If you're considering company formation in Malta, it's important to understand the tax implications that come with it. Malta is known for its favorable tax laws and business-friendly environment, but it's essential to have a good understanding of the tax implications before making a decision. In this article, we'll cover everything you need to know about the tax implications of company formation in Malta and how to maximize your tax benefits.
If you're looking to establish a business in Malta, it's important to understand the country's tax system. Taxes in Malta can be complex, with different types of taxes, incentives, and deductions to consider. To help you navigate this maze of tax regulations, we've put together a comprehensive guide for business owners.
In 1998 a law was introduced requiring those responsible for operating businesses, or people who are self-employed in Malta to submit details to their Value Added Tax (VAT) Department. If you want to apply for VAT in Malta the information provided here will help you navigate your way through the steps you need to take and what to do if you are applying for VAT.
In Malta, the allowable rate of the VAT is 18%. However, a reduced VAT rate of 7% also exists and applies to tourism accommodation. The only resorts or hotels that can benefit from this reduction must be authorised by the Tourism Authority of Malta. There is also another reduced rate of 5% that applies to medical services and equipment, electricity, arts, printed materials and cultural events.
The VAT Act governs Malta’s value-added tax. It works hand in hand with its subsidiary legislation, which is concerned with company and individual VAT registration. As per the law, natural people and legal organisations that carry out economic activities are taxable. There are different registration types in Malta. Below are some activities that are categorised under the supply of goods and products and, therefore, liable for VAT.
Value Added Tax (VAT) was first introduced in Malta in 1995 although the system has gone through many changes since its conception. Most notably, was when Malta joined the European Union (EU) in 2004 and the VAT rate was aligned to the rate dictated by the EU’s Council Directive.