‘Taxation matters will remain Malta’s competence’ – Muscat

Prime Minister Joseph Muscat refutes claims that Malta’s tax system undermines European solidarity, says fish farms slime and illegalities are unacceptable

Prime Minister Joseph Muscat has insisted that taxation matters should remain a matter of national competence, refuting claims by Austrian Chancellor Christian Kern that Malta’s corporate tax rate undermine European solidarity.

Speaking on One Radio this morning, Muscat argued that the European Union was not understanding the way globalisation works and that it thinks of itself as being cut off from the rest of the world.

Muscat’s comments come in the wake of a damning indictment by Austrian Chancellor Christian Kern, who, on Saturday, claimed that countries that offer low corporate tax rates, such as Malta, were harming European solidarity.

While the statutory corporate tax rate for corporations in Malta is 35%, shareholders can take advantages of tax reductions when the company’s taxed profits are remitted among them. The reduction on the individual’s dividends can reach as high as six-sevenths of the tax paid by the company.

Malta has also been feddling off criticism by proponents of the EU anti-avoidance tax package. The package, published by the European Commission in an effort to fight base erosion and tax sharing, would lead to tax convergence and could influence the way Malta structures its financial services industry. If implemented it could result in Malta losing its ability to control taxation rates in the country and also lose its competitive edge and flexibility in tax policies.

The introduction of corporate tax harmonisation in Europe has been repeatedly opposed by the government, the Opposition, as well as Malta's six MEPs.

And on Sunday, the opposition to Malta losing its competence in taxation matters was rejected by the prime minister, who insisted that issues in taxation should continue to be decided by national governments.

“I believe that issues relating to tax matters should remain Malta’s competence. Notwithstanding this, Malta will continue to comply with its obligations and with international taxation rules,” Muscat said.

“No one will lecture us. The government will always shoulder its responsibilities but we are determined to preserve our system and making it more competitive,” the prime minister said.

Referring to the recent EU ruling which ordered Ireland to recoup €13 billion in back taxes from US tech giant Apple, Muscat said Malta did not have the same system as Ireland and the decision would not affect Malta.

Fish farms sludge: 'Malta is not a dump ... rules have to be followed' - Muscat

Turning his attention on the controversy surrounding fish farms, Muscat pledged that “action would be taken and nothing would be forgotten after the summer.”

Slamming the slime and foam that has been repeatedly appearing Malta’s seas as “unacceptable”, Muscat insisted that the way operators are operating their fish farms today is not acceptable.

“We cannot have a situation where over half of the cages in the fish farms are illegal. Malta is not free-for-all, there are rules that need to be followed and regulations that need to be adhered to … Even though this problem may cause unemployment or may see the fish farms set up elsewhere, but we have to take action,” Muscat argued.

Studies carried out by the Environment and Resources Authority have blamed the feeding method adopted by tuna farm operators for the slime and foam that have appeared along Malta’s seas, but according to the Federation of Maltese Acquaculture Producers, it is the excessively oily herring purchased from Hungary and fed to the Bluefin tune, which is causing all the slime.

“Malta is not a rubbish dump … although we lack rules regulating the operation of fish farms, we will be drawing these up. We are pro-business but rules have to be obeyed,” he said.

Taking a swipe at the former PN administration, Muscat also refuted criticism by Mario de Marco – the former environment minister who had under his remit the responsibility of fish farms during the previous legislature – and said he did not know whether to laugh or cry when the PN deputy leader spoke on what the government should do.

“For the first time in Malta’s history, there will be regulations for fish farms … We do not write newspapers on what should be done or what should have been done, but we put our words into action.”

“He was an environment minister, why did he not take action himself? They sat on the problem for 25 years,” he said, in a dig at de Marco’s calls for fish farms to be relocated further offshore.  

Earlier, Muscat championed the country’s record-low unemployment rates, arguing that it was testament to the government’s ability to take decisions.

“Malta has the lowest unemployment rate in the Eurozone. As opposed to previous administrations, this government was never short sighted, but always put words into action and never shied away from taking a decision … This government may be pro-business, but the people are reaping the benefits of the decisions that have been taken during this legislature,” he continued.