Brussels, 12th May 2006
State aid: Commission welcomes phasing out of preferential tax regimes for offshore trading companies in Malta
The European Commission has welcomed the notification by the Maltese Government that it has formally accepted the Commission recommendation of 22nd March 2006 (see IP/06/363) to gradually abolish the existing aid schemes providing selective fiscal advantages in favour of International Trading Companies (ITC) and Companies with Foreign Income (CFI) by the end of 2010 at the latest. Malta’s acceptance renders the abolition of the schemes legally binding and will put an end to these long-lasting preferential regimes in Malta. The Commission found that the schemes violated the EC Treaty’s ban on state aid liable to distort competition.
Competition Commissioner Neelie Kroes commented “I welcome the abolition of Malta’s preferential regimes as a further important step towards eliminating selective tax incentives that significantly distort the location of business activities in the Single Market”.
Malta’s acceptance means that:
Malta’s unconditional implementation of these measures will eliminate the distortion of competition by the end of 2010 and progressively reduce the existing distortion by capping the number of new beneficiaries, eliminating all new beneficiaries after 31 December 2006, and reducing the tax benefits the existing beneficiaries enjoy after that date.