Last Updated on Friday, 29 April, 2022 at 11:50 am by Andre Camilleri
Minister for Finance Clyde Caruana said on Friday that the corporate tax regime will go through a major overhaul and a new structure and rates will be adopted by the year 2025.
Speaking at a press conference, Caruana said that a draft of the document of the new tax regime has been concluded and is undergoing necessary testing by tax authorities, so that the government does not experience a decrease in revenue.
He said that the system will move from an imputation system to a classical system, one which is practiced in continental Europe, and forms the basis of a structure which the country will see over these coming years.
The overhaul points at a major policy shift, the first since the 1990s, when Malta’s financial services industry foundation was established by then finance minister John Dalli.
Caruana said the draft was in consultation with all stakeholders and is a way of answering to the signals of the European Commission and other foreign entities over the system.
The draft proposal will be published in the coming weeks for public consultation. Caruana refused to disclose the new rates. He said that consultations will be made with the European Commission also.
He said that the public consultation process will take place on the proposed tax regime as it moves away from the imputation system. This will need the approval by the European Commission, which will then start the process of the new tax regime being put in place in 2025, he said.
When asked, Caruana declined to say whether the new regime will allow Maltese and foreign-owned companies to pay tax at the same effective rate.
The current system favours foreign-owned companies, who receive a refund on the 35% tax rate, effectively only paying a 5% tax.
He continued to reply to journalists’ that he will not speculate about the tax rates for the time being, as the government still needs to obtain the revenues required.
Caruana spoke about the FATF’s greylisting, saying that the examination of the country’s fight against financial crimes is taking place, and a decision will be concluded in June.