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Malta: Domestic Corporate Taxation


According to the 2008 Forbes Tax Misery and Reform Index, Malta emerged as the 5th most tax friendly country for companies and the most attractive country in the EU in terms of taxes and social security contributions paid out by companies. The ranking fell considerably in the 2009 index to 38th place and to 50th in 2010.

Used to analyse the investing climate, the index measures the amount of increased ‘misery’ or ‘reform’ towards tax friendliness and evaluates whether policy attracts or repels capital and talent. The countries at the top of the chart impose the harshest taxes while those at the bottom are the most tax friendly.

Malta’s entry into the EU has greatly strengthened its position and appeal to investors. Benefits include a good tax system with a network of double taxation agreements in place with some 70 countries, a flat income tax rate of 15% on remittances by permanent residents and no municipal taxes. Other incentives include an excellent infrastructure, and a skilled workforce of English-speaking locals and an enviable location.

In November 2008, the Maltese Prime Minister Lawrence Gonzi introduced a number of tax changes in his 2009 budget, which was set to reinforce Malta as an ‘eco-island’ with EUR152m of investment into environmental projects and alternative energy incentives. The main rates of personal and corporate income tax were left on hold.

The Maltese government reduced penalties for late payment of income tax and VAT: penalties for late payment of income tax and VAT were reduced from 12% to 9% per year; the monthly rates were reduced from 1% to 0.75%, effective from January 1, 2009.

The Budget 2012, announced in November, 2011, contained a 'VAT arrears settlement scheme' whereby companies and individuals with VAT arrears were encouraged to regulate their affairs by means of a reduction in penalties and interest. Returns which were due to have been filed by October 15, 2011, had to be filed with the department by January 15, 2012. In March 2012, an extension to the scheme was announced with the new deadline of April 15, 2012 and payment due by May 31, 2012. However, VAT returns due on November 15, 2011, and any subsequent months, had to be submitted and settled by the end of the extension deadline.



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