Updated 9am
Malta’s tax base will be halved if a tax harmonisation proposal approved by a European Parliament committee were to come into force, former Prime Minister and MEP Alfred Sant has warned.
Two separate reports on a Common Corporate Tax Base (CCTB) and a Common Consolidated Corporate Tax Base (CCCTB) were approved last week by the European Parliament's ECON Committee, which Dr Sant forms part of.
The proposals will be voted on by the European Parliament at the March plenary session.
The reports aim to create a single EU corporate tax regime across all EU states - something not in Malta’s interests, Dr Sant said as he voted again both reports.
Other MEPs from small EU states, including Cyprus and Ireland, also voted against, though both reports were passed by a comfortable majority.
A report by Tax Justice Network (TJN) has found that Malta could lose more than half its corporate tax base if the European Commission were to adopt the proposed tax measures.
The TJN is an advocacy group of researchers and activists with a shared concern about tax avoidance, tax competition and tax havens.
Their report reveals that a "diverse group of small EU countries, including the Czech Republic, Portugal and Sweden might expect their corporate tax bases to shrink by around one third, with the tax base of Malta, Slovenia and Estonia declining more than half in terms of their loss-consolidated tax base due to formulary apportionment in the Common Consolidated Corporate Tax Base (CCCTB) scenario.”
Dr Sant told the S&D Group, which backed the proposals, that he agreed with elements within the two proposals such as measures to enhance tax transparency or to better define digital presence in the EU. But he strongly disagreed with the principle of a common EU taxation system.
“A common EU taxation system undermines the sovereignty of national EU governments in the decision and implementation of taxation policies in their respective countries. For this reason I am voting against the two CCCTB reports.” He said.
The planned CCCTB was approved by 38 votes to 11 votes, with five abstentions. A separate, complementary measure which creates the basis for the CCTB was approved by 39 votes to 12, with five abstentions.
See who voted for and against the CCCTB report.