WATCH | Caruana stresses caution as international efforts on minimum corporate tax lose momentum

Finance Minister Clyde Caruana has called for caution as international efforts to implement a global minimum corporate tax appear to be losing momentum.

“What started as a global movement is now being fractured,” he said, noting that similar doubts are emerging in the halls of Europe.

He was reacting to statements he made on the 15% minimum corporate tax when questioned by the Public Accounts Committee.

Interviewed tonight at 6:30pm on programme Mill-Kamra on TVM+, hosted by Karl Azzopardi, Caruana said Malta should “be careful before rushing to change things” in response to shifting global positions on the 15% minimum corporate tax for large multinational companies.

The tax measure, proposed around three years ago, was part of a global initiative to ensure that corporations with annual revenues exceeding €750 million pay at least a 15% tax rate, regardless of where they operate. The aim was to prevent multinationals from engaging in jurisdiction shopping, wherte they relocate profits to low-tax countries to reduce the amount of tax they have to pay.

Caruana said Malta hosts around 700 companies of this size, but refused to comment on what the minimum tax rate, or lack of it, could mean to the country.

The minister explained that the initiative had been strongly supported by both the United States and the European Union when first introduced. However, the landscape changed after the Republican Party regained influence in Washington, leading to a shift in the American stance.

“Next December, the US will be granted a safe harbour, which allows it to apply a clause exempting its companies, no matter where they are,” Caruana said.

He warned that the withdrawal of US support, once the “cheerleader” of the measure, could lead to other major economies, including India and China, following suit.

Asked whether the developments were good or bad news for Malta, Caruana reiterated his cautious approach. “

We should be careful before rushing to change things. When you need to change things, you need to negotiate with the [European] Commission,” he said.

Caruana predicted the EU will likely reach a clearer position by summer 2026. Otherwise, he warned, the concerns expressed by former European Central Bank President Mario Draghi about Europe’s waning competitiveness “will worsen.”

“I don’t want to reveal all my cards, as when you negotiate, you need to get what’s best for the country,” he added, suggesting that informal discussions among finance ministers have already begun.

Asked whether the divide on the issue was geographical, with Nordic countries in favour and southern ones opposed, Caruana disagreed.

“For me, it’s more of a divide between countries that have big financial problems and need more taxation, and others that don’t and therefore do not want to be burdened with problems they should not be burdened with,” he said.