Malta remains against tax harmonization

Speaking at an informal meeting of the Economic and Financial Affairs (ECOFIN) in Luxembourg, Finance Minister Edward Scicluna once again expressed Malta’s opposition to tax harmonization.

“Taxation remains a sensitive area for Malta, not only because of its obvious role in the revenue collection process, but also as an important policy tool to direct economic activity.

“Coordinated efforts in the fight against tax fraud and tax evasion will be supported by Malta, but in this work we need to avoid any embedded push towards tax harmonisation”.

Ministers had an exchange of views on the way forward with respect to the issue of “minimum effective taxation” in the EU and, in relation to third countries.

The issue remains highly divisive: whilst some Member States argue that low taxation is harmful, others underline the positive aspects of tax competition in terms of competitiveness both within the EU and with respect to the rest of the world, whilst stressing that direct taxation of multinationals is a matter of national sovereignty.

“We are not aware of how prescribing minimum effective taxation has been delved into, not even within the current ambitious OECD-BEPS project. We think that coordination, not harmonisation, is the way forward. This is also the approach that best respects the Member States competences in this area,” Scicluna said during the meeting.

During the informal ECOFIN meeting, Finance Ministers also held an exchange of views on Climate Finance in the run-up to the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) in Paris in December. The international negotiations should lead to the adoption of a new and ambitious agreement with universal participation to ensure that global warming is kept below two degrees Celsius. The new agreement should enter into force in 2020.

Finance Ministers also held an exchange of views on the Deepening of the EMU. On this topic the Minister emphasised the need for “the strengthening of the recently set up institutions and to ensure their democratic legitimacy before we rush into setting up new ones.”

The informal ECOFIN meeting was followed by a Eurogroup meeting during which Ministers discussed the economic situation and risks to the recovery in the euro area, the state of play in Greece, the implementation of the Banking Union, and briefly took stock of the developments regarding European representation and the Euro area constituency in particular in the Asian Infrastructure Investment Bank (AIIB).

The working sessions were preceded by a working lunch at the European Investment Bank (EIB) offices wherein an oral presentation by Commissioner Katainen and the President of the EIB on the state of play of the implementation of the investment plan for Europe was provided.

For the meetings, the Minister for Finance Professor Edward Scicluna was accompanied by Prof. Joseph Bonnici, Governor of the Central Bank of Malta, and the Permanent Secretary Mr Alfred Camilleri.