City taxes lead to more Hedge Fund migration to Malta
Charlot Zahra
A week after Business Today had first announced that 20 hedge funds had transferred to Malta in the past year, there are indications that more hedge funds and financial services’ companies might be heading to Malta to circumvent UK government taxes on the financial industry.
In fact, Business Today has learnt that a number of Maltese businessmen were assisting these companies to set up shop in Malta. Among these were former Vodafone CEO Joe Grioli, who is listed as director on a number of the companies registered by the financial services’ companies in the UK in Malta in the past few months.
Sources told Business Today that some of the companies had kept some back office operations in the UK, while others had completely transferred their operations to Malta.
“It is up to their discretion whether they keep part of their back offices in the UK or not,” these sources added.
In fact, Conservative London Mayor Boris Johnson has warned that government taxes on the financial industry in the UK represented “a clear and present economic threat to London”.
The Mayor said he feared the taxes would “fast-track” the relocation of thousands of high-earning bankers overseas.
In a letter to Chancellor Alistair Darling, Johnson asked for an urgent meeting to discuss how to reverse “the damage done to perceptions of London as a global financial centre” by his introduction of a 50p income tax rate for top earners and a temporary 50 per cent levy on banking bonuses over GBP 25,000.
In the letter to Darling, Johnson warned “unilateral” British action was “ill-judged” and would weaken a financial services sector which provides around 8 per cent of UK output and one in every seven pounds collected in tax.
The London mayor had estimated that around 9,000 bankers might relocate abroad, with knock-on effects on London’s legal, accountancy, publishing and media industries and a reduction in the tax resources available to fund public services.
He told the Chancellor: “I believe that the Government’s current policy towards financial services is ill-judged.
“You have made unilateral changes to taxation that risk damaging London’s competitiveness and its status, alongside New York, as the world’s leading financial services centre,” Johnson warned.
About 20 UK-based hedge funds have re-located to Malta in 2009, attracted by a combination of low taxes, a favourable regulatory regime and cheap labour,
Among the 20 London-based firms that had set up an office here last year, there were the GBP 1 billion oil traders Bluegold, Pamplona Capital and Liongate.
Malta, according to the Sunday Times of London, offered “all the perks of being offshore — low taxes and a favourable regulatory regime — but it’s part of the European Union, which makes investors comfortable about handing over huge wads of cash.”
