Malta by nuhman10

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									Malta Income Taxes and Tax Laws




      In Malta The taxation of an individual's income is progressive. In
       other words, the higher an individual's income, the higher the tax he
       pays. The rates of tax for an individual in 2005 are 15% - 35%.
       There are reduced rates of taxes for certain income earners.
      The rate of corporate tax in 2005 is fixed at 35%. There are reduced
       rates for certain companies.

Income Tax for an Individual

      An individual who is a Maltese Resident pays tax on his income as
       a wage earner or as a self-employed person. A person who meets
       the criteria of a "permanent resident" (usually, a stay of more than
       183 days a year) will be taxed on his income in Malta and overseas.
       A foreign resident who is employed in Malta pays tax only on the
       income he earns in Malta.
      An employer is obligated to deduct at source, each month the
       amount of tax payable on a wage.
      Certain payments are deductible from the taxable income of an
       individual that are allowable for tax purposes.
      Separate calculations - A couple each with separate sources of
       income may report separately on their income, however one of the
       couple must be nominated as "the representative partner" for the
       purposes of the tax authorities.
      Passive income, such as rental of an asset, is attributed to the one of
       the couple having the higher income.

Malta individual income tax rates 2005 (single): :

Tax base (LM)               %
1-3,100                     0%
3,101-4,100                 15%
4,101-5,000                 20%
5,001-6,000                 25%
6,001-6,750                 30%
6,751 And over              35%


Reporting Dates for an Individual
    The tax year is the calendar year ending on December 31.
      The date for filing an annual return is August 30.
      During the year, a self-employed person must make 3 equal
       advance payments on April 30, August 31 and December 31. The
       advance payment is based on the taxable income for the previous
       year.
      Should there still be tax payable, it should be paid by the August 31
       following the end of the tax year.
      An employed person whose employer has deducted monthly tax
       from his salary is not bound to file an annual return. Nevertheless,
       an employed person must submit a declaration by June 15.
      A similar declaration must be filed by an individual in respect of
       his income from a pension, dividend from a local corporation, and
       income from an investment in respect of which tax of 15% was
       deducted at source.


Reporting and Payment Dates for a Limited Company
    The date for submitting a report is June 30. In practice, a report
      may be submitted up until September 30.
    Advance payments for a company are on the dates and in the
      amounts specified for an individual.
    Annual tax differentials must be paid by September 30.



Corporate Tax
    Malta Corporate tax in 2005 is 35%
    There is an obligation to deduct tax at source at a rate of 15% from
      a dividend paid to Maltese residents. There is no obligation to
      deduct tax at source from a dividend paid to foreign residents.
      There is zero withholding tax on interest and royalties paid to
      foreign residents.
    Companies with non-resident shareholders with overseas activities
      may register in Malta as ITC ( International Trading Companies )
      or IHC ( International Holdings Companies).
    By a special tax credit given to shareholders of ITC, the effective
      tax rates is 4.17%.
    The effective tax rates for shareholders of IHC is zero, when having
      "qualifying participation", as defined by Malta tax laws, or 11.67%
      for "non qualifying participation".

Forms of Incorporation

As a general rule - business bodies may incorporate in Malta in one of the
following manners:
      A limited company - * A limited liability company is the most
       popular form
                                with foreign investors.
                          * A public company has the suffix P.L.C.
                          * The minimum number of shareholders is 2.
                                Nevertheless, a company may be set up
       with one shareholder.
      A general partnership.
      A limited partnership.
      A branch (of foreign companies).
      Joint ventures.


       Comment: From the point of view of taxation, the forms of
       incorporation for companies and partnerships (general/limited)
       constitute a legal entity separate from the shareholders / partners.

REGISTRATION OF A COMPANY IN MALTA

When submitting the application to incorporate, the following steps must
be taken:
          o A bank deposit - the sum of the paid-up capital must be
             deposited with a bank before registration.
          o Submission of the Memorandum and Articles of
             Association - these should be delivered to the Companies
             Registrar.
          o Foreign shareholders are obliged to obtain an authorization
             from the Exchange Control Unit.
          o Payment of stamp duty (10 cents for every LM 25 of the
             company's capital).
          o Payment of a corporation registration levy (a minimum
             payment of LM 100 and a maximum payment of LM 573).


DEDUCTION OF TAX AT SOURCE
Malta tax rates for deduction at source:
           o Dividends- 0%.
           o Interest- 0%.
           o Royalties- 0%.

								
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