Taxation of enterprises in Malta

Taxation of enterprises in Malta

Maltese enterprises are subject to the application of a 35% tax rate on their total income and holding gains.

Malta grants various tax incentives to companies and their shareholders on the distribution of dividends. Furthermore, the country is a member of the EU and therefore has access to EU directives, such as the directive on parent companies and subsidiaries, the merger directive, the savings directive and the interest and royalty directive.

In addition, Malta has a comprehensive network of treaties and, thus far, has concluded more than 65 agreements to avoid double taxation.

Malta’s treaties are largely based on the OECD Model Tax Convention and guarantee the exemption from double taxation using the credit system.

Malta has adopted the full imputation system, this means that the tax paid by an enterprise is, on distribution of dividends, imputed to the shareholder as a tax credit against the shareholder’s tax liability. No tax is withheld on the distribution of interest and royalties to non-resident beneficiaries of this income. No tax is deducted on the distribution of dividends regardless of shareholders’ residence and nationality.

Malta does not have a set of rules such as the CFC legislation, the rules on thin capitalisation and transfer pricing.