EU election debate: Socialists committed to 18% corporate tax rate

The lead candidates for Europe’s top job, for European Commission President, yesterday faced off each other, revealing clear intentions on their position to harmonise taxation across Europe.

The outgoing European Commission vice-president Frans Timmermans, lead candidate for the socialists, said clearly that he will push for an 18% minimum tax rate, “with member states capable of raising it further”. This was supported by Ska Keller (Greens) and Margrethe Vestager (Liberals), but not endorsed by the centre-right European People’s Party lead candidate Manfred Weber, who steered clear of the 18% harmonised minimum tax rate.

“There are those who say that Europe and its citizens are best served by breaking down the EU. I don’t believe in that. There are those who say to avoid breaking down the EU we have to maintain it as it is. I don’t believe that either,” Timmermans said in his opening statement.

“To save and strengthen Europe, we need to fundamentally reform Europe. It’s time big companies finally start to pay taxes. It’s time we introduce minimum wages in every member state. It’s time we have equality in pay of men and women. It’s time we put an end to violence against women in Europe. It’s time we enforce the rule of law in every member state so that everybody abides by the rules. It’s time we put the climate crisis and sustainability on the very very top of the list of the next Commission. That is my proposal.” 

Every year Malta wipes out €2 billion in foreign tax by giving shareholders 85% rebates on their tax

European socialists want to stop tax competition across member states from robbing other members states of tax due on profits created in their countries.

Malta adopts a generous 85% rebate on taxation when profits from business activities generated outside are Malta, are booked in a tax-resident company in Malta.

“We need a corporate tax minimum level in the whole of Europe. I would say let’s put 18% as a minimum level and then you have a fair playing field. Then countries can decide to do more but they can no longer decide to do less,” Timmermans said.

“The thing is the economy has changed so fundamentally. We are in the fourth industrial revolution. We have companies who have found ways not to pay taxes at all. These big companies don’t pay taxes so we should keep asking ‘Alexa: Amazon, when are you going to pay taxes?’”

“It is clear that the 18% harmonised European tax rate would rob Malta of its competitive advantage in holding to its existing services industry and attracting other industries based on the same model,” PN candidate Peter Agius said in a TV debate led by TVM head of news Reno Bugeja after. “On 25 May we cannot endorse this socialist project. We need to send a clear signal in favour of our tax sovereignty,” PN candidate Peter Agius said in a TV debate led by TVM head of news Reno Bugeja after.

“The leaders debate in Brussels emphasises the dimension of our challenge in standing against tax harmonisation. Greens, Liberals and Socialists are all going in this direction We must address this challenge head-on,” Agius said.

“Our Maltese Labour colleagues do not fit that description. If they were not competent enough to change a socialist manifesto in Madrid, they will not be competent enough to change EU proposals in Brussels.”

Both the PL and the PN are committed against tax harmonisation, which would see Malta’s current effective 5% rate for foreign companies, raised to 18% in the form of a Europe-wide corporate tax rate.