New Maltese Trust Legislation Seeks To End Offshore Regime

by Jason Gorringe, Tax-News.com, London

27 September 2004

A bill to update Maltese legislation on trusts and trustees has been published in the Government Gazette and is soon expected to be debated by Parliament, according to the Times of Malta.

Trusts in Malta are currently based on the Offshore Trusts Act 1988 which stipulates that trusts must have non-resident settlors and beneficiaries.

However, under the new Act, Maltese residents and companies will for the first time be permitted to use local trusts.

"The purpose of this new law is to continue the process started in 1994 where the offshore laws are eliminated and Malta re-directed to the development of an onshore financial centre," MFSA chairman Joe Bannister told The Times.

Mr Bannister added that the bill eliminates the nominee company regime, and furthers Malta's international obligations on non-discrimination, transparency and prevention of money laundering.

According to Bannister, the bill should make Malta an attractive jurisdiction for trust administration.

Another purpose of the legislation is to ensure that trusts will not create any anomalies in the taxation of income.

“The tax implications have been worded in such as a way that the new law may be used as a tax planning tool but not for tax avoidance. Any transfer of assets into a trust or any change of beneficiaries within the trust will be treated as taxable," stated Kevin Valenzia, chairman of the Financial Services Consultative Council and partner at PricewaterhouseCoopers, according to the Times.

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