Finance Minister Clyde Caruana has delivered a brutally frank assessment of Malta’s stance with regards to international discussions on a potential global minimum corporate tax rate.
“I’ve been involved at different levels of discussions within the EU over the past few months and I’ve never seen it work at such a fast pace as it is on this plan,” Caruana told a FinanceMalta conference this morning.
“The COVID-19 pandemic has accelerated the efforts of the EU, particularly of certain member states, to push forward the idea of gaining more revenue, particularly since some member states are in dire need of more finances.”
He warned the mood in the room is that EU member states who completely oppose the Organisation for Economic Co-operation and Development (OECD)’s taxation plans “are being told to leave the negotiation room and let the others discuss”.
“So Malta can’t just say we disagree or we will be completely excluded from the negotiations. But we must be wise enough to understand what others are after. If we understand what they are after, they will understand what we are after.”
“It seems that the big countries want to increase revenue from the biggest companies in the world which is perfectly understandable, and at the pace such reform is being negotiated, I’m quite sure most of the counties will be willing to negotiate.”
“As a small nation, along with other small counties, we can negotiate to ensure what we have achieved remains there. Negotiation is our best tool ahead of us to maintain what we have achieved so far.”
Earlier this month, Malta joined 129 other countries in backing plans by the OECD to ensure that large multinational companies pay tax in the countries they operate and earn profits in, as well as to set up a 15% minimum corporate tax rate which countries can use to protect their tax bases.
Whether this will negatively impact Malta’s taxation system remains unclear.
While Malta has a corporate tax rate of 35%, its full imputation system allows foreign businesses to benefit from significant rebates on dividends.
Caruana said back then that Malta’s status is that it has reserved its position to decide on the whole package when more clarity is 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,” he said.
What do you make of the Minister’s warning?