The EU has directed Malta to halt its CFI and ITC regimes on the basis they create competitive distortions.

Per a statement issued on 23 March 2006, the European Commission has formally requested Malta under EC Treaty state aid rules to abolish the tax regime for Maltese Companies with Foreign Income (CFI) and the International Trading Companies’ (ITC) regime by the end of 2010 at the latest. Under these regimes, revenues from foreign sources paid to shareholders of an ITC or a CFI are subject to minimal or no taxation. The Commission intends to put a definitive end to these offshore tax regimes because they seriously distort competition and trade in the Single Market. Malta has one month to accept the proposed measures, failing which the Commission may open a formal state aid investigation.