Foreign businesses competing with Maltese should not have 5% tax rate, Abela says

On Xarabank, Labour leadership contender says he will take on board concerns by Maltese businesses of foreign competitors qualifying for handsome tax rebate in Malta

Robert Abela and Chris Fearne were asked the same questions in separate interviews on Xarabank
Robert Abela and Chris Fearne were asked the same questions in separate interviews on Xarabank

The Labour leadership candidate Robert Abela has suggested he would take on board concerns by Maltese businesses who say foreign companies paying 5% tax on profits remitted to Malta, enjoy an unfair advantage over them.

Malta allows foreign companies to remit profits to tax-resident companies here and enjoy a six-sevenths rebate on the tax they are charged, allowing them to pay a nominal 5% tax return.

While most of these companies’ operations are based overseas, Maltese business stakeholders like the GRTU insist that some foreign companies’ operations in Malta benefit of the reduced tax charge even while competing with Maltese-owned businesses here.

“Maltese companies are right in insisting about it, because they are not operating on a level-playing field. Without committing myself to any position without consulting with ministers, I will see that there is a level playing field for all our business. We need to arrive to that position, and Maltese businesses must be heard out,” Abela said on Xarabank during a question-and-answer session.

The same questions were put to Chris Fearne, the deputy prime minister.

“I agree with this tax scheme… it brings foreign direct investment which we need, to create quality jobs and build economic growth. Fiscal incentives is one of the things we do. Other countries criticise for it, but this is our prerogative.”

Fearne insisted that the Labour administration made the mistake of not having taken the Panama Papers scandal as seriously as it should have been taken. “We did not address it as expeditiously as we should have,” Fearne said. “If there is something we should have done differently, it’s about what we said on the resignations of Keith Schembri and Konrad Mizzi.”

Fearne said the police had to have the liberty to press charges against anyone they thought bore responsibility in the Caruana Galizia assassination, even if it was Keith Schembri.

Fearne said that as PM he will convene a conference on rule of law to sort out Malta’s shortcomings on good governance, and pledged once again a raise in wages and social benefits for Malta’s lower-income groups, and to tackle poverty.

While Abela said he certainly retain Fearne as his health minister if he becomes prime minister, Fearne was less than willing to confirm a future in his Cabinet for the MP, whom Muscat retained by his side as a consultant to the Cabinet. “Robert Abela is one of those persons who has much to offer to any future Cabinet,” he said, saying that he also trains regularly at the gym with Abela.

In other questions, Abela said he does not believe that Keith Schembri had “lost” his mobile phone, and said police should use any technological means to preserve evidence in its ongoing investigation into Schembri’s role in the homicide of journalist Daphne Caruana Galizia.

Abela, who suggested that Muscat’s refusal to remove Schembri from chief of staff had overshadowed his premiership, said anyone implicated in wrongdoing had to face the full weight of justice.

Abela also said he will appoint a new Commissioner of Police only after reforms are carried out in the police corps, and once again ruled out former minister Konrad Mizzi from being part of his Cabinet.

Abela poured cold water over a planned anti-corruption protest on Sunday, saying it will hamper trade in Valletta and that it was dampening the Labour leadership election.

He also said he will retain the Individual Investor Programme, the sale of Maltese citizenship, saying it had brought much wealth and “quality citizens” to Malta. “It is one of the best schemes there are… we should weigh the consequences of the programme. If we need to increase due diligence, we increase it, but as far as I am concerned, I will preserve that scheme.”