Issue link: https://maltatoday.uberflip.com/i/1517228
14 NEWS maltatoday | SUNDAY • 10 MARCH 2024 MATTHEW VELLA mvella@mediatoday.com.mt MALTA'S parliament has sent the European Commission a reasoned opinion in opposi- tion to proposed tax rules that help all companies in a group determine their tax base. The House of Representa- tives said the BEFIT proposal does not comply with the prin- ciple of subsidiarity, saying it was questionable whether the European Commission had al- lowed national parliaments to fully assess all the implications of this proposal. Currently, multinationals must comply with up to 27 different national tax systems in the EU. The Commission claims it creates an uneven playing field by increasing tax compliance costs for business- es operating in more than one member state. The new proposal – manda- tory for groups operating in the EU with an annual com- bined revenue of at least €750 million – seeks to make multi- nationals file one return on all tax bases where its subsidiaries are based, which are then ag- gregated at EU group level and allocated to each company in the group. Member states then apply their own adjustments and corporate tax rate to the allo- cated tax base of the company established in that country. But Malta's MPs said they ex- pected a more conscientious approach on such a sovereign matter as taxation, considering the profound implications that a single corporate rulebook on tax could have on a peripheral island member state like Malta. "There is considerable uncer- tainty regarding the proposed initiative's financial and eco- nomic consequences for Mal- ta, particularly given the possi- ble future formulaic approach to allocate profits," the House said in its reasoned opinion to the EC. "The purported simplifica- tions brought about by the overlay of BEFIT rules are doubtful. Concerns arise for smaller tax administrations being required to handle an additional set of rules, with their own administrative and operational requirements, in addition to national tax rules which will remain in place." The reasoned opinion was welcomed by the Institute of Financial Services Providers (IFSP), which insists that the BEFIT Directive might exacer- bate the uneven playing field it seeks to address by raising tax compliance costs and burdens. "Taxation remains a national competence and EU member states should be allowed the flexibility for their tax systems to be structured in such a way to reflect their economic reali- ty," the IFSP said. The IFSP said BEFIT could undermine Malta's tax sover- eignty under the guise of elim- inating tax obstacles to cross border economic activity, to the detriment of all EU mem- ber states. "If the BEFIT Directive were to be promulgated by the Eu- ropean Parliament in its cur- rent format, EU businesses will be disadvantaged compared to those operating outside of the EU." Similar concerns have been expressed by the parliaments of Sweden, Poland, Ireland and the Czech Republic. House opposes EU rules to aggregate tax bases of multinationals The Maltese parliament is opposed to new EU rules on taxation concerning multinationals Closing the THE Malta Development Bank wants to become a key driver of economic prosperity by advanc- ing "sustainable and inclusive de- velopment", its CEO says. Paul V. Azzopardi has no doubts on the bank's direction in the years ahead: "We must transform the way business looks at sustain- able development." Citing the bank's track record to "swiftly and effectively" ad- dress the extraordinary challenges posed by the pandemic, Azzopar- di says the bank is committed to leverage these experiences to push for development that is sustaina- ble and inclusive. "We are embarking on an effort to make the Malta Development Bank the gateway to finance for businesses in Malta," he says, adding that the bank will have an increasingly important role in fa- cilitating sustainable investments. Azzopardi sits down with Malt- aToday to speak about the MDB's drive to stand by businesses in their current needs, encourage them to adopt green initiatives and finance the green transition. What importance does the MDB attribute to sustainability? Right now, it is very important for the MDB. In a short time, we believe it will be important for all businesses in Malta. A recent EIB survey placed the Maltese at the very top of populations in Eu- rope who want action on climate change and a fair transition. I hope that in the future we will be able to show the impact of our efforts on these matters. So, is there a refocus on green initiatives? We are weaving the theme of green investment significantly in- to MDB's strategic planning. The idea is to place the bank at the centre of these matters. Sustaina- ble development is already in our mission, and in this context, the MDB reaffirms its commitment to promote it. But we will not chase a green transition if it means ig- noring today's needs: Defending employment levels in Malta in the face of shocks and supporting long-term prospects for SMEs re- main at the heart of what we do at the bank, along with our interme- diary banking partners. We are the gateway to finance for many businesses, and we pledge to continue being there for businesses. In our short six-year existence, we have facilitated over 800 facilities to businesses provid- ing loans and guarantees exceed- ing €600 million. Looking ahead, however, the green transition cannot wait any longer. When we analyse the impact of MDB's Malta Development Bank CEO Paul V. Azzopardi tells MaltaToday the bank has embarked on a transformative journey to become a driver of the green transition among Maltese businesses in the coming years. In our short six-year existence, we have facilitated over 800 facilities to businesses providing loans and guarantees exceeding €600 million. Looking ahead, however, the green transition cannot wait any longer.