Malta, part of the European Union; Tax avoidance and tax evasion.

On paper, according to the official numbers, Malta plays a remarkable role in the world economy.

It’s a huge investment destination: There are only a bit over 500,000 people on the island. But it has attracted more than $500 billion in foreign direct investment. 

At the same time, Maltese companies have invested about the same amount overseas. That’s about a million dollars per man, woman, and child in each direction.

Of course, it’s all fake. What we’re actually seeing is a proliferation of shell companies that are used by companies elsewhere as ways to launder, transfer their profits so that they pop up in Malta, which has a basically zero tax rate on corporate profits.

This is a combination of tax avoidance and tax evasion. Avoidance is when it’slegal, although it probably shouldn’t be. Evasion is when it isn’t. There’s some of both going on in Malta. 

There’s quitea lot of actual money laundering and sheer criminal activity. Famously, an investigative journalist from the island who looked into it was blown up by a car bomb. But mostly it is probably, at least marginally, within the, or arguably within the outer limits of the law.

What is going on here? Well, the mechanics are quite simple. The real question is why this is allowed to persist. 

Malta is a sovereign nation, but there really wouldn’t be any problem if the major democratic nations said this must stop. Malta is in fact part of the European Union. The European Union could clearly stop it. 

It has not.

Paul Krugman Aug 10 2026

https://substack.com/home/post/p-210521200


‘golden passports’; Malta, Cayman Islands, St Kitts and the United States of America

https://englundmacro.blogspot.com/2025/05/golden-passports-malta-cayman-islands.html


What the heck is happening in the Cayman Islands?

Almost 20 per cent of banks’ cross-border dollar funding is now supplied by entities based in the Cayman Islands

Gillian Tett 10 October 2019

https://englundmacro.blogspot.com/2019/10/what-heck-is-happening-in-cayman-islands.html


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