Malta

Corporate - Significant developments

Last reviewed - 11 August 2022

The following are some of the more recent significant developments that were introduced in Maltese tax law:

  • An enabling provision with respect to transfer pricing has been introduced in the Maltese Income Tax Act providing for the possibility for the competent Minister to enact rules for transfer pricing. The expectation is that such rules would come into effect in the foreseeable future. The Commissioner for Revenue issued draft Transfer Pricing Rules for public consultation in December 2021, with a consultation period that ran until 28 February 2022.
  • The possibility of setting up protected/segregated cell companies in the aviation and shipping sectors has been introduced in Maltese law. Such cell companies allow for the possibility of segregating vessels or aircraft portfolios within the same corporate entity, thus segregating the risks and benefits attributable to the particular cell, without affecting the risks and benefits attributable to other cells within the same cell company.
  • By means of the Consolidated Group Income Tax Rules, a parent company and its 95% subsidiary can form a fiscal unit for income tax consolidation, provided certain conditions are satisfied.
  • The Patent Box Regime Deduction Rules provide for deductibility rules applicable to income derived from qualifying intellectual property (IP).
  • Further tax incentives have been introduced for occupational pension schemes.
  • The minimum shareholding requirement of a ‘participating holding’ under the Maltese Income Tax Act has been reduced from 10% to 5%. This enables Maltese companies holding at least 5% of the equity shares, rather than 10%, to claim a participation exemption (subject to the satisfaction of other conditions) on dividend income and gains derived by a Maltese company from a qualifying ‘participating holding’ or from the disposal of such holding (apart from this 5% minimum equity holding, there may be other alternative conditions to qualify for the participation exemption). 
  • A notional interest deduction (NID) system, aiming to approximate the tax treatment of equity with that of debt.
  • The Agreement between the Government of the Republic of Armenia and the Government of the Republic of Malta for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance entered into force on 25 November 2021.
  • By virtue of a number of schemes, such as the Investment Aid for Energy Efficiency Projects Regulations and a number of research and development (R&D) schemes, undertakings operating in various industries may qualify for assistance by the Malta Enterprise.