Malta set to adopt a new tax regime by 2025 in major overhaul
Minister for Finance Clyde Caruana said on Friday that Malta’s 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 changes will be implemented in consultation with all stakeholders and is a way of answering to the signals of the European Commission and other foreign entities over the present 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 also be made with the European Commission.
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 necessitate the approval of the European Commission, which will then start the process of the new tax regime which is 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 tell 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 taken in June.