictions may exist in other jurisdictions with which Malta has an agreement but which has not yet been reviewed by the Global Forum.
Absence of dual criminality principles (ToR C.1.5)

207. The principal of dual criminality provides that assistance can only be provided if the conduct being investigated (and giving rise to an information request) would constitute a crime under the laws of the requested country if it had occurred in the requested country. In order to be effective, exchange of information should not be constrained by the application of the dual criminality principle. There are no limiting dual criminality provisions in any of Maltas agreements.
Exchange of information in both civil and criminal tax matters (ToR C.1.6)
208. Information exchange may be requested both for tax administration purposes and for tax prosecution purposes. The international standard is not limited to information exchange in criminal tax matters but extends to information requested for tax administration purposes (also referred to as civil tax matters). 209. Only one of Maltas agreements, its DTC with Spain, limits exchange of information to criminal tax matters. Specifically, the Malta-Spain DTC limits exchange of information to cases of tax fraud (as discussed in C.1.3 above). However, as discussed above, as EU member countries, Malta and Spain can exchange information to the standard Malta advises that as there is reciprocity this is not an issue.
15. DTCs with Belgium (Protocol), France (Protocol), Italy (Protocol), China (new DTC), Spain, Singapore (Protocol), Ireland, the US, San Marino, Isle of Man, Georgia, Jersey, Bahrain, Saudi Arabia, Poland (Protocol), Uruguay, Switzerland, Germany (Protocol), Hong Kong, China, Israel, Luxembourg (Protocol) and Turkey.
Provide information in specific form requested (ToR C.1.7)

210. Exchange of information mechanisms should allow for the provision of information in specific form requested (including depositions of witnesses and production of authenticated copies of original documents) to the extent possible. Only two of Maltas agreements, its DTC with the US and the TIEA with Bermuda contain specific references to the form of information, providing that if specifically requested by a treaty partner, the other partner shall provide information in the form of depositions of witnesses and authenticated copies of unedited original documents (including books, papers, statements, records, accounts and writings. The other DTCs neither provide for nor restrict the form of information that can be provided.
In force (ToR C.1.8)

211. Exchange of information cannot take place unless a jurisdiction has exchange of information arrangements in force. Where exchange of information agreements have been signed the international standard requires that jurisdictions must take all steps necessary to bring them into force expeditiously. 212. The majority of Maltas agreements are currently in force, with the exception of its 13 most recent Protocols and agreements which include Protocols with Belgium, Singapore and Luxembourg and new agreements with Switzerland, Uruguay, Bahrain, Israel, Turkey, Bermuda, Saudi Arabia and Hong Kong, China. In addition, Malta signed a DTC with Russia in 2000 that was never brought into force. Malta advises that in lieu of bringing the old treaty into force the parties have negotiated and initialled a new treaty. 213. Of Maltas 13 agreements and Protocols that are not yet in force, the majority (8) were signed not more than one year ago. Three agreements (with Bahrain and Israel and a Protocol with Belgium) were signed in 2010 (18-24 months ago). Its Protocol with Singapore was signed almost 2.5 years ago (November 2009). 16 214. In Malta, signature of an agreement is sufficient and a treaty does not have to go through Parliament to come into force. Therefore, Malta advises that while ratification has taken a long time in some cases, the cause of the delay did not necessarily stem from Maltas internal processes.
16. Singapore stands ready to ratify its agreements upon receipt of notification from its treaty partner that the domestic procedures required for bringing into force a DTC or protocol within their jurisdiction have been completed. The ratification process in Singapore only involves a publication in the Gazette by the Minister for Finance. There is no requirement to seek approval of other parties or of Parliament.
In effect (ToR C.1.9)

215. For information exchange to be effective the parties to an exchange of information arrangement need to enact any legislation necessary to comply with the terms of the arrangement. 216. As discussed in section B, Malta currently has the legislative and regulatory framework in place to give effect to its agreements.
C.2. Exchange-of-information mechanisms with all relevant partners

