3) What is the rate of corporation tax on the profits of a Malta Trading Company?

The corporate tax rate on the profits of companies registered in Malta is 35%.

However, in view of the adoption of the IMPUTATION system of taxation, the profit earned by a company and the tax paid by such company are deemed to be earned and paid on behalf of the shareholders.

For non resident shareholders whose income from Malta is taxed at only 5%, the imputation system could result in substantial tax savings since, when receiving the dividends from their Malta company, they also receive a tax certificate of 35% representing the tax paid on that dividend.Β  Given that their own person tax liability on the Malta profit is only 5%, this means that they are entitled to a rebate of 30/35 of all tax paid by the company on their dividend.

This brings the effective tax suffered earned by their Malta company to just 5%.

Further information on this subject can be found in our article Tax Provisions for International Trading Companies.

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