The past few months have brought about significant and rapid changes in direct taxation, with Malta updating its system to make it more aligned with the everchanging international landscape.
So far, the trend is set to continue in 2020, with multiple tax provisions having already come into effect in the first few days of the year.
Indeed, exit taxation and a variety of anti-hybrid rules, all predominantly concepts previously alien to Maltese tax law, came into effect on January 1.
The application of exit taxes may mean that asset shifts within the same entity but across different jurisdictions might start giving rise to a deemed taxable capital gain. Anti-hybrid rules might lead a corporate taxpayer to not be able to claim certain otherwise tax-deductible expenses or, in more limited cases, may cause the inclusion of taxable income which would not otherwise have been taxed in Malta.
2019 also saw the introduction of Malta’s nexus-based patent box regime. The regime has been approved by the OECD and by the EU’s Code of Conduct Group (Business Taxation) and will be administered by Malta Enterprise based on guidelines published in late 2019. Through the application of these rules, taxpayers deriving certain income from intellectual property may benefit from a ‘super’ deduction, thereby reducing their taxable base.
Tax practitioners, and in certain instances, taxpayers now have an additional obligation to report various information to the tax authorities on what is referred to as ‘cross-border reportable arrangements’.
This information is collected as part of an EU-wide effort with a view to curbing aggressive cross-border tax planning. Authorities will have the obligation to share this information with all other EU member states and the European Commission.
2020 will also bring about several changes to personal taxation, primarily due to Budget updates
2020 will also bring about several changes to personal taxation, primarily due to Budget updates. Prospective changes include a lower tax rate for certain overtime work and a possibility for married individuals, including individuals in a civil union, to submit separate income tax returns.
From an administrative aspect, the waiting time for the receipt of income tax refunds is expected to be reduced and interest due on late payment of taxes will be lowered, both for income tax and VAT, and for individuals and businesses alike.
EY is organising a seminar covering these key Maltese tax developments. The event is targeted at business professionals who would like to enhance their knowledge in the field of taxation.
Professionals who already have a grasp of Maltese taxation will be able to get up to speed with these most recent developments and those who are less familiar will learn new concepts as they are introduced in domestic law.
This session will provide an overview of the various developments in Maltese direct tax. It will also seek to address how these changes are expected to impact Maltese taxpayers.
Miraine Falzon is a certified public accountant working in EY’s Business Tax Advisory sub-service line in Malta.