The Government is currently in talks with the European Commission over Malta’s corporate tax regime, Finance Minister Clyde Caruana said on Thursday.

During a Times of Malta event dedicated to a discussion ahead of Budget 2025, the Minister expressed hope of making announcements by the time Budget day arrives on Monday 28th October.

Currently, Malta charges companies based on the island a 35 per cent corporate tax rate. Foreign companies then benefit from a system of rebates which effectively sees their tax bill lowered to five per cent.

During Thursday's event, the Government's proposed changes to the tax system were discussed. Under a new system, the state would retain its importation system, but foreign companies would benefit from a lower rebate, which would lead to an effective tax rate of 15 per cent.

A point of discussion, however, which needs clarifying with the Commission, is that the government wants to then pay such foreign companies Qualified Refundable Tax Credits (QRTCs) that would further reduce the 15 per cent rate.

The question remains as to how many QRTCs Malta can provide, with the Commission reportedly wanting to limit this benefit.

Malta has repeatedly come under fire for its beneficial tax system for multinational companies, with such companies setting up in Malta to benefit the five per cent taxation system. The OECD has in recent years proposed a minimum corporate tax rate for multinationals of a certain size, which Malta has signed on for, of 15 per cent.

In a separate discussion, the Government had promised to lower the corporate tax rate for Maltese companies, which at 35 per cent is among the highest in Europe. Asked about this by SME Chamber President Paul Abela, Minister Caruana said it is not the right time to tackle this issue, and the country must first see how the economy will react to changes in corporate taxation for multinationals.