Business Environment

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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The financial year starts on 1st January and ends on 31st December of the same year.
Accounting Standards
The account reports need to conform to the norms decreed by the IAS (International Accounting Standards).
Accounting Regulation Bodies
Malta Institute of Accountants
Accounting Reports
The annual accounts should give a clear view of the company's assets, liabilities, financial position and profits or losses. It must comprise: the balance sheet, the profit and loss account, and the notes to the accounts.
Publication Requirements
According to the Companies Act of 1995, all Maltese companies are required to submit their account reports annually, showing correct and honest picture of the volume of the business done along with the justification of the various transactions performed.
Professional Accountancy Bodies
Accountancy Board
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). You can contact an external auditor: KPMG, Ernst & Young, PricewaterhouseCoopers and Deloitte.
Accounting News

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - It-taxxa fuq il-valur miżjud (Local Name)
Tax Rate
18%
Reduced Tax Rate
7% on tourist accommodation and use of sporting facilities.
5% on confectionery; medical equipment and accessories; printed matter (including e-books/audio books); supply of electricity; items for the exclusive use of the disabled; the importation of works of art, collectors’ items and antiques
0% on food, excluding catering; pharmaceutical goods; international transport; exports of goods and related services (to territories outside the EU); supplies to ships; supply of gold to the Central Bank of Malta.

Exempt supplies include: letting and transfer of immovable property; health and welfare; education; postal services; banking and insurance; grant and negotiation of credit and the management of credit by the grantor; supply by non-profit organizations of approved services related to sports or physical recreation; sports; lotteries; broadcasting; water.

Other Consumption Taxes
Excise duty is levied on the import of certain products including fuel, vehicles, cigarettes and alcohol, mobile telephony services. The exhaustive list of products subject to excise duty can be seen on the website of the Customs Office.
More detailed information on excise duties is available concerning alcoholic beverages, tobacco products, energy products on the European Commission website.

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Corporate Taxes

Company Tax
35%
(a tax rebate is available for distributed dividends: this system grants a shareholder the right to claim a refund of all or a part of the Malta tax paid on the qualifying profits out of which the dividend was distributed, resulting in an effective tax rate between 0% and 10%)
Tax Rate For Foreign Companies
A company incorporated in Malta is taxable on a worldwide basis. Foreign companies that are incorporated outside Malta but carry out business activities in the country are liable to tax on income arising or received in/remitted in Malta.
For tax purposes, a company not incorporated in Malta is considered resident if the management and control of its business is exercised in the country.
Capital Gains Taxation
Capital gains arising from the transfer of securities, copyrights, patents, trademarks and trade names and on the assignment of ownership rights over such properties are included in taxable income and taxed at the ordinary corporate tax rate. No tax is levied on investments that yield a fixed rate of return.
Non-resident companies are not subject to tax on their capital gains from the sale of long-term insurance policies, investments in a collective investment scheme or a resident firm (unless the assets of the latter are entirely or mainly composed of real estate).
Main Allowable Deductions and Tax Credits
Expenses that are wholly and exclusively incurred in the production of income are generally deductible when documented.
Depreciation of tangible and intangible assets is tax-deductible. Capital expenditure on intellectual property incurred to generate income can be deducted over the useful life of the intellectual property in question (in all cases, over a minimum period of three consecutive years). Goodwill related to the purchase of intellectual property may be deductible.
Some start-up costs, such as training, advertising or remunerations, may be deductible if they are incurred at the latest 18 months before the start of the business activity.
Interest expenses on capital used for commercial purposes are deductible. Doubtful debts proven with the tax authorities may be deducted from the tax.
Donations to charities and fines are generally not deductible.
Other deductions are provided for transportation costs of employees to and from the place of work using means of transport capable of carrying more than eight persons, and for the use of cars and the payment of employee compensation.
Payments of royalties, interest and service fees to foreign affiliates are normally tax-deductible. Commercial, operating or impairment losses may be carried forward indefinitely. The carryback of losses is not permitted.
Other Corporate Taxes
Property transfer taxes are levied at 8% (or 10% if the property is acquired before 1 January 2004). The rate is reduced to 5% on the sale of properties rehabilitated in urban conservation areas, as well as for the first EUR 400,000 of the transfer value of an immovable property. For promises of sale being signed until December 2021 with the final deed of transfer being signed until 30 June 2022, the rate is also at 5%. The first EUR 100,000 of any profits or gains arising on the assignment or cessation of any rights acquired under a promise of transfer of immovable property or any rights thereon are taxed at a rate of 15%; whereas the part over EUR 100,000 will continue to be subject to tax at 35%. Transfers of immovable property acquired through causa mortis or donation may be taxed at 12% on the difference between the transfer value and the acquisition value.
Stamp duties are mainly levied on real estate transfers at an ordinary rate of 5% (2% for properties located in Gozo). Stamp duties of 2% or 5% are also levied on the sale of shares of real estate companies.
Social security contributions payable by the employer amount to 10% of the salary, plus a fixed amount of EUR 49.97 per week for annual salaries exceeding EUR 25,258.48 (2022).
Other Domestic Resources
Inland Revenue Department (IRD)
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Malta OECD United States Germany
Number of Payments of Taxes per Year 8.0 10.1 10.6 9.0
Time Taken For Administrative Formalities (Hours) 139.0 163.6 175.0 218.0
Total Share of Taxes (% of Profit) 44.0 41.6 36.6 48.8

Source: Doing Business - Latest available data.

