Malta: Release of the 2017 budget

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Malta: Release of the 2017 budget

intl-updates-small.jpg

The main theme of the Malta's 2017 budget, from a commercial perspective, is to incentivise the markets, boost business creation and attract foreign direct investment. At the core of the budget document are a number of tax measures and incentives.

salomone.jpg
cassar.jpg

Mark Galea Salomone

Kirsten Cassar

Malta's Minister of Finance Edward Scicluna presented the 2017 budget to parliament on October 17 2016.

As of next year, shareholders holding no more than 0.5% of the nominal share capital of companies listed on the Malta Stock Exchange may claim a refund for tax paid at source upon receipt of dividends from such qualifying holdings. This will be applicable to distributions made from profits derived after January 1 2017. In addition, fiscal incentives for the sale of shares on the Malta Stock Exchange will be extended.

To date, domestic tax legislation has exempted from income tax gains or profits arising from the transfer of shares listed on the Malta Stock Exchange, provided that they are not securities in a collective investment scheme. The exemption will also apply where the transfer is made by an individual who held the shares immediately prior to listing. This is a departure from the previous 15% tax on such gains or profits. This incentive will also be applicable to listings on alternative trading platforms.

Separately, the budget has proposed the introduction of the concept of fiscal consolidation into Maltese income tax legislation. This will allow companies forming part of a group to be treated as a single taxpayer, thus, computing their taxable income on a consolidated basis. Moreover, amendments to existing legislation are expected in order to strengthen insurance, collective investment schemes and securitisation products, as well as to grant the same tax benefits, currently provided to debt, to equity investments.

A host of tax credits have also been proposed in order to incentivise the markets, including:

  • Establishing the risk investment scheme, targeting investment in small and medium-sized enterprises (SMEs) and prospects (a scheme designed for SMEs to raise capital through the market) with the possibility of benefitting from a tax credit of up to €250,000 ($274,000);

  • Establishing a research scheme whereby researchers can claim a tax credit of between 25% and 45% on their research costs; and

  • Introducing a gaming scheme where developers of games may benefit from a tax credit of up to 30% on development costs.

Other notable tax measures include:

  • Tax credits for employers that invest in private pension plans for their employees;

  • Removing income tax on pensions for pensioners over 61 years of age, whether the pension is local or foreign, the exempt ceiling is being set at a maximum of €13,000;

  • Introducing a 12-month concession whereby stamp duty will be reduced from 5% to 1.5% when there is a transfer of business from a parent to his descendants;

  • Reducing the duty on the acquisition of residential immovable property in Gozo from 5% to 2%; and

  • Establishing the joint enforcement taskforce in the fight against unfair competition, income tax and VAT evasion.

Mark Galea Salomone (mark.galeasalomone@camilleripreziosi.com) and Kirsten Cassar (kirsten.cassar@camilleripreziosi.com)

Camilleri Preziosi

Tel: +356 2123 8989

Website: www.camilleripreziosi.com

more across site & shared bottom lb ros

More from across our site

Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
DLA Piper’s co-head of tax for the US and Latin America tells ITR about her fervent belief in equal access to the law, loving yoga, and paternal inspirations
Tax expert Craig Hillier agrees with the comparison of pillar two to using a sledgehammer to crack a nut
The amount is reported to be up 57% from the £5.6bn that the UK tax agency believes was underpaid in the previous year
The US president also unveiled a new 50% levy on copper imports; in other news, a UK wealth tax proposal has been criticised by the Institute for Fiscal Studies
Wim Wuyts, who had been head of the specialist tax network since 2017, is moving on to a new role with WTS’s Belgian member firm
MNEs are increasingly using algorithmic tools in TP. Sahasranshu Dash argues that data ethics should therefore plug directly into the TP design process
The Institute of Chartered Accountants in England and Wales also queried whether HMRC resources could be better spent scrutinising larger entities
Gift this article