Malta offshore companies- Maltese Offshore Company Incorporation Offshore Financial Services

Malta Trading Companies

TAXATION OF MALTA COMPANIES

1. Taxation system

2. Tax Computation

3. Procedure for Refund

4. Advanced Revenue Rulings

5. Other taxes

Taxation system

While Malta Companies are subject to the normal corporate tax rate applicable to all onshore companies, the extensive network of double taxation agreements, together with the full imputation system of taxation and provisions for tax refunds contained in the legislation make Malta a very tax efficient jurisdiction for non-resident shareholders.

A Malta Company is taxed at the normal company rate of tax which is currently 35%. However, upon a receipt of a dividend from a Malta Company, non-resident shareholders are:

taxed at a flat rate of 27.5% on the gross amount of the dividend and are credited with the amount of tax paid by the company on the profits out of which the dividend was paid;
entitled to a refund of two-thirds of the Malta tax paid by the company on the same profits. This refund is payable not later than the fourteenth day following the end of the month in which the refund becomes due.

Tax computation

The following example illustrates the tax workings relating to ITCs:

Tax Computation for Non-resident shareholders (or Malta company wholly owned by non-residents)	US$	US$
Company’s Chargeable income	100.00
Less: Tax paid by Company (@ 35%)	(35.00)
Net dividend received from Malta Company		65.00
Tax Liability (27.5% of Malta’s pre-tax profits)	(27.500)
Tax Credit (Tax paid by Company)	+ 35
Refund of 2/3 of tax paid by Company (on application)	+ 23.33
Net Refund		+30.83
Net Dividend after Tax		95.83
Effective Tax Liability		4.17%

Procedure for Refund

On the distribution of dividends to non-resident shareholders or to Malta companies which are 100% owned by non-residents, a refund equivalent to 2/3 of the tax paid by the Malta Company becomes due. These refunds are paid by the Inland Revenue Department to the non-resident shareholders within 14 days from the date of the request made to the Department.

Advance Revenue Rulings

International trading and holding companies may request an advance ruling on their taxable status. Such a ruling guarantees the tax position of the company for a minimum period of five years and may be renewed for a further period of five years. Any changes in the tax legislation during these periods will not become operative before the lapse of two years from the coming into force of the new law.

Other taxes

No withholding taxes, stamp duties or exchange control restrictions apply on distribution of the profits or dividends to the shareholders and there are no taxes or restrictions on the exportation of the dividends from ITC. This means that funds finding their way to Malta may be remitted anywhere around the world.

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