The Malta tax system is an efficient fiscal regime which, in particular when used in combination with Malta’s network of double tax treaties, offers a number of benefits to companies that are domiciled in Malta. Historically, however, this tax regime has suffered criticism and the labelling of Malta as a potential tax ‘haven’, resulted in an investigation by the European Investigative Collaborations (EIC).
In 2017 the OECD assessed Malta’s tax regime and approved Malta as a tax compliant jurisdiction. The OECD has also recently published an interactive tax map showing the results of peer reviews in over 140 countries regarding how they are addressing issues related to tax transparency, Base Erosion and Profit Sharing (BEPS).
An Overview of The Malta Tax Regime
- Malta offers an attractive regime that avoids double taxation on taxed company profits, distributed as dividends.
- Malta companies are taxed at a rate of 35%, however a full imputation system applies. When the beneficial owner is non-resident in Malta, shareholders are entitled to claim a tax refund of 6/7ths of the relevant tax paid in respect of trading income and 5/7ths of the relevant tax paid in respect of passive interest and royalties.
- Income and gains from a participating holding (where a company holds directly at least 10% of the equity shares of a non-resident company, and/or meets certain other criteria) are exempt from tax.
OECD Approval and the International Tax Co-Operative Report
As part of its assessment, the OECD reviews a jurisdiction’s tax regime in relation to its compliance with Exchange of Information on Request (EOIR), Automatic Exchange of Information (AEOI), and Base Erosion and Profit Shifting (BEPS) tax planning strategies. These are considered in relation to intellectual property, finance and leasing, banking and insurance, distribution and service centres, shipping, holding company and fund management regimes.
The 2017 OECD International Tax Co-Operative Report confirmed that Malta actively follows all of the EU tax directives and offers no “harmful features” within the tax regime, for the purpose of base erosion and profit shifting. The Minister of Finance, Edward Scicluna responded to the report: “indicators just published by the OECD portray Malta as a tax-compliant jurisdiction […] Thus, while we intend to continue to be one of the competitive choices in the Mediterranean for investors, we are resolute to keep to the best international standards on taxation matters”.
As part of continuing efforts to extend transparency, Malta continues to comply with Exchange of Information on Request and has signed the Multilateral Competent Authority Agreement for Country-by-Country Reporting (CbC MCAA), an information exchange network that allows signatories to automatically exchange Country-by-Country Reports with each other in relation to multinational organisations.
Dixcart has an office in Malta and has assisted a number of clients in establishing and managing their companies in this jurisdiction. It is pleasing that Malta’s tax regime has been ‘approved’ and at the same time, Malta remains an attractive option for international trading groups.
Dixcart can assist clients with:
- Formation of holding companies
- Registered office facilities
- Provision of serviced offices
- Tax compliance services
- Accountancy services
- Director services
- Dealing with all aspects of corporate acquisitions and disposals
- Advise on Malta’s extensive double tax treaty network
For more information regarding the Malta tax regime, please contact Jonathan Vassallo at the Dixcart office in Malta: firstname.lastname@example.org. Alternatively, please speak to your usual Dixcart contact.