Around 10 companies with revenues over €750m to pay higher tax in Malta – PM

Around 10 foreign-owned companies with revenues exceeding €750 million are set to start paying a higher tax rate in Malta, bringing in “new and substantial income” for the government, Robert Abela said on Sunday.

Speaking during a ONE TV interview, the prime minister said the companies in question currently pay a tax rate of 5%.

Under the new measures, which are part of global efforts to introduce a minimum corporate tax rate of 15%, the companies will be “allowed” to pay this tax in Malta rather than abroad.

Abela said without these new measures, approved by cabinet this week, the companies would have been able to pay 5% tax in Malta and 10% in their country of origin.

“This measure will bring in new and substantial income,” Abela said.

While Maltese companies are subject to a tax rate of 35%, all foreign-owned companies benefit from a tax refund regime that can reduce their effective tax rate to 5%.

Finance Minister Clyde Caruana said back in 2023 that the government was going to do away with the tax refund scheme available to all foreign companies. However those plans were later shelved.

The government has instead focused on improving tax compliance. Only half of businesses in Malta met their tax obligations last year, according to tax authorities.

Lack of drug testing 'paralysed' police

The prime minister also touched upon the introduction of mandatory jail terms for people involved in a road fatality whilst under the influence of alcohol or drugs.

Abela announced the proposed changes last Tuesday, in the wake of pressure from several professionals and lobby groups following a spate of horrifying road accidents this summer.

The prime minister dismissed suggestions that the changes were a knee-jerk reaction in response to the recent fatalities, as the process to introduce the proposed laws had been ongoing for months.

Apart from the stricter penalties, the police will now be given the power to randomly test drivers for alcohol or drugs.

Abela said the lack of drug testing kits had long “paralysed” the police, as they could do nothing if they suspected a driver was under the influence of drugs.

“This is an appeal for responsibility. We are not interested in witch-hunts. People need to know their responsibilities. The repercussions of these wrong choices are big,” Abela said.

Abela ruled out raising the drinking age in Malta, set at 17, instead saying he favours campaigns focused on harm reduction when it comes to alcohol and drug use.