Certain Maltese businesses feel that they are treated unfairly because they are paying a 35% tax rate, whilst their foreign companies in Malta are paying just 5%, but this is not the full story, Finance Minister Edward Scicluna told The Malta Independent.
Scicluna was asked by this newsroom about comments made PL MP Robert Abela – a Labour leadership contender - regarding the foreign businesses 5% tax rate.
On last week’s episode of Xarabank, Abela said he would take on board concerns of Maltese businesses who say that foreign companies paying 5% tax on profits are enjoying an unfair advantage over local businesses.
“This is our tax system, which is very competitive and many countries would want to destroy it for competition reasons, so we will defend it tooth and nail,” explained Scicluna.
Scicluna was speaking to the press after a conference about the 2020 budget proposals. He said that there is a forum of tax experts from leading accountancy firms who discuss developments and the many changes happening around the world and in the EU. “We want a fair playing field but we will not give up a tax regime which has stood so well for our competitiveness and our development. This is something which also the opposition itself agrees on.”
Scicluna explained that certain local businesses felt that they are being unfairly treated because as a business they would be paying 35% tax, whilst their foreign neighbour is paying just 5%. “The story is not like that at all. We listen and explain that the refund will be taxed in their country, and if they are residing in Malta, they will also pay tax like the Maltese.”
He explained that this is something businesses do not see and are not aware of. “We have to balance Malta’s competitiveness with the issues of a fair and level playing field. If we need to tweak, we will tweak certain issues, but we are not going to give up a system which is valid and accepted by the European Union.”