MEPs approve proposals on minimum corporate rate of 15%

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MEPs on Thursday broadly approved the Commission proposal implementing into law the international agreement on a global minimum corporate tax rate of 15%. The report, authored by Aurore Lalucq (S&D, FR) was adopted by the Economic and Monetary Affairs committee by 46 votes in favour, 4 votes against and 7 abstentions.

It approves the key elements of the Commission proposal, notably sticking to the proposed implementation timeline and the implementation deadline of 31 December 2022 with an aim to having the law apply swiftly.

Speaking earlier this month at the Institute of Financial Services Practitioners annual conference, EP President Roberta Metsola had said that Malta should be one of the leading countries spurring discussions on a global tax rate. Malta’s tax rebate to foreign companies will be a leg we can stand on only for a little while longer, she warned.

Prior to the last general election, the Nationalist Party was critical government for having agreed to the OECD global minimum corporate tax pact of a 15% minimum tax for corporations.

The report adopted today does also make certain changes to the Commission’s proposal. One is the introduction of a review clause which provides for the revision of the annual revenue threshold above which a multinational corporation would be subject to the minimum tax rate, and also calls on assessing the impact of the legislation on developing countries.

MEPs also seek to reduce certain exemptions proposed by the Commission, and limit the possibility for abuse of the rules, notably by introducing a specific article containing rules to fight tax avoidance schemes.

After the vote Ms Lalucq said, “This agreement is not perfect. We would have for example liked to have a higher tax rate. But it is the result of a compromise. And today, the urgency is for a deal to be reached in the Ecofin, for a rapid implementation. This was the main guiding principle of today’s vote.”

The report will now be tabled for a plenary vote, after which it will constitute the Parliament’s opinion. This opinion will need to be considered by the member states when they adopt the final text by unanimity.

The aim of the directive is to transpose into EU law the reform of the rules on international corporate taxation which were agreed by the OECD/G20 in December 2021. This global agreement aims to ensure a minimum corporate tax rate of 15% for large multinational corporations and constitutes a major step towards an effective and fair system of profit taxation. The Commission made its proposal a few days after the international agreement was reached.

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