On 2 September 2025, the Maltese Government enacted Legal Notice 188 of 2025, establishing the Final Income Tax Without Imputation Regulations (FITWI), 2025, under the Income Tax Act (Cap. 123). This legislation introduces a new, optional tax regime that offers companies and certain other entities the ability to apply a 15% flat rate of tax on their chargeable income, with such tax treated as final.
The regime, commonly referred to as FITWI, represents a strategic reform aimed at simplifying Malta's corporate tax system, while remaining consistent with international tax developments and compliance standards.
Key Features of the FITWI Regime
The FITWI regime allows eligible entities to opt for a flat 15% income tax on their taxable profits. This tax is considered final, meaning:
- No further tax is due at the shareholder level upon distribution of profits;
- Shareholders are not entitled to any tax refunds under Malta's refund mechanism;
- The income taxed under FITWI cannot be credited, refunded, or imputed to any person.
Eligibility and Application
The regime is available to the following types of entities:
- Companies incorporated or resident in Malta;
- Bodies of persons deemed to be treated as companies for tax purposes;
- Trusts that elect to be treated as companies under Maltese tax law.
The application must be submitted in the prescribed format to the Commissioner for Tax and Customs within the timelines established by the tax authorities.
Minimum Commitment Period
Entities that opt into the FITWI regime are required to remain within the system for a minimum period of five years. If an entity later chooses to exit the regime, it must revert to the traditional full imputation system for another minimum of five years before it becomes eligible to re-elect for FITWI.
This rule is intended to prevent frequent switching between tax systems and to ensure long-term compliance stability.
Strategic Context and Policy Objectives
The introduction of the FITWI regime reflects Malta's response to shifting international tax standards, including the OECD's Pillar Two framework and the EU Minimum Tax Directive. While Malta's full imputation system has historically played a central role in its corporate tax offering, the increasing complexity of global tax compliance—particularly in cross-border scenarios—has created a demand for simplified, final taxation options.
The FITWI regime provides this simplicity while offering certainty and flexibility to entities that may not benefit from or require Malta's tax refund mechanisms, especially where international investors are involved.
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.
