European Parliament negotiators have noted Malta’s position against a common tax base and are open to further discussions.

MEP Valerie Hayer, co-rapporteur for the European Parliament on Own Resources - the sources of revenue for the EU budget and one of the negotiators on the EU’s multi-annual financial framework (MFF), said that a mechanism for  new systems of revenue for the budget will be discussed amongst Member States, and with the European Parliament and Commission in order to find a fair system for all EU Member States.

Both leaders of Malta’s delegations in the European Parliament – EPP MEP Roberta Metsola and S&D MEP Alfred Sant - have come out against the proposed EU-wide common corporate tax base, , that  would help boost resources for the EU’s recovery fund and its long-term budget.

The MEPs were speaking during a webinar on the EU budget organised by the European Parliament Office in Malta earlier last week.

“I would shoot for having tax transparency across the board,” Sant said. “And when digital taxation comes in, as I think it should, and if there’s tax transparency across the board, then there’s no need, in my view, for tax harmonisation,” he noted, adding that it should be up to the EU member states to take steps to correct for tax avoiding.

Metsola noted that common consolidated tax bases are complicated and that Maltese MEPs were “wary” of them.

“Like other governments get their own standpoints, I have no doubt that the whole EP delegation here will be united to ensure that the burden on Malta is not disproportionate,” she said.

Reacting to their comments, MEP Hayer said that the European Parliament has undertaken a long process to involve the creation of new resources for the EU budget (Own resources). The European Parliament wanted to ensure that it is not the citizens who end up paying  for the exceptional debts that have to be created to fund the EU’s recovery plan to mitigate the economic losses created by the Covid-19 pandemic.

MEP Hayer argues for making big corporations and digital giants pay for the recovery funds, not taxpayers, and insists that a common corporate tax base would serve to protect SMEs.

“However, if such a system is found to be unfair to any one country, then a solution can be found, as we have found one for the new plastics contribution, that will be one of these own resources, where Malta has a correction mechnanism to pay less,” said Hayer, who heads the European Parliament’s negotiations with the European Council on Own Resources.  

Malta was already applying a correction mechanism when it came to the creation of another resource, the plastics contribution. Robert Camilleri, EU Funds Director at Malta’s Finance Ministry confirmed that Malta would be paying out 80c per kilo of non-recycled packaging waste, equivalent to some 1.4 million per year. This would be replacing part of its GNI contribution.

The European Parliament Office in Malta’s webinar was held as negotiations for the EU budget continue next week during a meeting of the EU council. Member states Hungary and Poland have said they will not approve the budget due to a rule of law conditionality mechanism, blocking the approval for the budget for all EU Member States including Malta.

This impacts Malta which has plans underway for its EU budget spending to aid economic recovery.