On 2 September 2025, Malta issued Legal Notice 188 of 2025, introducing a 15% final income tax option the Final Income Tax Without Imputation Regulations, 2025.
Under these new Regulations, any body of persons qualifying as a company or opting to be treated as a company under the Income Tax Act, may, as from basis year 2024 (year of assessment 2025), opt to have the chargeable income taxed at the rate of 15% instead of being taxed under the standard provisions of the Income Tax Act. The 15% tax under these regulations is final and not refundable or creditable.
Any profits taxed in terms of these new Regulations are allocated to the Final Tax Account (‘FTA’), and any distributions do not entitle the shareholder to claim any tax refunds.
The rules prescribe that any such tax charged under these rules shall not be lower than the effective Malta income tax otherwise due under the standard full imputation tax systems, including the payment of refunds.
In order to be subject to the final tax of 15%, a company must make an election through the submission of the form, as made available through the Malta Tax and Customs Administration (MTCA) website, to the MTCA, by the 28th of November, 2025. Once such an election is made, the 15% final tax will apply for a minimum period of five consecutive years, after which the taxpayer may request to be taxed under standard provisions of the Income Tax Act.
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If you would like to understand how these changes may affect your business and whether the 15% election is right for you, feel free to reach out to us for further guidance.
