Malta Should Slash Corporate Tax Rate By 10%, Consultancy Firm Proposes
Malta should slash its corporate tax rate by 10% to boost investment in the wake of the COVID-19 crisis, a local business consultancy firm has proposed.
SEED Consultancy, which was founded by economist JP Fabri and taxation specialist Nicky Gouder, urged Malta to reduce its corporate tax rate from 35% to 25% over a period of five years, equivalent to a 2% reduction every year until 2025.
This will place Malta’s corporate tax slightly higher than the EU average of 21.3%.
“We believe that the time is ripe to support Maltese businesses who have consistently invested heavily in their enterprises and employees,” they said. “We believe that such a reduction will spur investment and growth.”
Although Malta’s full imputation and tax refund system means the effective tax rate to shareholders is often reduced in practice, SEED argued that this only applies when a company actually distributes its profits.
“In the coming months and years, we would expect companies to re-invest such profits in the company and not distribute them, also due to the current economic situation.”
Meanwhile, it proposed that Malta recoup its losses by increasing taxes on plastic packaging, landfill use, sweetened products, and registration tax on vehicles that run on fossil fuels.
These are some other highlights of SEED’s proposals to the government ahead of the 2021 Budget:
• Increase eligibility of COVID-19 aid to businesses, but attach such aid to conditions to ensure companies transform themselves to cater for the ‘new economy’
• Waiver of MTA licenses for the duration of the pandemic, waiver of Lands Department charges for chairs in public areas such as on pavements and a waiver of ground rent also payable to Lands Department
• Reduce VAT rate on accommodation from 7% to 2% for a year starting January
• A second round of vouchers during the Christmas period
• Revamping of all government services and websites to ensure they’re fit for the digital age, ensure everyone has a secure digital ID
• Introduction of a second-pillar pension, payable by government and employer
• Government should set up an independent international reputation remediation taskforce
• A start-up visa scheme to attract more digital nomads to Malta
• Redeployment of public human resources to Malta Enterprise and JobsPlus to support their back-office processing
So you agree with this proposal to reduce Malta’s corporate tax rate? Let us know in the comment section
READ NEXT: Malta Sends 500 Sacks Of Potatoes To Lebanon To Feed Beirut Blast Victims
