Malta's full imputation and refundable credit system is a key pillar of its tax regime, designed specifically to eliminate the risk of any form of economic double taxation of corporate profits in Malta. Under this system, when a company distributes a dividend to its shareholders, the tax paid at the level of the company on those profits may be credited against the shareholders' tax liabilities.

​

Through this measure, the income tax act ensures that the relevant income is only taxed at the shareholder's level, preventing such income from being taxed on two separate occasions. The shareholders receive a full tax credit for the income tax already paid by the distributing company, effectively integrating corporate and personal tax systems.

​

In addition to the full imputation system, Malta's unique refundable tax credit mechanism further boosts its appeal as a hub for international entrepreneurs. Under this mechanism, certain shareholders may claim refunds on the tax paid by the company, resulting in a significantly lower effective tax rate. This tax rate can be reduced to as low as 5% in most cases but may range accordingly depending on the relevant business profits being generated. Additionally, Malta has recently implemented a form of fiscal consolidation, which optimises this refund process significantly.

​

Further to the fiscal consolidation rules, Malta has also introduced local transfer pricing rules and guidelines. Malta’s approach to transfer pricing is largely guided by international standards, particularly those set by the OECD with the emphasis being placed on the adherence to the arm's length principle for cross-border transactions made between associated enterprises.

​

Multinational enterprises (MNEs) are required to disclose key financial and tax related information for every jurisdiction they operate within through Country-by-Country Reporting (CbCR). This reporting framework, typically mandated by tax authorities, aims to enhance transparency and combat tax evasion by providing tax authorities with a comprehensive overview of MNEs' global operations, including their revenue, profits, taxes paid, and other relevant data.

​

​Here at CSB Group, we have developed an extensive range of international and local tax professionals capable of handling your groups needs. Contact us today to learn more about our services.