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Corporate taxation

Corporate-TaxationTaxation System

Income tax in Malta is covered by the Income Tax Acts, which comprises the Income Tax Act and the Income Tax Management Act.

The Income Tax Act covers the obligations of income tax, the calculation of chargeable income and the tax thereon; It contains provisions on allowable deductions and available exemptions.

The Income Tax Management Act regulates the administration of Income Tax. It provides the administrative framework for the filing of tax returns, issue of assessments and procedure of appeal.

The withholding of the income tax from the employee's wage may be carried out by the employer and reported using the services offered online by the Commissioner for Revenue.

Direct taxes

Under Malta's tax system, the total income from all sources, including capital gains, is aggregated. Exemptions and allowances are deducted and the final income is taxed according to the rates applicable. Companies are taxed at a flat rate of 35%, certain types of investment income is taxed at source at 15% and transfers of immovable property in Malta at 12% of the transfer value.

A company's reserves are allocated to 5 tax accounts, namely the:

  • Final Tax Account (FTA)
  • Immovable Property Account (IPA)
  • Maltese Taxed Account (MTA)
  • Foreign Income Account (FIA)
  • Untaxed Account (UTA)

Indirect Taxes

VALUE ADDED TAX is levied under a self-assessment system - those registered establishing their own VAT liability, transferring the net amount due or claiming a net tax refund. VAT is charged by the person providing the goods or service at the time the transaction is taking place. The rate of tax is regulated by Art 19 and the Eighth Schedule of the VAT Act at either 18%, 7%, 5% or 0%. VAT is regulated by the Value Added Tax Act.

EXCISE DUTIES are governed by the Excise Duty Act. The category of goods and services considered as excisable are alcohol and alcoholic beverages, manufactured tobacco, energy products and mobile telephony services. The rates of duties applicable to such goods and services can be found in the Schedules attached to the Excise Duty Act.

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