17/01/23

MALTA: Jurisdiction has third highest corporate tax rate in the world, says new research.

As published on newsbook.com.mt, Monday 16 January, 2023.

New research has revealed that Malta’s corporate tax rate is among the highest in the world.

At 35%, Malta’s direct tax imposed on the income or capital of corporations and businesses was only surpassed by the volcanic archipelago off of Africa’s East coast, Comoros (50%) and the small South American country, Suriname (36%).

Malta shares third place with Argentina, Chad, Cuba, Equatorial Guinea, Guinea, Sudan and Zambia.

The study carried out by Utility Bidder used 2021 tax reports to reveal the countries with the highest and lowest corporation tax rates, as well as the countries with the largest 10-year change in corporate tax rates.

At the other end of the spectrum, a number of countries – often described as tax havens – do not charge corporate taxes. These include the Bahamas, Bahrain, Vanuatu and the United Arab Emirates.

But this could soon change as last year Malta agreed to the OECD global minimum corporate tax pact of a 15% minimum tax for corporations.

Reportedly, Malta agreed to the global tax rate but holds reservations when it comes to companies which register €750 million or more in profit and corporations operating in certain sectors.

Multinationals registered in Malta could end up paying a 5% tax rate on the island and the remaining 10% tax to be paid in their home country, if the agreement is enforced globally.

However, although Malta’s corporate tax rate is currently set at 35%, foreign companies based in the islands pay the lowest tax on profits of any country in the EU.

While local businesses pay a 35% tax on profits, foreign corporations pay as little as 5% thanks to a complex system where shareholders can receive a tax refund of up to six-sevenths of their tax paid in Malta. The average rate in the EU is around 22%.