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Individual Taxes

Tax Rate

Income Tax - Single persons or married persons filing separately Progressive rate from 0% to 35%
EUR 0 to 9,100 0%
EUR 9,101 - 14,500 15%
EUR 14,501 - 19,500 25%
EUR 19,501 - 60,000 25%
Above EUR 60,000 35%
Married resident taxpayers
EUR 0 to 12,700 0%
EUR 12,701 - 21,200 15%
EUR 21,201 - 28,700 25%
EUR 28,701 -  60,000 30%
Above EUR 60,000 35%
Foreign-source income remitted to Malta by individuals benefiting under specific residence schemes 15%
Allowable Deductions and Tax Credits
Various deductions are allowed, including certain fees in connection with schools, child care, sports for children specified by the Minister of Finance and fees with respect to a registered private kindergarten; and fees paid on homes for the elderly. Alimony payments are deductible.
Employment expenses incurred wholly and exclusively in the production of the income can be deducted. Where the employer reimburses employees for expenses incurred on the employer's behalf, no tax liability should arise.
No personal allowances are granted under Maltese law.
Special Expatriate Tax Regime
Individuals who are both domiciled and ordinarily resident in Malta are taxed on their worldwide income. Any person who is ordinarily resident in Malta but not domiciled in the country is taxable only on income arising in Malta and on any foreign income remitted to Malta. Nevertheless, if the spouse is ordinarily resident and domiciled in Malta, a worldwide basis of taxation should apply for the other spouse too.
A non-resident individual is taxed only on income arising in Malta.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of Double Taxation Agreements signed by Malta
Withholding Taxes
There are no withholding taxes on dividends, interest or royalties. However, interest paid to residents could be taxed at 15% if it qualifies as investment income.
Bilateral Agreement
Mauritius and Malta are bound by a double taxation treaty to apply from 1st January, 2016. The treaty provides that dividends, interest and royalties will be taxed only in the State in which the recipient resides.

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Intellectual Property

National Organisations
The organization responsible for the protection of brands, industrial drawings and patents in Malta is the Industrial Property Registration Directorate.
Regional Organisations
Malta is member of the UCC (Universal Copyright Convention) since 1968.

Malta signed the Paris Convention for the Protection of Industrial Property, as well as the Berne Convention for the Protection of Literary and Artistic Works.

 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patents Act 2002
20 years
Trademark
 
Trademarks Act, 2001
A trademark is granted for a period of ten years which is renewable.
Design
 
Industrial Designs.
A design right is protected for a period of five years from the date of filling in the application and is renewable for one or more periods of five years up to a total term of 25 years.  
Copyright
 
Copyright Act 2000

 

Protection lasts 70 years after the end of the year in which the author dies, irrespective of the date when the work is made available to the author. WIPO Copyright Treaty
Industrial Models
 
Industrial Designs.
20 years  

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Legal Framework

Independence of Justice
The judiciary in Malta is independent.
Equal Treatment of Nationals and Foreigners
Foreign nationals can expect an impartial trial form the country's judicial system.
The Language of Justice
Maltese and English are the two judicial languages used in the country.
Recourse to an Interpreter
Malta is country's national language. However, English is widely used and considered as a second language. Therefore, the recourse to an interpreter is easy.
Sources of the Law and Legal Similarities
The main source of the law is the constitution of 1964 (amended many times). The country's legal system is based on English common law and Roman civil law (Napoleonic codes). English law has had since the early part of the last century, its fair share of influence on certain areas of criminal law and procedure (for example, the presumption of innocence). Malta being a member of the European Union, the national law in the country needs to comply with the conditions of the community legislation. 
Checking National Laws Online
Malta's main laws online (English and Maltese)

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Standards

National Standards Organisations
MCCAA, Malta Standards Authority
Integration in the International Standards Network
As Malta is member of the European Union, EU legislation in terms of standardization is applied in this field. The organization responsible for defining technical standards is the Malta Standards Authority (MSA).The MSA is a member of the International Standard Organization (ISO), of the European Committee for Standardization (CEN), of the European Committee for Electrotechnical Standardization (CENELEC), of the European Telecommunications Standards Institute (ETSI), of the International Electrotechnical Commission (IEC), and of the International Telecommunication Union (ITU).
Classification of Standards
Malta being part of the European Union, all products sold in the country are regulated by specific EU legislation (EU's General Product Safety Directive) as well as to possible additional national requirements. An important feature of EU standards is CE marking which is necessary for products which may pose a health or safety risk.
Online Consultation of Standards
A catalogue of Malta's standards can be found on the Malta Standards Authority website.
Certification Organisations
MCCAA Malta Competition and Consumer Affairs Authority

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Business Practices

General Information
Passport to trade, Business culture in Malta
Cultural Atlas, Business culture in Malta
Opening Hours and Days
Shops are generally open from 9.00 am to 1.00 pm and again from 4.00 pm to 7.00 pm. In tourist zones, various shops remain open till 10.00 pm. Shops are normally closed on Sundays and on public holidays.

Bank timings are generally from 8.30 am to 12.30 pm from Monday to Friday and from 8.30 am to 11.30 a.m. on Sunday.

The working hours for public administration offices are: 8.00 am to 4.30 pm during winters and 7.30 am to 1.00 pm in summers (Monday to Friday).

Finally, the companies generally remain open from 8.30 am to 4.00 pm from Monday to Friday.

 

Public Holidays

New Year's Day January 1
St Paul's shipwreck February 10
St Joseph March 19
Good Friday Depending on the dates
Freedom Day March 31
Worker's Day May 1
Sette Giugno June 7
St Peter and St Paul June 29
Assumption August 15
Victory Day September 8
Independence Day September 21
Immaculate Conception December 8
Republic Day December 13
Christmas Day December 25
 
 

Periods When Companies Usually Close

New Year holidays 3 days to a week closure around Christmas and New Year's eve
 

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Latest Update: July 2022