Common corporate tax ‘not in country’s interest’ – Labour

The Labour Party has said the Common Consolidated Corporate Tax Base (CCCTB) was not in the country's economic interest, and declared its total opposition to the common corporate tax.

The statement was released following a presentation meeting on the CCTB Directive held at the Malta Business Bureau (MBB) where Labour spokesperson for finance Karmenu Vella, spokesperson for the economy Charles Mangion and European Parliamentary Member (MEP) Edward Scicluna were among those present.

The CCCTB Directive is the latest in a series of EU-level attempts to converge the calculation of corporate taxation across the internal market. Previous attempts have failed to see through the introduction of direct tax harmonisation regulating both the imputation of the common tax base and the consolidation of tax returns by companies operating cross-border, i.e. in different locations within the European Union.

The Malta Business Bureau (MBB) had commissioned an impact assessment to evaluate the implications on company taxation for both inbound and outbound business operations in Malta. The impact assessment was carried out by Pricewaterhouse Coopers (PwC Malta), on the basis of terms of reference drawn up and approved by MBB.

"The Labour Party feels that if the CCCTB directive is accepted, this could lead to tax harmonisation even on the rates of tax," Karmenu Vella said.

"Furthermore, PL is concerned that companies wouldn't be given the choice whether to apply the principle, but would eventually end up becoming mandatory for company's to conform.

"Any tax method that our country adopts should be more 'growth friendly' and not mainly aimed at fiscal consolidation."

MBB president George Vella said that after having analysed all the aspects of the Impact Assessment Report, the implementation of CCCTB, as it is being proposed by the European Commission, was detrimental for Malta.

"This harmonised tax system places at a competitive disadvantage a number of European Member States, that use the corporate tax model to attract foreign investment."

The MBB's study sheds considerable light on how the tax computation system as proposed in the draft CCCTB Directive would be managed in practice, the tax base on which the tax computation would be drawn up and the final tax liability to be incurred by firms when compared with the current corporate tax due under the provisions of the Maltese Income Tax Acts (ITA).

Vella urged government, Opposition, and social partners to take a tough stand against the CCCTB Directive.