The jurisdictions network of information exchange mechanisms should cover all relevant partners.
217. Ultimately, the international standard requires that jurisdictions exchange information with all relevant partners, meaning those partners who are interested in entering into an information exchange arrangement. Agreements cannot be concluded only with counterparties without economic significance. If it appears that a jurisdiction is refusing to enter into agreements or negotiations with partners, in particular ones that have a reasonable expectation of requiring information from that jurisdiction in order to properly administer and enforce its tax laws it may indicate a lack of commitment to implement the standards. 218. Malta has a large treaty network, covering all of its significant partners, including regional partners, EU member countries and its main trading partners. Maltas main trading partners are within the EU, and are primarily Italy, France, the UK and Germany. Its treaty partners include: every EU member country, 30 of 34 OECD member countries and 10 of 15 non-EU G20 member countries. 219. Comments were sought from the jurisdictions participating in the Global Forum, and in the course of preparation of this report, no jurisdiction advised that Malta had refused to negotiate or enter into an agreement. 220. Malta recently signed a TIEA with Bermuda and advises that it is currently negotiating TIEAs with The Bahamas, Gibraltar and Macao, China. In addition, Malta is negotiating DTCs with Azerbaijan, Bosnia and Herzegovina, Guernsey, India, Mexico, Norway, Oman, Russia, Saudi Arabia, South Africa, Thailand and Ukraine.

Phase 1 determination The element is in place Factors underlying recommendations Recommendations Malta should continue to develop its EOI network with all relevant partners
C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received.
Information received: disclosure, use, and safeguards (ToR C.3.1); all other information exchanged (ToR C.3.2)
221. Governments would not engage in information exchange without the assurance that the information provided would only be used for the purposes permitted under the exchange mechanism and that its confidentiality would be preserved. Information exchange instruments must therefore contain confidentiality provisions that spell out specifically to whom the information can be disclosed and the purposes for which the information can be used. In addition to the protections afforded by the confidentiality provisions of information exchange instruments countries with tax systems generally impose strict confidentiality requirements on information collected for tax purposes. 222. All of Maltas treaties contain a confidentiality provision that conforms to the standard. In addition, Malta has provisions in its domestic laws that reinforce this confidentiality provision. Specifically, the Income Tax Management Act provides that every person who has an official duty or who is employed in the administration of the Income Tax Acts must regard and deal with all documents and information relating to the Income Tax Acts or copies thereof as secret and confidential and every person must make an oath to this effect (Article 4(1)). 218. In addition, a person who is appointed under or employed in carrying out the provisions of the Income Tax Acts cannot be required to disclose to any court, tribunal, Board or committee of enquiry, anything learned in the performance of his/her duties under the Act. There are however, exceptions in the following cases: When necessary for the purpose of carrying into effect the provisions of the Income Tax Acts; or
for the purpose or in the course of a prosecution for any offence committed against any of the provisions of the Income Tax Acts; or for the disclosure to any authorised representative of any other Government of such information as is required to be disclosed in terms of any arrangement between Malta and other States or their tax authorities providing for the reciprocal exchange of information for tax purposes. 219. The penalty for any person who communicates or attempts to communicate information contained in the documents outlined above is guilty of an offence and on conviction liable to a fine of from EUR 232 to EUR 2 325, or to imprisonment for up to 6 months or both (Article 53, Income Tax Management Act).
C.4. Rights and safeguards of taxpayers and third parties

The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties.
Exceptions to requirement to provide information (ToR C.4.1)

220. The international standard allows requested parties not to supply information in response to a request in certain identified situations where an issue of trade, business or other legitimate secret may arise. Among other reasons, an information request can be declined where the requested information would disclose confidential communications protected by the attorney-client privilege. Attorney-client privilege is a feature of the legal systems of many countries. 221. All of Maltas DTCs contain a provision equivalent to Article 26(3) of the OECD Model Convention and therefore respect the rights and safeguards of taxpayers and third parties. In addition, the Cooperation Regulations contain a provision that states that no person may be requested to provide information that would disclose a trade, business, commercial or industrial secret or information which is the subject of attorney client privilege or information, the disclosure of which would be contrary to public policy (Regulation 5(1)). As discussed in section B.1.5, the attorney client privilege standard in Malta defines such information as confidential communications

between a client and a lawyer or other legal representative produced for the purposes of seeking or providing legal advice or for the purposes of use in existing or contemplated legal proceedings.
C.5. Timeliness of responses to requests for information

