Corporate Tax

A limited liability company incorporated in Malta is deemed to be domiciled and resident in Malta for tax purposes, and is therefore taxable on its  world-wide income and capital gains, whether such income is arising in Malta or otherwise and whether received in Malta or otherwise.

The Companies Act of Malta allows, subject to certain conditions, for a Company which is not incorporated in Malta to opt to re-domicile to Malta without having to go through the formal dissolution and winding up procedures. No tax or levy is imposed upon companies re-domiciling to Malta.

When a company is not incorporated in Malta, but however carries out the main and administration and control of the Company in Malta the Company will be deemed to be a resident of Malta for tax purposes and is therefore subject to tax on income remitted to Malta.

A company which is taxable in Malta is subject to a flat rate of 35% Corporate Tax.  Owing to the full imputation system adopted by Malta there is no further tax imposed upon the shareholders of the company. The shareholders of the Company are however entitled to a major refund of the tax paid by the Company.  Following the refund the effective net tax paid would be that of anything between 0%-10%.

The shareholders must submit an application to the Malta Inland Revenue through their tax representative following a distribution of a dividend to them. The refund is generally received within 14 days from the receipt of their application.

The refunds provided for under the Maltese legal system are the following:

  • 6/7th refunds of the tax paid on trading profits earned by the company. Ultimate effective tax paid : 5%.
  • 5/7th refunds of the tax paid on passive interest and royalties earned by the company. Ultimate effective tax paid :10%. 
  • Royalty and similar income, including copyright derived from qualifying patents and copyright which income would be chargeable to a company’s trading income or income derived from royalties are subject to a complete tax exemption 
  • 2/3rd refund of the tax paid when claiming double taxation relief.

 

All refunds contemplated are indirectly available only to non-resident persons. Provided that the beneficial owner of the income and gain, as the case may be, is a person not resident in Malta and such person is not owned and controlled by, directly or indirectly, nor acts on behalf of an individual or individuals who are ordinarily resident and domiciled in Malta.

 

Persons who are ordinary resident but not domiciled or permanent residence may benefit from such refunds through guided corporate structuring.

Further fiscal benefits arising from the Malta Corporate Tax System are that

  • There are no withholding taxes on payment of dividends to non-resident shareholders
  • There are no capital gains/tax arising from the sale of shares by non-residents persons
  • There are no CFC  rules or transfer pricing and thin capitalisation restrictions
  • Malta has an extensive network of over 50 double taxation treaties which allow for effective tax planning opportunities
  • Malta has a number of tax programs which provide for a minimal amount of personal taxation , which also allow for effective tax planning opportunities
  • Malta has further fiscal benefits to particular sectors, such as the shipping sector, where, subject to certain conditions, all income received is taxed at 0%


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