Malta: Budget 2015: New and revised tax measures
Malta's Budget for 2015, presented to Parliament on November 17 2014, includes a number of measures which will have an impact on the tax landscape. These measures are expected to come into effect in the course of 2015. An outline of the salient features follows.
Tax credits – Seed Investment Programme
It has been announced that a tax credit will be introduced to promote investment in start-up companies setting up shop in Malta. Such tax credit will be equivalent to the capital invested in such companies up to a maximum of €250,000 ($310,000). Additional regulations providing for this programme are expected to be published in due course.
Taxation on transfers of immovable property in Malta
As from January 1 2015, the final withholding tax on transfers of immovable property acquired after January 1 2004 will be reduced from 12% to 8% of the transfer value while the rate in respect of transfers of immovable property acquired before January 1 2004 will be 10%. It will no longer be possible to go for the alternative now available in some cases which permits taxpayers to opt out of the final tax system and therefore be taxed on the gain made on the disposal of immovable property situated in Malta. Furthermore, no deduction of expenses will be allowed in arriving at the transfer value. The final tax is payable on the date of the contract of sale.
Individuals who do not trade in immovable property and who transfer such property within five years from the date of acquisition will be taxed at 5% (instead of 8%) on the transfer value.
Exemptions applicable on certain transfers of immovable property, such as in cases of a transfer of property which has been occupied as a residential property for at least three years, transfers between group companies, or sales by court order, will continue to apply.
Measures to combat tax evasion
The government expressed its intent to continue to combat tax evasion. In this respect, a number of anti-abuse measures are being introduced including: (i) the launch of a pilot project to enable Malta's Inland Revenue Department to obtain and analyse information already available in the public sector; (ii) enhanced training for tax inspectors; and (iii) promoting the use of electronic payments. A new enforcement unit is also intended to be introduced to support the customs authority.
These initiatives are complementary to the commitment Malta has shown in the international tax sphere towards ensuring due compliance by taxpayers with applicable tax rules. In this respect it is notable that Malta has entered into a number of tax information exchange agreements (TIEAs), including with countries such as the Bahamas, Bermuda, the Cayman Islands and Gibraltar, and has signed an intergovernmental agreement with the US for the purposes of implementing FATCA. Malta also signed up to the new global standard on automatic exchange of information on October 29 2014.
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