Value added tax is the tax that is charged progressively according to the increase in product value. It is important to note that all entities in Malta, partnerships included and natural persons are obliged to register with the VAT office in order to comply with the Maltese VAT legislation of 1998.
Ever since it’s incorporation in the European Union, Malta has grown to be one of the most attractive business destinations in Europe. Due to Malta’s lack of raw material, imports are more prevalent than exports. However, this does not stop Malta from flourishing, the country wisely leverages its tourism industry and it is currently one of its economic backbones.
Malta is not only for its low tax rates, but it is also one of Europe’s fastest developing countries. Part of this development is due to the introduction of the citizenship by investment program, accepted by the EU. In addition, Malta also introduced several residency by investments programs, to help foreigners significantly reduce their taxes.
Although corporate taxation in Malta is not low, shareholders are entitled to claim back part or even the whole tax paid by the Malta company. This is why the Maltese taxation system is unique and very ingenious.
Malta does not apply a separate system of corporate tax, making a company chargeable to income tax in Malta in much the same way as an individual, at the flat rate of 35%. However, Malta does apply a full imputation system to relieve the economic double taxation arising on the taxation of dividends received by shareholders from distributions made from tax-retained earnings of Maltese companies.
