Cypriot, British companies increase chance of re-domiciling to Malta as form of tax rescue
More and more Cypriot banks, in their troubled state are increasingly threatening to move to Malta. As Cyprus continues to experience the debt burden, the country is seeking new forms of austerity measures – in order to avoid EU bailout.
Being a member of the Eurozone, Cyprus experienced pressure from Brussels as its deficit double the EU’s 3 per cent of GDP ceiling. The European Commission also predicts this could increase to 5 per cent in 2012.
Action therefore needs to be taken. What is the Cypriot government’s next move? It would appear that its intention is to establish a support fund for banks as well as a legal framework for state intervention which is opposed by the Association of International Banks (AIB). The AIM states that such measures could drive its members to leave the island for a more tax-friendly environment such as Malta, Agence France Presse reported.
UK companies are simultaneously increasingly moving their set up to other jurisdictions – mainly Malta, Ireland and Switzerland. One of the reasons for this move is the UK’s high business taxes. In addition it would appear that this also results from the aggressive approach of HMRC to tax collection – which was set up 5 years ago and has since collected £16.5bn from investigating tax evasion and avoidance in the last 12-month period. The single main contributors to this amount were corporation tax enquiries – clearly showing that it is businesses that have been affected the most by this.
The above might result in making the British jurisdiction a less attractive one for businesses and lead to other jurisdictions, such as Malta to be much more desirable jurisdictions.
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