Corporate Tax Services in Malta

Corporate Tax in Malta: An Overview

Malta's corporate tax system is among the most distinctive in Europe, combining a headline rate of 35% with a full imputation system that effectively reduces the overall tax burden for shareholders when profits are distributed. This system has made Malta an attractive jurisdiction for business, but it also requires careful management to ensure companies comply with their obligations and take full advantage of the benefits available.

Under the Income Tax Act (Cap. 123), every company resident in Malta is subject to income tax on its worldwide income. Non-resident companies are taxed only on income arising in Malta. The financial year for tax purposes generally follows the company's accounting period, and companies must file an annual tax return with the Commissioner for Revenue within nine months of the end of their accounting period.

Corporate tax compliance in Malta involves several interconnected obligations: maintaining proper accounting records, preparing financial statements in accordance with IFRS (or the General Accounting Principles for Smaller Entities where applicable), computing the tax liability based on assessable income and allowable deductions, making provisional tax payments throughout the year, filing the annual return, and managing shareholder tax refund applications where dividends are distributed.

At Said Accounting, we manage every element of corporate tax compliance for our clients. Steve Said, our ACCA-qualified Certified Public Accountant, brings deep expertise in Maltese corporate tax law to ensure your company meets all its obligations while minimising the tax burden within the boundaries of the law.

What Our Corporate Tax Service Includes

Our corporate tax service is designed to be comprehensive, covering every obligation from provisional tax payments to final assessments. Here is what you receive when you engage Said Accounting:

• Tax computation preparation: We prepare a detailed tax computation for your company, starting from the accounting profit per your financial statements and making all necessary adjustments for items that are not deductible for tax purposes (such as entertainment expenses, fines, and certain provisions) and items that receive favourable tax treatment (such as capital allowances). The result is an accurate calculation of your company's assessable income and tax liability.
• Annual tax return filing: We complete and file your company's annual income tax return (the TA24 return for companies) electronically with the Commissioner for Revenue. Every figure is cross-referenced to the underlying financial statements and tax computation to ensure consistency and accuracy.
• Provisional tax calculations: We calculate your company's provisional tax obligations for each financial year. Maltese companies must make three instalment payments, and the amounts are based on either the current year's estimated liability or the previous year's actual liability, whichever methodology applies. We determine the correct amounts and remind you of the payment deadlines.
• Capital allowances claims: We ensure your company claims the maximum capital allowances (wear and tear deductions) available on qualifying assets such as computer equipment, furniture, fixtures, motor vehicles, plant and machinery, and industrial buildings. Proper capital allowance planning can significantly reduce your taxable profits.
• Loss utilisation: If your company incurs tax losses, we advise on how those losses can be carried forward and set off against future profits, or how group relief provisions might allow losses to be shared between related companies. Effective loss management is an important element of corporate tax planning.
• Shareholder tax refund applications: Malta's imputation system allows shareholders of Maltese companies to apply for refunds of up to 6/7ths of the tax paid by the company on distributed profits (in most cases). We prepare and submit these refund applications, ensuring all conditions are met and documentation is in order for the fastest possible processing.
• Dividend distribution management: We advise on the timing and structure of dividend distributions to optimise the tax position of both the company and its shareholders, taking into account the different tax accounts (Final Tax Account, Immovable Property Account, Foreign Income Account, Maltese Taxed Account, and Untaxed Account) from which dividends may be allocated.

Malta's Full Imputation System Explained

Malta's corporate tax system operates on a full imputation basis, which is central to understanding why the effective tax rate for many businesses is significantly lower than the headline 35%. Here is how it works in practice:

When a Maltese company earns profits, it pays income tax at 35%. When those profits are distributed to shareholders as dividends, the shareholders receive a tax credit equal to the tax already paid by the company. The shareholders are then assessed to tax on the gross dividend (including the tax credit) at their personal or corporate tax rate. If the shareholder's tax rate is lower than 35%, they receive a refund of the excess tax. Even if the shareholder's tax rate equals 35%, they pay no additional tax because the company's tax payment is fully credited to them.

Additionally, Maltese shareholders (and in many cases, non-resident shareholders) can apply for a refund of a portion of the tax paid by the company. The most common refund is 6/7ths of the tax paid, resulting in an effective tax rate of 5% on distributed profits. Other refund fractions apply in specific circumstances, such as 5/7ths for passive interest and royalties, or 2/3rds for income benefiting from double taxation relief.

Navigating this system correctly requires careful record-keeping, accurate allocation of dividends to the correct tax accounts, and timely submission of refund applications. This is an area where the expertise of an ACCA-qualified accountant is invaluable, and it is one of the core strengths of our corporate tax service.

Who Our Corporate Tax Service Is For

Our corporate tax service is designed for companies of all sizes operating in Malta. We work with:

• Local SMEs: Small and medium-sized companies that form the backbone of the Maltese economy. Whether you run a trading company, a professional practice, or a service business, we handle your corporate tax efficiently and affordably.
• Newly incorporated companies: If you have recently completed your company formation, we set up your tax registrations, calculate your first provisional tax payments, and prepare your first tax return. Getting the foundations right from the start saves time and money in future years.
• Holding companies: Companies that hold shares in subsidiaries and receive dividend income. We manage the tax implications of holding structures, including participation exemptions and inter-company dividends.
• Companies with international operations: Businesses that trade across borders, have foreign subsidiaries, or receive income from outside Malta. We advise on double taxation treaties, foreign tax credits, and the tax treatment of international income.

Trusted by SMEs across Malta, we provide consistent, high-quality corporate tax services from our office in Mosta, serving clients in every part of the island.

Why Choose Said Accounting for Corporate Tax

Corporate tax is a specialised area that demands both technical knowledge and attention to detail. Errors in tax returns can lead to assessments, penalties, and lost refund opportunities. Here is why businesses across Malta trust Said Accounting with their corporate tax:

• ACCA-qualified precision: Steve Said's ACCA qualification and CPA status ensure your tax affairs are handled by a professional with the highest standards of competence and ethics.
• Integrated approach: Our corporate tax service integrates with our bookkeeping and VAT services. When the same team manages your accounts and your tax, the result is seamless, accurate, and efficient.
• Maximised refunds: We ensure shareholder refund applications are prepared correctly and submitted promptly, so you recover the maximum amount in the shortest time.
• Year-round support: Corporate tax is not a once-a-year exercise. We manage provisional tax payments, advise on transactions with tax implications throughout the year, and provide proactive planning to optimise your position.
• Based in Mosta, serving all of Malta: Our central location and digital-first approach mean we serve clients across the entire island efficiently and conveniently.

Getting Started with Corporate Tax Services

Whether your company needs its first tax return prepared or you want to switch to a more proactive, expert tax service provider, we make the transition straightforward. Contact Steve Said for a free, no-obligation consultation. We will review your company's current tax position, identify any compliance gaps or planning opportunities, and provide a clear proposal for our services. From provisional tax management to year-end returns and shareholder refunds, Said Accounting handles every aspect of your corporate tax so you can focus on growing your business.