Malta has a competitive jurisdiction for tax planning and corporate structures and one of the advantages is the full imputation system. A company incorporated in Malta is chargeable to tax here as well and would be subject to tax on chargeable income arising in Malta, chargeable income arising outside Malta (if the income is received in or remitted to Malta) and chargeable gains realized in Malta (such gains realized outside Malta are exempt even if received in Malta).
There is a flat rate of 35% company tax but Malta operates a full imputation system. This means the overall effective tax rate for companies incorporated in Malta is 5%. Malta also has double taxation relief available domestically such as treaty relief, unilateral relief and flat rate foreign tax credit. Combining the tax relief mechanisms and the full imputation system the tax rate will typically be reduced from 35% to between 0% and 6.25%.
- Corporate Income Tax
- Personal Income Tax
In Malta there are two accounting standards applicable to companies depending on their size. Most companies fall under the accountancy principles which conform to the International Financial Reporting Standards (IFRS). However, smaller companies (Based on profit and employee count) fall under the General Accounting Principles for Smaller Entities (GAPSE).
- Bookkeeping – According to The Companies Act, every company incorporated in Malta is required to keep accounting records of receipts and expenditure, sales and purchases of goods by the company and assets and liabilities the company possesses. Apart from being a statutory obligation, it is also required to comply with tax and audit obligations. Furthermore, it allows for the preparation of reports and accounts in a timely manner and greatly improves the management reporting for important decision making throughout the year. Banks also require frequent financial statements to accommodate a credit facility.
- Preparation of Financial Statements – All companies registered in Malta are required to submit financial statements of statutory accounts. These may either be prepared in accordance with International Financial Reporting Standards (IFRS) or in accordance with General Accounting Principles for Smaller Entities (GAPSE). The financial statements are to be accompanied by the income tax return for each year of assessment.
- Payroll Services – When having employees there are numerous requirements an employer needs to consider and comply with. These things are salaries paid, bonuses and other allowances in additional to law requirements in relation to employee income tax and social security contributions (National Insurance). It is important that such statutory requirements are adhered to from the engagement of an employee until termination of employment.
Before employing persons in your company, you need obtain a PE number (Employment Number). This is a general number to be able to engage any employees. Also when hiring employees, the employee needs to be registered via an engagement form with Jobs+.
VAT Regulation In Malta – Any economic activity in Malta is required to register for VAT, both self-employed and companies. Depending on your annual turnover, you must register under article 10 and would be liable to charge VAT on your taxable supplies. You would also be in a position to claim back VAT incurred throughout the course of the economic activity. When registered under article 10 you will receive a VAT number with a MT prefix and have to issue fiscal receipts or tax invoices.
If your annual turnover falls below the established thresholds, you can register under article 11 as an exempt person. In this case you will not charge VAT on your services or goods but also not able to claim back any VAT incurred for business operations.
Registering For VAT In Malta – is a straight forward process. Registrations are done online on the VAT Departments website and take approximately 15 minutes to complete. A copy of the ID card of the person applying is required and in case of limited liability companies, a copy of the Memorandum and Articles of Associations is required as well. Your VAT certificate will be issued within about 1 week and will be sent by post to your registered address.
It is important to register for VAT within 30 days from the start of the economic activity to avoid penalties.
VAT Returns in Malta – VAT returns are normally to be submitted each quarter or on a annual basis. There is a €20 penalty applicable per month if the the return is filed late. The processing of submissions for refunds takes no more than 90 days. If this refund is not paid back in time, a interest of 0.54% per month is applicable.
As you might expect, Maltese banks will require several key documents as well as specific information from any business looking to open a new account. While the exact procedure will vary depending on the bank, here are the general guidelines to keep in mind:
- A specification of the exact type of account you want to open, along with choosing a main currency and declaring which method you plan to use for tax payments.
- A description of your business activities along with business forecast and previous profit marks; this information should be matched with a certified copy of your company’s Certificate of Registration, along with a regular copy of your Association’s Memorandum and Articles.
