The year of assessment is a calendar year, but a company may obtain authorisation from the Maltese Commissioner for Revenue to have a different year-end (i.e. other than 31 December).
An income tax return for income earned during the previous year must be filed for every year of assessment. The tax return for a company must be submitted by the later of nine months following the end of the financial year or by 31 March following the year of assessment (however, in recent years, the Commissioner for Revenue has provided concessionary extensions to such statutory deadlines in the case where the tax return is submitted electronically). Penalties are incurred on late filing of returns. The tax return submitted by the company is a self-assessment, and the Commissioner for Revenue will not raise an assessment unless the Commissioner is not in agreement with the self-assessment.
Payment of tax
Companies are charged tax in the currency in which their share capital is denominated.
During the basis tax year, a company is generally required to make provisional tax (PT) payments every four months. In general, the PT payments are based on the last self-assessment filed by the company, and payments are divided into three instalments of 20%, 30%, and 50%, respectively. Any tax liability that is still due at the tax return date after deducting all tax credits must be settled immediately with the submission of the return. Interest at 0.33% per month is charged on any unpaid tax on or after 1 January 2020, whereas, following a recent legislative change, interest at 0.6% per month is charged on any unpaid tax on or after 1 June 2022.
In certain instances, especially for companies with mostly international operations, PT may not be payable, and the tax payment is normally paid on the earlier of the date profits are distributed or 18 months after the end of the relevant accounting period.
Tax audit process
The Maltese Commissioner for Revenue is entitled to raise an investigation and notify the taxpayer in writing that the department is initiating a tax enquiry. In such investigations, the taxpayer will typically be required to provide information and supporting documentation in respect of queries raised by the Revenue. The taxpayer has a right to appoint a representative on their behalf.
Statute of limitations
An assessment may be issued by the Maltese Commissioner for Revenue no later than five years from the end of the year in which the tax return is filed. In the event of non-full disclosure or wilful incorrect/misleading information, the aforesaid prescription period will not apply.
In respect of the payment of tax, additional tax, interest, or any penalty, an action may be taken during any time from the date on which it becomes due and payable up to eight years from that date or, where an assessment in respect thereof has been made, from the date on which that assessment becomes final and conclusive.
Topics of focus for tax authorities
The Maltese Commissioner for Revenue follows international tax developments closely and is also involved in discussions and representations on such matters in various fora.