The global impact of the COVID-19 crisis has been immense, both economically and socially. It has led to an unprecedented economic downturn resulting in substantial public debt.
Concurrently, the urgent need to address the environmental crisis requires significant efforts, with fiscal incentives playing a crucial role in achieving long-term commitments.
Amid these challenges, comprehensive tax reforms became even more urgent to create a fair and relevant international corporate tax framework.
Institutions like the Organisation for Economic Cooperation and Development (OECD) and the European Union (EU) advocated strongly for multilateral cooperation to enhance revenue, stability, and predictability in the global tax landscape.
The European tax agenda aims for a balanced revenue mix and a tax system guided by fairness, efficiency and simplicity. By achieving these objectives, a tax framework can promote equitable taxation, optimal resource allocation and streamlined compliance for businesses in Europe.
Fiscal incentives have long been a fundamental contributor for Malta’s competitive advantage by attracting businesses, investment and talent to the country. These incentives, offered through the tax system and other supportive measures, create an environment that encourages economic growth and development. However, given the evolving international context, an overhaul of the Maltese corporate tax system, which has served the economy for over 20 years, is inevitable.
Malta’s corporate tax structure will be revamped while aiming to retain Malta’s competitive advantage. Budget 2024 is expected to bring about the first moves in the tax reform, which is expected to be heavily influenced by the work of the EU, the OECD and the G20.
Fiscal incentives have long been a fundamental contributor to Malta’s competitive advantage
However, pipeline reforms go beyond this.
Indeed, the Commissioner for Revenue is leading an extensive initiative to transform the tax system, aiming to enhance its effectiveness, efficiency, and resilience.
This transformation involves leveraging data and interlinkages across various information sources to build knowledge and intelligence. The ultimate goal is to establish a proactive and customer-centric entity that prioritises voluntary tax compliance while maintaining a strong enforcement culture. The overarching values of this entity are centred around being FAIR: foresight, accountability, integrity and respect.
These reforms tie in as a glove with the recently launched Financial Services Strategy. The latter puts a focus on embracing technological advancements to capitalise on opportunities within tax administration.
By incorporating leading-edge technology, the aim is to achieve efficiencies, leverage artificial intelligence and machine learning capabilities for enhanced effectiveness and future-proof the system.
Additionally, this approach will not only showcase Malta’s capabilities as a country but also deliver a consistent message across the entire financial services industry.
Aware of the impact of tax reform on Malta’s competitiveness and on the financial services profession, the Malta Institute of Accountants will be dedicating a panel during its traditional Biennial Conference 2023 to debating these developments with key stakeholders and practitioners.
The panel discussion will delve into the significance of Malta’s tax system as a supporting factor in the implementation of the Malta Financial Services Advisory Council’s strategy for the financial services industry.
It will specifically address the challenges arising from global and EU developments in taxation and examine the strategic initiatives outlined in the strategy document.
The panellists, featuring the Commissioner for Revenue Joseph Caruana, will also address matters such as real-time reporting, specifically within the context of the local industry, as well as the need to revise the existing procedures and practices concerning the enforcement of tax laws and the prosecution of tax offenders.
This discussion will also delve into the role of professionals such as accountants, lawyers and other tax specialists throughout this reform, with insights that will be fundamental for staying ahead of the curve in the months and years ahead.
The MIA Biennial Conference 2023: Rethink and Reform, A Blueprint for Malta’s Competitiveness in Financial Services will be held on May 31 at the Hilton Malta. Book your place at www.miamalta.org/Biennial23.