Nationalist Party promises to cut standard corporate tax to 25%

Nationalist Party (PN) leader Bernard Grech has pledged that, under a PN-led Government, corporate tax would be reduced from 35 per cent to 25 per cent, with a further reduction to 15 per cent for companies that reinvest in the economy.

Speaking at an event in Għajnsielem on Sunday (yesterday), Dr Grech criticised the Government’s inaction, arguing that it has led to rising prices and placed the burden of increased living costs on the private sector.

Referring to a MaltaToday survey, which indicated that the PN is set to reclaim Gozo and is leading the Labour Party (PL) by nearly six points, Dr Grech stated that these results reflect the party’s sustained efforts on the sister island.

Dr Grech also outlined the PN’s vision for Gozo’s economic development, promising more employment opportunities, enhanced education and healthcare services, improved tourism profitability, and modernised infrastructure for the island.

Malta’s high corporate tax rate

Malta’s corporate tax rate of 35 per cent remains the highest in the EU, surpassing Portugal (31.5 per cent) and Germany (29.9 per cent).

While foreign companies operating in Malta can benefit from a tax refund scheme that effectively reduces their tax burden to as low as five per cent, local businesses argue that this creates an uneven playing field, placing them at a disadvantage.

Finance Minister Clyde Caruana last year said that as of the end of 2022, 42,595 active companies were paying the full 35 per cent corporate tax rate, collectively employing 223,772 individuals. Over the past 15 years, tax revenue from these companies has nearly quadrupled, growing from €122 million in 2008 to €471 million in 2022.

Ahead of the 2025 Budget, the Malta Chamber of SMEs had pushed for a reduction in corporate tax from 35 per cent to 25 per cent, aligning with a promise made in the 2022 electoral manifesto that has yet to be fulfilled.

The SME Chamber maintained that a lower tax rate would enhance cash flow for businesses, enabling further investment, job creation, and innovation.

However, in late 2024, Finance Minister Clyde Caruana dismissed proposals to reduce the standard corporate tax rate to 15 per cent.