ADDRESS BY THE HON. LAWRENCE GONZI, PRIME MINISTER, AT THE SIGNING OF THE TEXT OF THE DOUBLE TAXATION TREATY WITH THE U.S.A. – AUBERGE DE CASTILLE, VALLETTA – 8TH AUGUST 2008
Your Excellency, Distinguished Guests, Ladies and Gentlemen, Good morning.
It is with great personal satisfaction that I stand here today announcing that we have reached another milestone through the signing of the text of the Double Taxation Treaty with the USA.
As you may recall, this issue was high on the agenda in the meeting I had with President Bush in Washington in 2005. Since then teams from our Ministry of Finance and the US Treasury have been working painstakingly to conclude this agreement.
The discussions, negotiations and the follow-up work have been successful and we look forward to having this treaty in operation in the not too distant future.
The USA makes a welcome addition to our tax treaty network. In fact, some 12 years ago we already had a similar agreement in place that is why it was important that we re-establish our relationship with the US at this level.
We now have treaties with about 50 countries, with some in the pipeline at various stages of negotiation. These ensure the removal of any potential trade barriers between our respective countries by establishing internationally accepted provisions for the avoidance of double taxation on the same income. They also establish appropriate channels for exchange of information between our respective countries in our mutual efforts to prevent fiscal evasion.
In the face of international developments, my Government will continue in its endeavour to negotiate tax treaties with other jurisdictions making this a central pillar of our increasingly diversified economy.
Malta and the United States established full diplomatic relations upon Malta’s independence in 1964. Over the years this relationship has developed, although there where some difficult times. However, what is certain is that under my government, this relationship has continued to strengthen and can currently be described as both active and cordial.
Today, Malta and the United States enjoy a good relationship on a number of levels.
Minister Fenech has already highlighted the good trade relations we have with the US. Through this agreement we hope to improve quality trade even further, strengthen our communication and encourage investment.
We always believed that our country has the potential to attract high quality investment from the USA. Recently, Foreign Direct Investment into Malta has been strong as a result of our highly educated, English-speaking population, excellent reputation for back-office and financial services and the significant investment going into such diverse areas as aviation, pharmaceuticals and Information and Communication Technology (ICT). The advent of SmartCity is another area where there is potential benefit for both countries.
The number of US firms participating in the Maltese economy has always been significant in relative terms. Firms operating in Malta that have US ownership or investment include major hotels, manufacturing and repair facilities, and some offices servicing local and regional operations.
Our proximity to North Africa, our EU membership, the island’s safety, the capability of our professionals, our application of international standards and our quality of life make Malta an attractive proposition. US participation is therefore expected to grow over time and this will be beneficial to both countries as economic ties expand.
On the social level we are inextricably linked through social ties created by Maltese migrants over the years. The familial ties of Maltese migrants have always remained strong as has the bond to their motherland. This is evidenced to this very day through active migrant communities, some of which I had the opportunity to meet personally on my visit to the USA, and the various local organisations and activities they organise to enhance migrant relations.
On the political front, the spirit of cooperation has also been extremely good. Just looking at some recent initiatives we can mention the good level of cooperation we have in the area of security where Maltese officers trained in the USA, we have benefited from donations of patrol boats and a state-of-the-art container screening system. We must also not forget that the US is helping us tremendously in our plight to cope with the huge influx of illegal immigrants coming to our shores.
In spite of these good relations and the benefits we are deriving and experiencing, there is still more that can be done. There is definitely the potential of promoting the natural beauty of Malta and its rich cultural treasures in the USA with the aim of attracting more visitors to our islands and to make travel between our two countries easier. Besides the requirement of better air links, it is just as important that the visa requirement for Maltese traveling to the US be waivered. This was another issue I raised with President Bush in 2005. Negotiations on this matter are ongoing and am pleased to state that are now at an advanced stage both at a bilateral and EU level. We remain hopeful that the matter will be concluded soon.
There is also scope for more cooperation at an educational level. The agreement between the University of Malta and James Madison University of Virginia to offer a dual post-graduate degree programme is a commendable initiative. I look forward to seeing more cooperation agreements of this type in the future.
The Double Taxation Agreement with the USA will soon be a reality and I would like to thank the US Treasury and especially the team lead by Michael Mundaca for their work in making this happen.
I join the Minister of Finance in commending the Commissioner for Inland Revenue and our Tax Treaty Negotiating Team, the Malta Financial Services Authority, the Malta Maritime Authority, the Financial Intelligence Analysis Unit, and Ambassador Mark Miceli and his excellent staff for all their efforts. Furthermore, I thank our industry leaders for their assistance throughout the process.
My sincere gratitude also goes to Ambassador Molly Bordonaro, a true friend of Malta, who together with her embassy personnel has played an important part in supporting the negotiation process and took an active interest in its completion.
Maltese-US relations are active and well and we have already managed to achieve a lot. However, by continuing to work together in a spirit of cooperation and goodwill we can achieve much more. Let us, therefore, use this Treaty for our mutual benefit.