The Government of Malta has published Legal Notice 188 of 2025 – the Final Income Tax Without Imputation Regulations, 2025, in relation to Article 22B of the Income Tax Act. Such legal notice provides companies and certain trusts with the option to elect for a final tax rate in lieu of the imputation system, that has long characterised Malta's corporate tax regime.
Key Features of the Regulation
Entities may choose to be subject to tax either under the existing provisions of the Income Tax Act, or at a final income tax rate of 15% on chargeable income. Entities which opt to be subject to the final tax rate of 15% must formally notify the Commissioner for Tax and Customs.
Such election may be applied to income derived in the fiscal year preceding the year of assessment 2025 and subsequent years.
Duration & Reversibility
Once an entity elects for the 15% final tax, it must remain under this system for a minimum of five consecutive years. If it later opts out, it must then remain under the ordinary rules for the next five years.
Exclusions from the 15% Final Tax
The elective 15% final tax does not extend to all forms of income. Specifically, it excludes dividends derived from profits that have not been allocated to the Final Tax Account of another Maltese company, as well as any income that has already been subject to a final tax under other provisions of the Income Tax Act and duly allocated to the Final Tax Account.
Safeguards and Limitations
Under the Final Income Tax Without Imputation regime, safeguards are in place to preserve fiscal integrity. The tax payable may not result in a lower overall liability than what would arise under the ordinary system after accounting for shareholder refunds under Article 48(4) or (4A) of the Income Tax Management Act. Furthermore, the 15% tax is deemed final; it cannot be credited or offset against the tax liability of any other person, nor can it generate refunds. Profits taxed in this manner must also be allocated to the entity's Final Tax Account.
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.
