Malta: Domestic Corporate Taxation
Scope of Income Tax
The Maltese Income Tax Act as amended governs company taxation. Malta imposes income tax on the world-wide income of companies resident in the country; this includes all companies incorporated or registered under any Maltese law if they are ordinarily resident, and any foreign company which is managed and controlled from Malta. The definition of income includes capital gains; there is no separate capital gains tax as such. However, capital losses can only be relieved against capital gains, so the distinction is preserved within the tax computation. Local-source income and foreign-source income are also treated separately within the computation; Maltese companies with foreign income maintain a Foreign Income Account for this purpose (see below).
Non-resident Maltese companies pay income tax on locally-sourced income including capital gains, and on income remitted to Malta (excluding capital gains).
Non-resident foreign companies pay income tax on locally-sourced income only (not including capital gains). Local interest and royalty income would normally be exempt.
The Income Tax Act lists a number of sources of taxable income:
- Trade or business;
- Profession or vocation;
- Employment or office;
- Interest and discounts;
- Pensions, charges, annuities and other annual payments;
- Rents and other profits arising from immovables or real rights thereon;
- Other gains or profits.