Malta Pushes Back on Global Minimum Tax10th February 2022
Granted, our 2022 new year’s champagne has barely fizzled out, but when you think about it, next year is right around the corner. The EU island-country of Malta is already feeling the heat of 2023—the year that the OECD’s Pillar 2, a 15% global minimum tax, is slated to take effect. To take the pressure off, the island nation is requesting a two-year delay to implement the 15% minimum tax, so the government can revise its tax regime.
Malta may seem like an unusual suspect to take issue with the 15% minimum given that the country has one of the highest statutory tax rates in the world: 35%! But then Malta is very attractive to foreign investors as government rebates and benefits allow many taxpayers to reduce that 35% to an effective tax rate of 5%. While Malta has agreed to the global minimum tax, the government wants to maintain its much-needed foreign investment. Malta is hoping to negotiate some carve-outs and strike some deals to maintain its attractiveness to foreign companies—and it’s in a good position to do. In order for the EU to pass the Pillar 2, it will need unanimous agreement from member states.