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Malta: Tax measures in 2026 budget enacted

Introduction of 175% R&D deduction, various VAT changes

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April 13, 2026

The Budget Measures Implementation Act, 2026 was enacted on March 10, 2026, and formally implements certain tax measures announced in the 2026 budget speech held during October 2025.

The main changes in relation to income tax include the introduction of a 175% deduction for qualifying expenditure on research, development, and innovation incurred by persons engaged in a trade, business profession, or vocation, provided that the expenditure is incurred for the use and benefit of that activity.

Value added tax (VAT) changes cover various aspects including new rules governing VAT registration obligations for non-Maltese established entities, the introduction of an open market value requirement for certain transactions between related parties, and the extension of deemed supplies in case of deemed supplies of services.


For more information, contact a KPMG tax professional in Malta:

Anthony Pace | anthonypace@kpmg.com.mt

Doreen Fenech | doreenfenech@kpmg.com.mt

John Ellul Sullivan | johnellulsullivan@kpmg.com.mt

Lisa Zarb Mizzi | lisazarbmizzi@kpmg.com.mt

Simon Xuereb | simonxuereb@kpmg.com.mt

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