DAC6 : an analysis of the post-implementation challenges in Malta

Abstract

Purpose: This dissertation aims to explore the challenges encountered in Malta following the implementation of Council Directive (EU) 2018/822 (DAC6), which mandates the disclosure of Aggressive Tax Planning (ATP) schemes. This research investigates the interpretative and practical challenges faced by both tax professionals and the Malta Tax and Customs Administration (MTCA), whilst analysing the recommendations put forward for improving the Directive and compliance with it. Design: Adopting a qualitative methodology, the study involved semi-structured interviews with 15 tax practitioners and 5 representatives from the MTCA. These interviews were supported by a thorough review of secondary sources, including legislative documents and prior research on DAC6's impact in other European Union (EU) member states, to gain a comprehensive understanding. Findings: The findings indicate the terminology which was deemed to have the highest degree of interpretation, primarily due to the lack of or broad definitions in the Directive. The application of the Directive has manifested numerous practical challenges and financial burdens faced by practitioners due to complex compliance and enforcement mechanisms, including onerous data tracking, stringent deadlines, and retrospective assessments. The findings also reveal the challenges faced by the MTCA in enforcing the Directive. Recommendations from the study stress the need for clearer guidelines, enhanced practitioner training, and better technological support to facilitate DAC6 compliance and improve its implementation efficacy in Malta. Conclusions: The research concludes that while DAC6 has brought significant regulatory changes, there remains substantial room for improvement in its implementation. Challenges identified in the study have resulted in many questioning the Directive’s wide scope, which goes beyond the ATP strategies it intended to capture. Recommendations given include limiting the scope of the Directive and improving guideline harmonisation. Value: The research fills a critical gap in existing literature and provides actionable insights that can guide policymakers, tax professionals, and companies in refining compliance strategies. This in-depth exploration not only helps stakeholders grasp the real-world implications of the Directive but also lays a foundation for enhancing future legislative frameworks. This study could prove instrumental in assessing the overall effectiveness of DAC6 and in optimising the design of subsequent directives, thereby contributing constructively to the broader discourse on tax regulation within the EU.