I refer to the article ‘Malta has the highest corporate tax rate in the EU’ (TMID, 2 July) which declared that Malta has the highest corporate tax rate in the EU. While this may seem to be true at face value, in reality if ones looks at how the different tax systems work, one would find that in actual fact Malta has one of the lowest effective tax rates, for the simple reason that it is only one of three countries in the world (the others being Australia and New Zealand) that operates an imputation tax system. In simple terms what this means is that when company’s profits already taxed at 35% are distributed as dividends to the shareholders, the shareholders who opt to declare this dividend get charged tax at their personal tax rates, up to a maximum of 35%, But, they get a credit for the tax already paid by the company, which effectively can in no case give rise to more tax being paid.  

■ Joseph Zammit

Attard