Update: Government introduces new taxes on financial services sector companies - PN; ministry reacts

A number of legal notices were introduced on Christmas Eve, revising fees related to the financial services sector.The notices amend legislation governing banks, trusts, retirement funds and more.Many of the legal notices increase application fees, a

By: independent.com.mt

Jan 07 2025
0
3 Views

Update: Government introduces

A number of legal notices were introduced on Christmas Eve, revising fees related to the financial services sector.

The notices amend legislation governing banks, trusts, retirement funds and more.

Many of the legal notices increase application fees, as well as supervisory fees.

The Nationalist Party took aim at the revisions, arguing that the government "introduced new taxes" on companies operating in the sector. The government, meanwhile, said that such revision was deemed necessary to cover for the resources required by the Authority for the performance of its supervisory and regulatory functions vis-à-vis those persons on whom such fees are being imposed. "The increase in licencing fees is targeting those areas that are exposed to certain risks," the government said, adding that families will not be impacted.

The PN was first to issue a statement. It said that in order to address the record debt the government has accumulated for our country, through legal notices published in the Government Gazette on Christmas Eve, Prime Minister Robert Abela and Finance Minister Clyde Caruana "announced several new taxes."

These taxes - some of which are more than double what they were previously - affect companies operating in the financial services sector, the PN said through its spokespersons Jerome Caruana Cilia (economy and enterprise) and Graham Bencini (finance).

The taxes, the PN said, target banks, companies offering investment and insurance services, among others. There are also taxes impacting companies providing payment services, they added. "These taxes were not announced at any grand press conference under a large marquee in front of Castille, but were instead quietly introduced during the Christmas festivities."

"The record debt created by Robert Abela and Clyde Caruana - for which they have little to show - is leading to these new taxes, which will ultimately be borne by the Maltese and Gozitan people," the PN said.

The greylisting by the Financial Action Task Force, "a consequence of the Labour Government's policies, caused significant damage to the financial sector. Now comes another blow that further burdens operators in the sector. This tax burden will ultimately fall on clients - that is, Maltese families and businesses."

The scandals of recent years within several government entities, including those under Minister Clyde Caruana, are causing Maltese and Gozitan consumers, who rely daily on banking, insurance, and investment services, to suffer, the PN said.

"While the inner circle thrives and prospers, taxes are increased and quietly introduced during the Christmas festivities," the PN said, concluding its statement.

More resources for the MFSA to be able to safeguard the reputation of financial services - ministry

In reaction, the Finance Ministry said that the financial services industry was consulted about the need for the reform, and said that such a revision was necessary.

"The revision of such fees was one of the recommendations given by the IMF to the MFSA, and such revision was deemed necessary to cover for the resources required by the Authority for the performance of its supervisory and regulatory functions vis-à-vis those persons on whom such fees are being imposed," the ministry said.

The increase in licencing fees is targeting those areas that are exposed to certain risks, "hence unlike the impression given by the PN, families will not be impacted," the ministry said.

"It should be noted that the said functions have increased exponentially during the last ten years, as has the financial services sector, but the fees due to the Authority generally remain unchanged since 2014. Therefore, this reform is but a natural consequence of the changes and developments which took place over the past decade. Furthermore, as an international financial jurisdiction Malta cannot attract prospective investors and licence holders just because it is unreasonably cheap."

Notwithstanding the increase in fees, Malta remains competitive when compared to other jurisdictions, the ministry added. "The said fees were raised just enough to partially cover for the abovementioned resources without exceeding the equivalent fees set in other jurisdictions."

"Finally, it should be noted that a consultation session was held a few months back with the 'Stakeholder Panel' set up by the MFSA, whereby the newly proposed fee structure was presented to all the industry representatives forming part of the said panel. Representatives for all the financial services sectors falling within the scope of the proposed regulations were thereby given the opportunity to provide feedback on the revised fees. Following the said session, various feedback was received from the aforementioned representative bodies, which was taken into consideration during the drafting process. That said, it was generally agreed by the attending representatives that the proposed fee reform was long due."