PN launches a plan to ensure that the tax system does not discriminate against Maltese companies
The Nationalist Party has announced details of a plan to overhaul Malta’s tax system to prevent it from discriminating against Maltese businesses.
Thanks to the proposal, launched in the 2022 PN election manifesto, the corporate tax rate will be reduced from 35% to 15% for the first €500,000 of income reinvested in the business.
However, there is a catch; companies wishing to benefit from this reduced tax rate must first ensure that they comply with a set of environmental, social and good governance (ESG) requirements.
Over a five-year period, ESG-compliant companies will also see their top tax rate drop from 35% to 25%.
Under the PN plan, ESG-compliant companies that earn less than €5 million in a financial year, employ fewer than 250 full-time people and have balance sheets of no more than €10 million. Euros won’t even need to submit audited financial statements as part of their business requirements.
Instead, they will be able to present their accounts, accompanied by a certificate proving that they comply with ESG criteria.
The PN’s proposal is essentially a new social pact with corporations – if they improve their operations in a way that helps the nation meet its climate change goals, the government will reward them with several benefits.
While Maltese companies must comply with a corporate tax rate of 35%, foreign companies can benefit from a comprehensive imitation system which effectively reduces their tax rate to single digits.
As a result, Maltese businesses are being hit with a double whammy – forced to apply the highest rate of tax in the EU and forced to compete with businesses on its shores that can benefit from more advantageous rates.
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