Nearly 20 large foreign companies may have to start paying three times as much in taxes as they do today once Malta is forced to introduce a new minimum corporate tax rate in 2023, according to sources working on the island tax plan.

Government sources have said that between 18 and 20 international companies, which employ thousands of people in lucrative industries such as gaming and business services, could see their tax exposure drop from 5% to 15%.

This would come into effect in January 2023, when Malta is expected to be forced to adopt a global minimum tax rate imposed by the Organization for Economic Co-operation and Development (OECD).

A high-level source said some of those employers have already indicated indirectly that they will consider closing their local operations if their tax exposure is tripled.

However, another source claimed that no employer had signaled their intention to leave the country.

The new tariffs are an offer by the OECD to crack down on countries like Malta that compete to offer the lowest tariffs.

The rates will also apply to companies with an annual turnover of more than 750 million euros.

The OECD estimates that this will generate around € 130 billion in additional global tax revenue each year.

According to estimates from the Ministry of Finance, local businesses that would be impacted by the new tax rules pay 50 to 60 million euros in taxes each year.

Malta has already subscribed to the principle of an OECD minimum rate, which is expected to be enacted into law next year for implementation early the following year.

Government sources said the issue was recently discussed when ministers met at the Auberge de Castille for their weekly cabinet meeting.

While Malta has accepted the OECD plan, the issue is still under discussion at the EU level, where the island hopes to negotiate “exclusions and concessions” that could limit the island’s exposure, the island said. the sources.

Change of direction of investments

According to cabinet sources, the government is already redirecting its foreign direct investments towards attracting international companies that do not reach the threshold of 750 million euros in turnover set by the OECD.

“We will now have to direct our efforts to attract this type of business,” said the source.

“Those who do just under the threshold. Not that we haven’t already, but it has now become even more of a priority. “

Malta has one of the highest corporate tax rates in the world, taxing 35 percent of corporate profits at the end of the year.

However, the island attracts foreign investment by offering foreign companies a series of discounts and benefits that allow them to reduce their corporate tax rate to 5% effective.