Malta Reaches Agreement With IRS On Qualified Intermediary Status

by Amanda Banks, Tax-News.com, London

28 June 2001

The Malta Financial Services Centre (MFSC) has reached an agreement with the United State's Inland Revenue Service (IRS) which will ease financial services business between the two countries. According to the Times of Malta news service, the IRS has acknowledged Malta as a 'reliable' partner in terms of adopting measures that would enable Maltese financial institutions to acquire Qualified Intermediary (QI) status.

Approved status for Malta allows financial institutions in the jurisdiction to apply for Qualified Intermediary status under which they can avoid imposing 30% withholding tax on US source income for properly documented clients, or can deduct reduced rates under tax treaties applying in particular cases. They will also be allowed to keep the identify of their non-US clients confidential when dealing with the IRS. Financial institutions in offshore financial centres which are not approved by the IRS are obliged to identify all their clients to the IRS or are charged 30% withholding tax.

In a statement issued by the MFSC, the Centre said: 'Winning IRS approval is a significant issue for Malta's finance sector. It is further evidence of the benefits of consistently improving regulatory standards and operational procedures and enhances the ability of the finance industry to win more business from the giant US market.

Recommended