Bernie Sanders slams system letting US firms use Malta as 'tax haven' for profit
Senator says companies are shifting profits offshore
Bernie Sanders has taken aim at the "rigged system" that allows large US companies to shift profits to "tax havens" like Malta.
Sanders, a US senator for the Democrats and former presidential hopeful, took aim at Donald Trump for enabling "these corporate tax dodgers" to shift their profits offshore to tax havens like Malta, Singapore and Switzerland.
Last year, Trump pulled the US out of global tax agreements to introduce a 15% minimum global tax.
While Malta has a 35% tax rate on paper, shareholders of foreign-owned companies can claim a 6/7 refund on trading profits, which brings the effective corporate tax rate down to 5%.
A recent New York Times article highlighted how multi-billion-dollar US companies have used Malta to significantly cut their tax bills.
According to the article, Abbott Laboratories, a pharmaceutical giant, claimed all its profits were earned through a Malta-based subsidiary with no employees.
Malta helped the company cut its tax bill by $336 million (€289 million) last year, the New York Times found, citing corporate filings.
Thermo Fisher Scientific, a scientific equipment maker, cut its taxes by $3.5 billion (€3 billion) last year via Malta, according to the same article.
Profits allocated by US companies to Malta soared to $5.6 billion(€4.8 billion) in 2022 from $134 million (€115 million) in 2017, according to the International Tax Observatory, a research group at the Paris School of Economics.
The New York Times cites a roll call of other major companies that used Malta to reduce their tax bills.
These include credit rating agency S&P Global, which saved $269 million (€231 million), and Yum Brands, the owner of Taco Bell, KFC and Pizza Hut, cut its tax bill by $121 million (€104 million).
Shoemaker Crocs walked out of Malta with a $47 million (€40 million) tax saving.
Malta secured a derogation allowing it to delay introducing a new minimum tax rate for companies with a global income of more than €750 million.
The new rules will not come into force until 2029, thanks to the delay.
Malta's tax refund system for foreign-owned companies has long angered other EU countries, who feel it unfairly drains taxes that should have been paid in the home country, where the real economic activity takes place, rather than in Malta.
Tax harmonisation has been a bone of contention around Europe, with many smaller states in the bloc arguing that a one-size-fits-all approach to taxation makes it impossible for them to compete with their larger counterparts.