Malta’s tax system is under threat and the government appears to be doing very little to protect it, the Nationalist Party has said in a statement expressing concern at the lack of stakeholder consultation.
“Yet again, the Opposition, business owners, unions and stakeholders were not consulted about the government’s decision to give in to international institutions and lose its fiscal independence by accepting a decision about a common minimum tax rate for foreign companies,” PN finance spokesperson Mario de Marco said.
“We had to learn of this from the media,” he added, noting that the government’s failure to raise the matter in parliament suggested a disdain for that institution.
The PN spokesperson was referring to reports that Malta will be presenting proposals to protect its corporate tax system to the OECD later this month.
Malta attracts foreign investment by offering overseas companies a series of rebates and benefits that allows them to bring their corporate tax rate down to an effective 5 per cent tax rate.
That competitive advantage could however be eroded by a high-level agreement between more than 130 countries to establish a global minimum tax rate of at least 15 per cent.
Malta was among the signatories of that agreement, with Finance Minister Clyde Caruana having previously said that it would have found itself locked out of negotiations had it not agreed to the deal.
Ireland and Estonia, which also use tax incentives to lure foreign investment, agreed to join the deal this week.
The agreement's details - and exceptions - are still being negotiated.
Sources have told Times of Malta that the Maltese government is keen to propose that the 15 per cent minimum rate should only apply to corporations with a huge turnover.
But no official details about Malta’s position have been divulged so far, prompting the PN opposition to raise concerns about a lack of transparency.
In its statement, the PN said that both parties had worked together for decades to safeguard Malta’s tax system and financial services sector. But that work had now been nullified, it said, with the Finance Minister “saying that there is no point in trying to object”.
“In other words, our voice as a nation has ended up being a powerless one,” the PN said.
It said it expected the government to be open about its negotiating position and explain what it had sought for Malta, what its reservations are and how it is planning to minimise the impact of this tax on Malta.
“We need to discuss these things as soon as possible, on a national basis, to ensure we find a national problem that safeguards our future,” the PN said.
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