Malta: Regulations on 15% “elective tax” published
Regulations published September 2, 2025, implement 15% elective tax.
The Maltese government on September 2, 2025, published the Final Income Tax Without Imputation Regulations, implementing a 15% “elective tax.”
Based on the regulations, an entity—defined as a company, including any person that elects to be treated as a company or is deemed to be a company in accordance with the provisions—may elect to be taxed on its chargeable income at a 15% rate, as an alternative to the standard rules of the Maltese Income Tax Act, namely without the application of the imputation system. Key takeaways include:
- The 15% tax is final and not refundable or creditable, thus preventing shareholders or any other individuals from being able to claim tax refunds available under the standard rules of the Maltese Income Tax Act.
- The base on which the 15% tax is charged is the same base as computed under the standard income tax rules. This implies that the 15% final tax forms part of Malta’s standard income tax system.
- Profits taxed under the new regulations are credited to the Final Tax Account, and any distributions made from this account do not qualify for tax refunds. Additionally, the 15% tax rate must not result in a tax liability lower than the tax that would be due after refunds under the standard refund system provisions.
- To qualify for the 15% final tax rate, a company is required to submit an election form to the Malta Revenue. The form is still pending publication. Once this election is made, the 15% final tax will be applicable for at least five consecutive years, after which the company may apply to revert to taxation under the standard provisions of the Maltese Income Tax Act.
The election may be made in respect of income accruing to or derived by the entity in the fiscal year preceding the year of assessment 2025 and subsequent years, i.e., as from basis year ending on December 31, 2024.
Read a September 2025 report prepared by the KPMG’s EU Tax Centre