Malta has joined 129 other countries in backing plans for a global corporate tax rate of at least 15% .
The Organisation for Economic Co-operation and Development (OECD), announced on Thursday that 130 countries had backed plans to reform international taxation rules and ensure that multinationals pay a fair share of tax wherever they operate.
Malta’s name was listed as one of the 130 countries which agreed to this reform.
The plan seeks to ensure that large multinational companies pay tax in the countries they operate and earn profits in, as well as 15% minimum corporate tax rate which countries can use to protect their tax bases.
The remaining elements of the framework, including the implementation plan, will be finalised in October.
US treasury secretary Janet Yellen has hailed the decision as a “historic day for economic diplomacy”.
Today is an historic day for economic diplomacy. For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response.
The result was a global race to the bottom:
— Secretary Janet Yellen (@SecYellen) July 1, 2021
“Lower tax rates have not only failed to attract new business, they’ve also deprived countries of funding for important investments like infrastructure, education, & efforts to combat the pandemic,” she tweeted.
“Today’s agreement by 130 countries representing more than 90% of global GDP is a clear sign: the race to the bottom is one step closer to coming to an end.”
French Finance Minister Bruno Le Maire described this as the “most important international tax deal reached in a century” while German Finance Minister Olaf Scholz said that while details still needed to be worked out, the agreement marked “colossal progress”.
However, three EU member states – Ireland, Hungary and Estonia – as well as Kenya, Nigeria, Peru, Sri Lanka, Barbados and Saint Vincent and the Grenadines refused to endorse this deal.
Malta’s Finance Ministry has since issued this response:
Malta’s status on this matter is that it has reserved its position to decide on the whole package when more clarity is provided. We understand more detail will be provided later this year.
Malta would like to engage with stakeholders in the discussions, and to do so we did not object to the framework of discussion in place with the presupposition that this does not prejudice any future position Malta may decide to take on this matter.
The main points of concern from the Maltese Government have also been communicated to the OECD.
The above is certainly no blanket or blind endorsement of a future agreement, which has yet to be properly discussed, as the article seems to imply.
Finance and Employment Minister Clyde Caruana has repeatedly stated publicly that the Government’s priority is to safeguard the incentives in place that form the pillar of Malta’s attractiveness as a jurisdiction.