- Proof of address of all specified Managers and Directors of your company, along with a copy of all their respective identification documents; these documents must be certified and authenticated either by a major bank or by your local Maltese embassy. Some banks may also require similar information for all beneficiaries of your firm including your secretaries, as well as a utility bill to confirm your company’s offices address.
- The entire management body of your company or director board must individually provide bank reference letters, as well as any foreign representatives and even other beneficiaries. Unless this information is clearly and personally issued and referenced, the bank might have to thoroughly verify its accuracy which may delay the application process.
- In case a company is comprised of a group of trustees, there is a chance identification of the actual beneficiaries may be required along with a verified copy of all passports.
- If another company is listed as beneficiary, your company secretary may be required to provide a detailed statement.
- Your board of directors or management group will have to fill out a form expressing their desire to open an account in that specific bank.
These are the commercial banks available in Malta: Bank of Valetta, HSBC Bank, Lombard Bank, and BNF Bank.
As from the date of EU accession, Malta automatically became part of the European Union Intellectual Property Office (EUIPO), responsible for European Union Trademarks and Designs. By default therefore all European Union Trademarks (as well as all Community Designs) are applicable to Malta and therefore also have protection in Malta. This office represents Malta on the EUIPO Administrative Board and Budget Committee and also participates in Liaison meetings on Trademarks, Designs and Technical Cooperation. In addition this office is also participating and implementing a number of projects under the Cooperation Fund administered by EUIPO. This fund seeks to create and provide tools and projects for the benefit of the national IP offices and for the users of the trademark and design systems in the EU.
© Government of Malta 2012 | Intellectual Property
Market and Credit Risk in an evolving regulatory landscape, Our Market and Credit Risk services support clients in their efforts to assess, design and implement market and credit risk solutions.
Risk management is critical to both banks and policy makers, since a robust banking system promotes the financial stability of a country and increases the industry’s resilience in times of financial crisis. Considering that the granting of credit is one of the main activities and a key source of income for banks, credit risk is the leading risk they encounter. Therefore the management of this credit risk is assumed to have an impact on the profitability of banks. The main aim of this dissertation is to provide stakeholders with accurate information. The main aim of this dissertation is to analyse the relationship between credit risk management and the profitability of Maltese licenced banks. This dissertation also aims to assess the effectiveness of banks’ credit risk management through the use of a scorecard. Return on Assets and Return on Equity are used as the proxies for bank profitability, while the capital adequacy ratio and non-performing loans ratio are used to represent the credit risk management of the bank. Data was collected from 7 banks over the period 2005-2015, to answer the research question “What is the relationship between credit risk management and profitability of Maltese licenced banks, over the period 2005-2015?”. Statistical tests are incorporated in this study through the use of E-views to determine the significance of the relationship. The findings from this dissertation reveal that there is a positive relationship between credit risk management and bank profitability. Amongst the two proxies for credit risk management, the capital adequacy ratio has a positive effect on both return on assets and return on equity. On the other hand, the non-performing loan ratio is a weak indicator and has an insignificant effect on the majority of the banks under study. Moreover the results from the scorecard show that Maltese licenced banks are fairly strong in their credit risk management processes.
© University of Malta |
Renting an Office in Malta
Commercial property for rent in Malta ranges from the modest managed office space to offices ideal for small, medium and the large businesses. Today’s standard finish includes all amenities such as air-conditioning, segregated bathrooms, gypsum walls and modern partitioning. There are many high-end office spaces available that boast state of the art technology already available so to make life easier for the Information Technology industry.
If you are a foreign business owner relocating to Malta and are looking to rent or let an office we will happily guide you through the whole process.
Buying an Office in Malta
There are several opportunities to purchase office space in Malta. We are in a position to assist various local and foreign corporate companies with their office purchase. Our experience in selling commercial office space is an assurance that if you are looking to purchase an office or seek land to develop an office will be taken care of professionally.
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