The jurisdiction should provide information under its network of agreements in a timely manner.
Responses within 90 days (ToR C.5.1)

222. In order for exchange of information to be effective it needs to be provided in a timeframe which allows tax authorities to apply the information to the relevant cases. If a response is provided but only after a significant lapse of time the information may no longer be of use to the requesting authorities. This is particularly important in the context of international cooperation as cases in this area must be of sufficient importance to warrant making a request. 223. None of Maltas agreements contain a provision for the response time for the treaty. However, under the Cooperation Regulations, the Competent Authority in Malta must confirm receipt of a request no later than seven working days from its receipt (Regulation. 9). Within one week of receipt, the Competent Authority must notify the requesting authority of any deficiencies in the request and the need for any additional information.
Organisational process and resources (ToR C.5.2)

224. It is important that a jurisdiction have appropriate organisational processes and resources in place to ensure a timely response. A review of the practical application of these processes and the resources available will be conducted in the context of Maltas Phase 2 review.
Absence of restrictive conditions on exchange of information (ToR C.5.3)

225. Exchange of information should not be subject to unreasonable, disproportionate or unduly restrictive conditions. There are no aspects of Maltas exchange of information agreements that appear to impose restrictive
conditions on exchange of information. Maltas domestic laws have generally been aligned to allow for the exchange of information without restrictive conditions.
Phase 1 determination The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 73
Summary of Determinations and Factors Underlying Recommendations

Factors underlying recommendations
Determination
Recommendations
Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities The element is in place. Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements The element is in place. Banking information should be available for all account-holders The element is in place. Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information) The element is in place. The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information The element is in place. Exchange of information mechanisms should allow for effective exchange of information The element is in place. The jurisdictions network of information exchange mechanisms should cover all relevant partners The element is in place. Malta should continue to develop its EOI network with all relevant partners
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received The element is in place.
74 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS

