Malta Corporate Income Tax: Your comprehensive guide

9 months ago   •   .6 min read

.By İlayda Birol
.Table of contents

What is corporate income tax and how does it affect your Malta-based business? Stay with us as we walk you through everything you need to know.

All profits earned by corporations (and various other business entities) have a government-imposed tax placed on them. This is called corporate income tax. It is calculated based on a company’s taxable income. Corporate income tax rate differs per country and even region. Companies need to keep accurate financial records and file their taxes annually. There are of course nuances to the corporate tax laws in each country ⁠–⁠ and this guide will focus on corporate income tax in Malta.

Corporate income tax is an important part of Malta’s fiscal framework. It contributes to the nation’s revenue streams. As a business owner or investor in Malta, you’ll need a thorough understanding of its corporate income tax structure. This guide will demystify the complexities of corporate income tax in Malta. It will also equip you with insights to make informed financial decisions. From unravelling tax rates and calculations to exploring tax-saving strategies, this guide covers it all.

Corporate income tax rates

If you’re on the fence about moving your business to Malta, or starting a business in Malta, this information might convince you. Malta boasts a competitive corporate income tax rate. The current rate sits at 35%, but there are many incentives that need to be considered as well. This rate alone positions Malta favourably on the global stage and supports its reputation as a business-friendly jurisdiction. As you can tell, Malta is an attractive place to run a business from!

Taxable income calculation for corporations

When calculating your company’s taxable income, you’ll need to take various elements into account. These include your company’s allowable expenses, deductions and adjustments. To minimise your tax liability and to make sure your tax calculations are always correct, you will need to be familiar with all these elements.

Dividends and tax implications

In Malta, when a company pays tax on its profits, shareholders are eligible for a tax credit. This amount is equivalent to the tax paid by the company. This unique system incentivizes investment in Malta. It has also contributed to Malta's appeal as a holding company location.

Tax-saving strategies for corporate income tax

Taking advantage of tax incentives

In Malta, the government has set up various tax incentives. These are designed to stimulate economic growth and attract investments. These incentives include benefits for research and development (R&D) activities and the intellectual property (IP) regime. You can read more about this in Understanding the tax system in Malta: Your guide to Malta's company tax rates. If you take advantage of these incentives you can significantly reduce your corporate income tax liability.

Efficient corporate structuring

Choose the right corporate structure for your company. This can lead to substantial tax savings. For example, holding companies can benefit from participation exemption on dividends and capital gains. This makes them a strategic choice for businesses with subsidiaries.

Timing of dividends and participating holding exemption

If you strategically time when dividends are distributed you can significantly affect the tax liability of both companies and their shareholders. The timing can be influenced by tax rates in a specific year. It could mean you’re able to reduce your overall tax burden. Additionally, the participating holding exemption is mentioned. This offers reduced tax rates on dividends, particularly for investments in subsidiaries. This exemption makes investing in subsidiary companies more appealing because of the tax advantages it provides.

Utilising double taxation treaties

Double taxation treaties are important so that your company doesn’t get taxed twice in different countries. For example, in cases where your company might earn income across borders. Malta's extensive network of double taxation treaties has the potential to greatly influence how cross-border transactions are taxed. These treaties make sure that your company gets fair and reasonable tax treatment across jurisdictions. It also promotes international trade and investment.

wamo's 1% Cashback Campaign: Fueling Success for Maltese Businesses

Your successful business needs successful partners to open new doors for you. As a local Maltese company itself, wamo started offering a 1% cashback for all government payments made to the Maltese government. This exclusive offer for the Maltese businesses not only helps you meet your tax obligations to the Maltese government but also rewards your business for doing so. Best part is, there is no maximum limit, the more payment to the government you make with your wamo debit card, the more you earn. Imagine earning money from every tax, fee, contribution you pay to the government. Well, this is exactly what this is!

With wamo's cashback campaign, your business can earn a substantial 1% cashback on a wide range of tax payments, covering income tax, VAT, Social Security contributions, corporate taxes, and more. What's remarkable is that it extends to all payments to the government, encompassing fines, contributions, and various fees.

Participating in this rewarding campaign is a very simple. Just follow our guideline:

  1. Register your business account with wamo.
  2. Complete the onboarding process.
  3. Create your visa debit card within the app.
  4. Follow our straightforward guidelines to complete payments here.

As you make your payments with the business debit card, you will be eligible to earn your cashback. On the last day of the next month, we’ll credit this amount to your business account automatically.

This enticing 1% cashback offer is available to all businesses registered in Malta and is valid for one year, commencing on September 1, 2023. To ensure your eligibility and access the terms and conditions, please visit this page, or feel free to reach out to our team to start your onboarding journey.

Embrace this opportunity to turn corporate tax payments into a financial advantage. The wamo tax cashback campaign complements Malta's tax incentives, allowing you to navigate corporate income tax in a way that maximises rewards and minimises costs.

And yes, all tax payments and additional payments will count towards this cashback, so the more you move your mandatory payments to wamo business debit card, the more you’ll be able to take advantage of our campaign.

All you need to know about taxes for small businesses
Have questions about the taxes you need to pay for your small business? Detailed information on small business taxes is on the wamo blog.

Compliance and documentation

As with any tax-related admin, you will need to keep meticulous records to stay on top of your corporate income tax. Stay compliant by keeping comprehensive documentation of all relevant financial information.  Getting the right systems in place now will help you out later on! 

Transfer pricing documentation

If your company does any cross-border transactions then transfer pricing documentation is essential. This documentation is important to show that the transactions are conducted at arm's length, in accordance with international standards.

As you can tell by now, mastering Malta's corporate income tax landscape requires a multifaceted approach. Through this guide you should now understand tax rates and how to structure your business. You also know about capitalising on tax incentives and embracing innovative campaigns like the wamo tax cashback! You're all set to make the most of your corporate tax strategy.

We hope this guide will encourage you to align with Malta's tax regulations, leverage tax-saving opportunities, and maintain compliance through proper documentation. These steps will improve your company's financial performance. They will also help you to contribute to the broader economic growth and stability of the nation.

Resources for further information

Thank you for letting us guide you through all things corporate income tax in Malta! For up-to-date information on Malta's corporate income tax regulations and incentives, consult reputable sources such as the Malta Financial Services Authority (MFSA) and the Maltese Inland Revenue Department.

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