Malta Country Profile taxation trade issues

Malta

TAXES - ACCOUNTING

Corporate tax

Tax rate for resident companies	The resident companies are subjected to income tax on their worldwide income. The standard rate of tax on the companies is 35%. The tax rate varies from case to case : - 30% - 35% for the companies listed on the Maltese Stock Exchange - 4.17% for the International Trading Companies (ITC). It is applicable to only those Maltese companies doing trading outside Malta with non-resident Maltese people -taxation rate of 0% for International Holding Companies (IHC). It is applicable to those Maltese companies which generate their income outside Malta.

Tax rate on long-term capital gains	The income tax on long term plus values is 35% for the resident companies.

System governing groups of companies and dividends paid by subsidiaries to their parent companies	The dividends received by the foreign companies from their daughter companies operating in Malta are subject to a tax deduction at source at the rate of 35%.

Tax rate on branches	The branches of both resident and non-resident companies with their management and control in Malta are subject to the same tax rates.

Income tax

Fiscal year

The financial year starts on 1st January and ends on 31st December of the same year.

Income tax rate

People physically living in Malta are subject to income tax on their worldwide income. The rate of income tax in 2004 for a bachelor isin (bracket by bracket) is :

0 - 3100 MTL	0%
3101 - 4100 MTL	15%
4101 - 5000 MTL	20%
5001 - 6000 MTL	25%
6001 - 6750 MTL	30%
beyond 6750 MTL	35%

VAT rates

Standard rates	18%

Reduced rates	A reduced tax rate of 5% is applicable to hotels and electricity. Medicines, food products, banking and insurance products are not subject to VAT.

Accounting

General accounting principles
According to the companies act (Companies Act) of 1995, the Maltese companies are required to submit their account reports showing correct and honest picture of the volume of the business done, along with justification of the various financial transactions involved.
The account reports of the companies need to conform to the norms decreed by theIAS (International Accounting Standards).
The Malta Institute of Accountants (MIA) is the organisation responsible for implementation of the IAS norms on the companies located in the country.

Certification and auditing
The Maltese companies need to appoint one or more than one external auditors for validating the annual account statements which are presented during their annual general meetings. An auditor has to be competent enough to conduct such audits and should confirm to the requirements as given in the Chapter IX of the companies act (Companies Act of 1995).

Useful links

For more information on the Maltese accounting system, you can refer consult the guide to accounting system on Malta published by Deloitte & Touche (PDF file).

Last modified in 2006 - ongoing update