Factors underlying recommendations
Determination
Recommendations
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties The element is in place. The jurisdiction should provide information under its network of agreements in a timely manner The assessment team is not in a position to evaluate whether this element is in place as it involves issues of practice that are dealt with in the Phase 2 review.
ANNEXES 75
Annex 1: Jurisdictions Response to the Review Report*
Malta would like to express its appreciation for the hard work done by the assessment team and the secretariat in evaluating Maltas legal framework and in drafting the Phase 1 report. It was a pleasure working with the assessment team and the secretariat. Malta agrees with the findings of the report.
* This Annex presents the Jurisdictions response to the review report and shall not be deemed to represent the Global Forums views.
76 ANNEXES
Annex 2: List of all Exchange-of-Information Mechanisms in Force
Jurisdiction 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Albania Australia Austria Bahrain Barbados Belgium Bermuda Bulgaria Canada China Croatia Cyprus Czech Republic Denmark Egypt Estonia Finland France Georgia
Type of EoI Arrangement DTC DTC DTC DTC DTC DTC DTC (Protocol) TIEA DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC (Protocol) DTC DTC DTC (Protocol)
Date signed 2 May 2000 9 May 1984 29 May 1978 12 Apr 2010 28 Jun 1974 28 Jun 1974 19 Jan 2010 24 Nov 2011 23 Jul 1986 25 Jul 1986 23 Oct 2010 21 Oct 1998 22 Oct 1993 21 Jun 1996 13 Jul 1998 20 Feb 1999 3 May 2001 30 Oct 2000 5 Jul 1977 29 Aug 2008 23 Oct 2009 8 Mar 2001 17 Jun 2010
Date entered into force 23 Nov 2000 20 May 1985 13 Jul 1979 N/A 3 Jan 1975 3 Jan 1975 N/A N/A 1 Jan 1988 19 May 1987 1 Jan 2012 22 Aug 1999 11 Aug 1994 6 Jun 1997 30 Dec 1998 7 April 2001 22 Jan 2003 30 Dec 2001 1 Oct 1979 1 Jun 2010 30 Dec 2009 27 Dec 2001 19 May 2011
20 Germany
ANNEXES 77
Jurisdiction 21 Greece 22 Hong Kong, China 23 Hungary 24 Iceland 25 India 26 Ireland 27 Isle of Man 28 Israel 29 Italy 30 Jersey 31 Jordan 32 Korea (Rep. of) 33 Kuwait 34 Latvia 35 Lebanon 36 Libya 37 Lithuania
Type of EoI Arrangement DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC (Protocol) DTC DTC DTC DTC DTC DTC DTC (Protocol) DTC DTC DTC DTC DTC (Protocol) DTC DTC DTC DTC DTC DTC DTC DTC (Protocol) DTC DTC DTC
Date signed 13 Oct 2006 8 Nov 2011 6 Aug 1991 23 Sep 2004 8 Sep 1994 14 Nov 2008 23 Oct 2009 29 Jul 2010 16 Jul 1981 13 Mar 2009 25 Jan 2010 16 Apr 2009 25 Mar 1997 24 Jul 2002 22 May 2000 23 Feb 1999 16 Apr 2009 5 Oct 1972 28 Dec 2008 17 May 2001 29 Apr 1994 30 Nov 2011 3 Oct 1995 4 Nov 2008 26 Oct 2001 18 May 1977 2 Jun 1975 8 Oct 1973 7 Jan 1994 6 Apr 2011 26 Jan 2001 26 Aug 2009 30 Nov 1995
Date entered into force 30 Aug 2008 N/A 29 Nov 1992 19 Apr 2006 8 Feb 1995 15 Jan 2009 26 Feb 2010 N/A 8 May 1985 24 Nov 2010 19 Jul 2010 13 Oct 2010 21 Mar 1998 19 Mar 2004 24 Oct 2000 10 Feb 2000 23 Mar 2010 5 Dec 1972 20 May 2010 2 Feb 2004 14 Feb 1996 N/A 1 Sep 2000 23 Sep 2009 15 Jun 2007 9 Nov 1977 22 Jul 1977 20 Dec 1975 24 Nov 1994 N/A 5 Apr 2002 9 Dec 2009 16 Aug 1996
38 Luxembourg 39 Malaysia 40 Montenegro 41 42 Morocco Netherlands
43 Norway 44 Pakistan 45 Poland 46 Portugal 47 Qatar 48 Romania
78 ANNEXES
Type of EoI Arrangement DTC DTC DTC DTC (Protocol) DTC DTC DTC (Protocol) DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC Date entered into force N/A N/A 19 Jul 2005 15 Feb 2010 16 Jun 2010 29 Feb 2008 N/A 20 Aug 2000 12 Jun 2003 12 Nov 1997 12 Sep 2006 3 Feb 2006 N/A 16 Oct 2000 31 Dec 2001 N/A 18 May 2007 27 Mar 1995 23 Nov 2010 N/A
Jurisdiction 49 Russia 50 Saudi Arabia 51 52 San Marino Serbia
Date signed 15 Dec 2000 4 Jan 2012 3 May 2005 10 Sep 2009 9 Sep 2009 21 Mar 2006 20 Nov 2009 7 Sep 1999 8 Oct 2002 16 May 1997 8 Nov 2005 9 Oct 1995 25 Feb 2011 22 Feb 1999 31 May 2000 14 Jul 2011 13 Mar 2006 12 May 1994 8 Aug 2008 11 May 2011
53 Singapore 54 Slovakia 55 Slovenia 56 South Africa 57 Spain 58 Sweden 59 Switzerland 60 Syria 61 Tunisia 62 Turkey 63 United Arab Emirates 64 United Kingdom 65 United States 66 Uruguay
Multilateral agreements
Malta is a party to the: concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation and taxation of insurance premiums. 17 This Directive came into force on 23 December 1977 and all EU members were required to transpose it into national legislation by 1 January 1979. The current EU members, covered by this
EU Council Directive 77/799/EEC of 19 December 1977 (as amended)
17.
A new Mutual Assistance Directive was adopted by the European Council on 15 February 2011 and will come into force on 1 January 2013.
ANNEXES 79
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom; and EU Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments. This Directive aims to ensure that savings income in the form of interest payments generated in an EU member state in favour of individuals or residual entities being resident of another EU member state are effectively taxed in accordance with the fiscal laws of their state of residence. It also aims to ensure exchange of information between member states.
Council Directive, are: Austria, Belgium, Bulgaria, Cyprus 18, Czech
18.
1. Footnote by Turkey: The information in this document with reference to Cyprus relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the Cyprus issue. 2. Footnote by all the European Union Member States of the OECD and the European Commission: The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
80 ANNEXES
Annex 3: List of all Laws, Regulations and Other Material Received

