The Inland Revenue Department is currently sending out the tax
returns for basis year 2015 to individuals' resident in Malta.
The tax return must be submitted together with payment by 30th June
2016 in order to avoid fines and penalties. A number of areas of
interest have been highlighted hereunder:
Employment income is to be declared
even though tax would have been deducted by the employer. The gross
amount and tax deducted must match the FS3 details provided by the
Business income and expenditure must
be recorded on the provided profit and loss account. The net profit
is to be declared in the tax return.
Pensions are to be declared and added
to any other earned income in arriving at the tax due for the
Income earned outside Malta must be
declared and the taxpayer has the option to deduct tax at a flat
rate of 15%.
Local interest is to be declared in
the case that no withholding tax has been applied.
Local dividends, with tax deducted at
source may be still included in the tax return as this could result
in a refund of tax in certain instances. In cases of taxpayers with
other income totalling less than €19,500 [when opting for
single rates], €21,200 [when opting for parent rates] and
€28,700 [when opting for married rates], dividends may be
included up to said amounts and a refund will be given on the
additional tax suffered at source.
Rental income is to be declared
either in the tax return or in form TA24. Rental income declared in
the tax return will be added [less the applicable deductions] to
any other income earned by the taxpayer and taxed at the set
progressive rates, whereas rental income declared in Form TA24 will
be taxed at 15% on the Gross Rent Received.
A number of deductions are allowed in
order to reduce the taxable income of the taxpayer. These include
private schools' children fees, facilitator fees, child-care
fees, approved sport-related activities fees, elderly people's
home fees, tertiary education fees, creative and cultural course
fees and school transport fees. These must all be approved
Women returning to work are granted a
tax credit as long as a number of criteria are satisfied. Such
credit can amount to up to €5,000 depending on a case by case
Married women returning to work,
given that they had been absent from work for at least 5 years, are
over 40 years old and such income does not exceed €9,200 shall
be exempt from tax for a period of 5 years and not added to the
husband's income when computing the tax payable.
Taxpayers established in a field of
excellence who have returned to Malta after an absence of 10
consecutive years having an eligible contract of employment may be
taxed at 15% provided that their remuneration exceeds
Expatriates holding a qualifying
contract of employment in specified senior employment positions
with companies licensed by the MFSA, MGA and TM may have their
income taxed at a flat rate of 15%, provided that such income is
more than €81,457. In the case of incomes exceeding €5
Million, the excess is exempt from tax.
Tax credits granted to the taxpayer
on one of the various available schemes may be deducted against tax
due if applicable. In the case of the Micro Tax Credit, such credit
may amount to a maximum of €30,000 or €50,000 and must be
in possession of the certificate awarded by Malta Enterprise.
Taxpayers investing in a personal
retirement scheme or long term insurance policies may claim a tax
credit equivalent to the lower of, 15% of the contributions made or
In the case of income which suffered
foreign tax, there is the option to deduct the credit for the
double taxation relief. In certain cases, only part of the foreign
tax incurred would be deducted depending on whether the average tax
rate on the foreign income is higher than the average Malta tax on
the total income.
Income from part time work may be
taxed at a flat rate of 15%. The maximum capping for this type of
income is €10,000 in the case of part time employment and
€12,000 in the case of part time self-employment. Income
falling within these categories must not be declared in the income
tax return. Income from part time self-employment income must be
declared on form TA22 and filed with the Inland Revenue department
by 30th June 2016.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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