The EU is entering a period of tightening up of procedures and loopholes regarding the payment of taxes by multinational companies.

In a way, the initiative does not come from the EU but rather from the Organisation of Economic Cooperation and Development which has been working on this very complicated issue from as far back as 1997.

Its most recent initiative, issued some weeks ago, regards what are known as BEPS (Base Erosion and Profit Shifting) or the ways in which multinational companies use tax loopholes and different tax rules to shop around for the lower taxes. According to the OECD, some multinational companies end up paying as little as 5% in corporate taxes where smaller businesses can end up paying up to 30%.

The most recent Ecofin discussed and adopted a directive aimed at improving transparency on the tax treatment of companies by different states.

At that meeting, Malta, through Finance Minister Edward Scicluna, pointed out that Malta is at the forefront of transparency and is publicly against any form of money laundering. Malta has a level playing field where taxes are involved and taxes do not vary from company to company according to some sectoral tax deals.

However, Malta also insisted that the Council must adopt a flexible approach in this regard because what can apply to a large country may not apply as well to a smaller country.

At the same time, there is flexibility and flexibility. Last January, the Commission proposed a new interpretation of the Stability and Growth Pact, giving countries additional time to balance their public accounts if they implement major structural reforms, increase key investment expenditure or in the case of a severe economic downturn.

This was mostly in response to calls by France. But Germany has been reiterating its opposition to greater fiscal flexibility. At the 8 December Ecofin, the ministers scrapped the most controversial elements of the Commission proposals.

Following that Ecofin meeting, Minister Scicluna was quoted as having pushed for a more flexible approach as regards BEPS at the meeting.

Valdis Dombrovskis, Commission vice-president for the Euro, played down the divergences. The Commission, on its part, denied that the Economic and Financial Committee limited the use of flexibility clauses.

It would seem, however, that a serious discussion did take place and divergences were aired. German Finance Minister Wolfgang Schauble is reported to have expressed his opposition to putting structural reform on the same level as investment, as only the former is anchored in the Treaty. Germany thus obtained a rather stricter interpretation of the investment clause.

In his remarks following the Ecofin meeting, Commissioner Dombrovskis also referred to the thorny question of the Financial Transaction Tax where 10 Member States have now agreed in principle on its key parameters.

Malta, as is widely known, is not part of this FTT agreement and there is steadfast bi-partisan agreement on this stance. FTT is a red line for both parties. This is important for one must ensure that FTT respects both European and international law, including the rights of non-participating  Member States such as Malta.

The previous government set up a think-tank which is still active today from the financial practitioners and this government has continued with its predecessor's practice of consulting the Opposition.

But the flexibility that Malta, with reason, enjoins on the others, must also apply in its regard. Rather than insisting on a sterile and useless opposition, Malta, its government, parties and business sectors, must also prepare to be flexible where it senses that total opposition can be harmful in the long run and where opposition can bring upon Malta the huge pressure of the European juggernaut.

As further Commission initiatives are made public in the coming months, this flexibility must be at the forefront of all those taking part in the consultation process in Malta.

Malta cannot afford to be singled out as the odd country out or even attacked as a tax haven.