Finance Minister Clyde Caruana believes it is still too early to determine the effect on the country of a G7 commitment to a global minimum corporate tax of 15%.
Caruana said that the proposal was still in its infancy and more details on the agreement would be available in around October.
“The proposal still needs to be refined. It is still too early to say [what the effect would be],” he said when asked for a reaction to the broad agreement on imposing a global minimum tax of 15% on a country-by-country basis.
The G7 meeting, held in London over the weekend, was attended by the UK, Canada, France, Germany, Italy, Japan and the US.
The US is pushing the world’s largest economies to agree on minimum rates of tax paid by businesses. It intends raising corporate tax in the US from 21% to 28%.
The aim of this agreement is to level the playing field for large companies
US President Joe Biden is calling for a unified minimum corporate tax rate of 15% in negotiations with the Organisation for Economic Cooperation and Development (OECD) and the G20.
Proponents argue that a minimum tax is necessary to stem competition between countries over which can offer multinationals the lowest rate. They say that a “race to the bottom” saps precious revenues that could go to government priorities like hospitals and schools.
Malta, whose low corporate tax rate is used to attract investment, has long opposed a blanket rate, insisting that tax issues fall squarely within the sovereignty of individual member states. Caruana confirmed that this will remain the government’s position.
Economist Nicky Gouder, a founding partner at Seed Consultancy, said that as with many such agreements “the devil is in the detail”.
He explained the agreement could have a major impact on how multinational enterprises will be taxed. However, while this was an agreement by some of the wealthiest countries, it was only seven of them, he noted.
It now needed to be understood what position other countries would take to see whether this will really be a global solution.
“The aim of this agreement is to level the playing field for large companies,” Gouder said.
“One needs to understand what ‘large companies’ is going to mean and what threshold will be introduced.
“The discussions have always revolved around companies with annual turnover thresholds of above €750 million.”