Banking Act Central Bank Act Financial Institutions Act Malta Financial Services Authority Act Commission for the Administration of Justice Act Commercial Code Civil Code Income Tax Act Income Tax Management Act Companies Act Companies Act (Cell Companies Carrying on Business of Insurance) Regulations Companies Act (Incorporated Cell Companies Carrying on Business of Insurance) Regulations Insurance Business Act Trust and Trustees Act Investment Services Act Notarial Professional and Notarial Archives Act Co-operative Societies Act VAT Act General Accounting Principles for Smaller Entities Act Accounting Professions Act Professional Secrecy Act Cooperation with Other Jurisdictions on Tax Matters Regulations (Cooperation Regulations)
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

The OECD is a unique forum where governments work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The European Union takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisations statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members.
OECD PUBLISHING, 2, rue Andr-Pascal, 75775 PARIS CEDEX 16 (23 2012 07 1 P) ISBN 978-92-64-16883-1 No. 59905 2012
Global Forum on Transparency and Exchange of Information for Tax Purposes
PEER REVIEWS, PHASE 1: MALTA

The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 100 jurisdictions which participate in the work of the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. These standards are primarily reected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. Fishing expeditions are not authorised, but all foreseeably relevant information must be provided, including bank information and information held by duciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard. All members of the Global Forum, as well as jurisdictions identied by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined Phase 1 plus Phase 2 reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once approved by the Global Forum and they thus represent agreed Global Forum reports. For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please visit www.oecd.org/tax/transparency and www.eoi-tax.org.
Please cite this publication as: OECD (2012), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Malta 2012: Phase 1: Legal and Regulatory Framework, OECD Publishing. http://dx.doi.org/10.1787/9789264168848-en This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit www.oecd-ilibrary.org, and do not hesitate to contact us for more information.
ISBN 978-92-64-16883-1 23 2012 07 1 P
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Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.

ABOUT THE GLOBAL FORUM 5

About the Global Forum

Information and methodology used for the peer review of Malta

The Maltese Economy

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 17

Compliance with the Standards

18 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

A.1. Ownership and identity information

Companies (ToR A.1.1)

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 19

Company ownership and identity information required to be provided to government authorities

20 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

Information filed with Registrar

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 21

Information filed with Tax Authority

22 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

Company ownership and identity information required to be held by companies

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 23

SL 386.13 Chapter 403, Laws of Malta.

24 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 25

26 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 27

Bearer shares (ToR A.1.2)

Partnerships (ToR A.1.3)

28 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

Ownership and identity information required to be provided to government authorities

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 29

Income Tax Acts

Ownership and identity information held by the partnership

30 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

Trusts (ToR A.1.4)

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 31

32 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

Information provided to government authorities

Information kept by the trustee

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 33

34 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

Foundations (ToR A.1.5)

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 35

Information provided to the Registrar

36 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 37

Information provided to the tax authorities

38 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

Information kept by the foundation itself

Other relevant entities and arrangements

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 39

40 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

Enforcement provisions to ensure availability of information (ToR A.1.6)

Income Tax Acts

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 41

42 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 43

A.2. Accounting records

General requirements (ToR A.2.1)

44 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 45

46 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 47

Trusts and Trustees Act