Harmful Tax Practices Progress Report
On the 8th of February 2018, The Organisation for Economic Co-Operation and Development (“OECD”) announced further developments in the implementation of Base Erosion and Profit Shifting (“BEPS”) policies in relation to Country-by-Country reporting (BEPS Action 13) and the Forum on Harmful Practices (BEPS Action 5). In relation to the latter, the Inclusive Framework on BEPS approved updated results of reviews of preferential tax regimes.
In relation to Malta, the OECD announced positive developments with regards to Malta’s intellectual property and shipping regimes. The progress report notes that Malta abolished its Patent Box regime by announcing the closure of this scheme in June 2016.
Malta - OECD Harmful Tax Practices Progress Report
Meanwhile, the report also confirmed Malta’s tonnage tax system’s status as ‘not harmful’. The OECD acknowledged that substantial income generating activity in the area of shipping is performed in transit outside the jurisdiction of the shipping regime and thus the value creation attributable to the core income generating activities that occur from a fixed location is more limited than for other types of regimes The study also considered whether the system caters for ensuring taxpayer compliance with corporate law and regulatory obligations of the shipping company, along with other obligations such as shipping registration and compliance with International Maritime Organisation regulations.
