End the tax penalty on local businesses with a flat 20% corporate tax rate and R&D incentives in Budget 2027

The government should use Budget 2027 to shift the tax burden away from workers and honest local businesses.

Momentum proposes raising the minimum wage to €360 a week over a four-year phased transition. Annual cost-of-living adjustments should be fully exempt from income tax, so that every cent of COLA reaches the worker.

To stop the brain drain, fresh graduates should pay a flat 15% income tax rate for their first five years after graduating. Level 7 and 8 graduates and professionals returning after five or more years abroad should pay a flat 15% for their first ten years back.

On corporate tax, Momentum proposes gradually raising the effective income tax rate paid by foreign corporations from 5% to 20% over five years, while reducing the domestic rate to 20% over the same 5 years. One rate for everyone. Businesses with a proven record of tax compliance would benefit from a reduced rate.

To reward innovation and modernise Malta’s current Patent Box Regime, companies investing more than 10% of annual turnover in research should pay 0% tax on intellectual property income for five years. This improves on the current 1.75% effective rate, before capping at 10% thereafter. Furthermore, employee share option schemes should be excluded from capital gains tax, and tax incentives should support investment in wind, solar, wave, geothermal and battery storage, as well as young farmers. 

“Malta’s tax system has asked the most from those with the least room to manoeuvre. Local businesses pay more than foreign giant companies, and our graduates leave because they can earn more elsewhere. We want a system where talent chooses to stay and everyone plays by the same rules.” said Momentum Treasurer, Carmel Asciak.

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