Clock ticking on Malta’s tax reform

The Maltese Tax Law is regulated by the provisions of the Income Tax Act 1948 and is mainly based on UK principles. Surprisingly, the tax system has remained relatively the same in recent years, except for piecemeal adjustments, such as the shifting from offshore to the onshore regime (including the tax refund system) and updating the system with EU directives.

But the business world, society and economies are constantly changing, and taxes must adapt; otherwise, it risks significant revenue losses and potentially harmful distortions. This applies even more to countries like ours that are small and have no natural resources; hence our leaders need to think outside the box about generating the maximum tax revenues without harming the economy.

In October 2021, the international community announced a landmark deal when it introduced a global minimum effective corporate tax rate of 15 per cent for large multinational corporations that exceed an annual revenue of €750 million. Also looming is the EU un-shell directive that will prevent companies without economic substance not to benefit from tax advantages arising from the application of Double Taxation treaties. Moreover, certain...