Minimum tax on multinationals is just a foot in the door – Alfred Sant

Former Labour Leader and current MEP Dr Alfred Sant argued that the OECD-level agreement in favour of a common minimum tax on multinationals would be a metaphoric foot in the door, and would eventually be extended in a wider manner. Sant was addressing, together with fellow Labour MEP Cyrus Engerer, a press briefing organised by the European Parliament Office in Valletta on the margins of the plenary session being held this week in Strasbourg.

Nearly all 139 countries involved in talks at the Paris-based Organisation for Economic Cooperation and Development (OECD) last week backed plans for new rules on where companies’ profits are taxed, and a rate of at least 15%. G20 finance ministers are expected to endorse the deal at meetings on Friday and Saturday in Venice, adding momentum to a global initiative that in June prompted G7 ministers to back a clampdown on tax havens.

Although Malta’s tax system had repeatedly secured EU and OECD approval, Sant argued that “a number of MEPs consider Malta as a tax haven” and as a result warned that elements within Parliament, particularly among Greens, but also among the Socialists, would be pushing for faster action in getting countries to abandon systems which provided tax advantages to foreign entities investing on their shores.

New rules on where the biggest multinationals are taxed would shift taxing rights on more than $100 billion of profits to countries where the profits are earned, it added. Asked whether this was a lost battle, Sant acknowledged that Malta seems to have already watered down its insistence on tax independence which had been a no-go area up to recent times, indicating that the point of no return has now been passed.

The two MEPs spoke about the key issues which are expected to dominate this week’s agenda, including a discussion on the priorities of the Slovenian presidency and the situation on the rule of law in a number of countries particularly the issue of LGBTIQ rights in Hungary. In this context, Parliament is expected to approve a resolution, spearheaded by Cyrus Engerer, through which the EP will call on the European Union to begin formal legal proceedings against Hungary for breaching EU law.

Engerer also reserved tough words for the European Commission, for failing to uphold its role of guarantor of the EU Treaties, judging by the way it was looking away from Hungary’s persistent breaches relating to fundamental rights. He wanted that Parliament would consider taking action against the same Commission if it fails to take the necessary action. The Maltese MEP explained that although it is Hungary in the centre of this unfortunate situation, in view of the freedom of movement of citizens, such a situation could ultimately affect the rights of any EU citizen, including Maltese.

The resolution, he said, would be calling on the EU “to officially take the strongest action against the Hungarian government.”