MALTA Law and Practice Contributed by: Donald Vella and Kirsten Debono Huskinson, Camilleri Preziosi Advocates
(see 3.4 Taxation of Individuals on Shares in Closely Held Corporations ) – meaning that the tax is final and no tax credit, imputation benefit or refund entitlement arises in respect of those profits, whether at the level of the entity or its shareholders. The FITWI Regulations have been introduced in direct response to the OECD’s Pillar Two global minimum tax framework, providing eligible entities with a voluntary mechanism to meet the 15% minimum tax rate, and may mitigate the risk of a top-up tax being applied in other jurisdictions. 9.3 International Tax International tax has a relatively high public profile in Malta, given recent international pressures. Malta pre - sents a stable business climate for companies form - ing part of international groups aiming to establish a subsidiary or a company branch. While fostering competitive tax policies, the Maltese authorities have continued to closely monitor devel - opments in the OECD and BEPS projects over recent years. A relatively important BEPS-related develop - ment has been the ongoing ratification of the MLI. Malta was an early adopter of the MLI, in mid-2017. At the time of signing the MLI, Malta defined 71 tax treaties as agreements it wishes to be covered by the MLI and opted to apply the following: • the minimum standard, which includes provisions dealing with the purpose of covered tax agree - ments, the prevention of treaty abuse and MAP (and corresponding adjustments); • provisions of the MLI in connection with capital gains from the alienation of shares or interests of entities deriving their value principally from immov - able property; and • provisions dealing with arbitration procedures sub - ject to certain reservations. 9.4 Competitive Tax Policy Objectives The Maltese government and authorities continue to confirm Malta’s commitment to countering aggressive tax planning structures. Mechanisms and compliance processes aimed at identifying and countering ele - ments and arrangements indicating harmful tax prac -
ing developments in the areas of BEPS and anti-tax avoidance initiatives. Malta is one of 137 members of the OECD Inclusive Framework that agreed to the “Statement on a Two- Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy” made by the OECD in October 2021. On 15 December 2022, fol - lowing a unanimous agreement, EU member states, including Malta, adopted the EU Minimum Tax Direc - tive (Pillar Two). During the Budget speech for 2024 held on 30 Octo - ber 2023, the Minister of Finance confirmed that Mal - ta will be exercising its right to apply the derogation allowed by the EU Minimum Tax Directive, as a conse - quence of which Malta will be deferring the introduc - tion of the 15% minimum top-up tax under Pillar Two past 2024. Accordingly, the three main components of the Pillar Two rules, namely the Income Inclusion Rule (IIR), the Undertaxed Profits Rule (UTPR) and the qualified domestic minimum top-up tax (QDMTT), have not yet been transposed into Maltese law. As announced during the 2025 Budget speech, plans are firmly underway for new forms of statutory grants and tax credits (referred to as qualified refundable tax credits (QRTCs)) to be introduced, as part of the Mal - tese government’s commitment to ensure compatibil - ity with rules imposed by both the EU and the OECD. While the main components of Pillar Two rules have not been transposed into Maltese law as per above, in September 2025, Malta promulgated the Final Income Tax Without Imputation Regulations (“FITWI Regula - tions”), which introduce an elective 15% tax rate on chargeable income for eligible Maltese entities, cal - culated on the basis of standard Maltese income tax rules. Eligible entities have the option of remaining subject to tax under the standard provisions of the ITA or, alternatively, of electing to be taxed at a final rate of 15% on their chargeable income. Eligible entities include companies, bodies of persons electing to be treated as companies, entities deemed to be com - panies under the ITA, and trusts electing company treatment. In this regard, it is important to note that once an entity opts into the 15% regime, the profits so taxed fall entirely outside the scope of Malta’s tra - ditional full imputation and shareholder refund system
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