Tax preparation and planning are essential for any business operating in Malta. With recent changes to Malta’s corporate tax framework and the introduction of new optional regimes, companies now have more flexibility—but also more decisions—to make when structuring their tax strategy.
This guide explains how Malta’s corporate tax system works in 2025 and how proper tax preparation and planning can reduce costs, simplify compliance, and help you choose the best tax regime for your business.
🇲🇹 1. Why Tax Preparation and Planning Matter in Malta
Malta offers one of the most unique corporate tax systems in the EU. While the statutory corporate tax rate is 35%, the actual tax burden is often much lower due to Malta’s imputation and refund system, participation exemptions, and—in 2025—the newly introduced 15% Final Tax Regime (FITWI).
For companies based in Malta, strong tax preparation and planning help you:
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Choose the optimal tax regime
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Reduce your effective tax rate
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structure dividends efficiently
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maintain proper tax accounts
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comply with filing deadlines
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avoid penalties and unnecessary tax leakage
2. The Malta Corporate Tax System (Traditional Regime)
Under the traditional system:
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Companies pay 35% corporate income tax.
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Shareholders may receive tax refunds, often up to 6/7 of the tax paid, reducing the effective tax rate to around 5%.
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The full imputation system ensures that tax paid at the company level is fully credited to the shareholder upon distribution.
This regime is advantageous for international businesses and foreign shareholders who can benefit from Malta’s refund system.
Here, tax preparation and planning is critical because:
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Income must be allocated to the correct tax accounts
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Refund eligibility must be confirmed
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The timing of dividends affects cash flow
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Compliance must be maintained to secure refunds
3. The 15% Final Tax Regime (FITWI) – New in 2025
Malta introduced an optional 15% final tax regime to simplify corporate taxation:
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Companies may elect to pay a flat 15% tax on chargeable income.
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No refunds, no imputation credits, and fewer compliance steps.
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The election is binding for 5 years.
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Dividends distributed from FITWI profits carry no tax credits.
This option is ideal for companies that prefer simplified taxation and predictable liabilities.
Here, tax preparation and planning involve deciding:
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Whether your shareholders benefit more from refunds or simplicity
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Whether long-term operations justify the 5-year lock-in
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How FITWI affects dividend strategies and profit allocation
4. Traditional (35% + refunds) vs 15% FITWI – Which Is Better?
A well-structured tax preparation and planning review should compare:
✔ Traditional Regime (Effective ~5%)
Best for companies where shareholders can receive refunds or benefit from the participation exemption.
✔ 15% Final Tax Regime
Best for companies wanting a simpler model with no refund process and predictable tax liability.
Planning considerations include:
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shareholder residency
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type of income (active vs passive)
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dividend distribution plans
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long-term operational stability
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whether simplicity or tax efficiency is the priority
5. Key Tax Preparation and Planning Steps for Maltese Companies
For 2025, every Malta-based business should focus on:
1. Choosing the Right Corporate Tax Regime
Analyse whether the traditional system or the FITWI regime is the most tax-efficient.
2. Reviewing Shareholder Eligibility for Refunds
Non-resident shareholders often enjoy full refund benefits; local shareholders may prefer the 15% regime.
3. Ensuring Correct Allocation of Income
Foreign Income Account (FIA), Maltese Taxed Account (MTA), Final Tax Account (FTA), and others must be managed correctly.
4. Planning Dividend Distributions
Timing affects refunds, cash flow, and tax exposure.
5. Filing Corporate Tax Returns Properly and On Time
Malta uses a self-assessment system, so errors can create unnecessary tax costs.
6. Considering Malta’s Participation Exemption
Eligible holdings may offer a 0% tax on certain dividends and capital gains.
6. The Importance of Local Expertise
Because Malta’s system involves multiple tax accounts, refund mechanisms, potential exemptions, and now the 15% FITWI regime, strong tax preparation and planning is essential to avoid:
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incorrect allocations
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missed refunds
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unnecessary tax costs
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non-compliance penalties
Working with a Malta-based advisor ensures your tax strategy aligns with local requirements and maximises available tax benefits.
Malta remains one of the most tax-efficient jurisdictions in the EU. With the traditional 35% + refund system, many companies enjoy extremely low effective tax rates. Meanwhile, the new 15% Final Tax Regime offers simplicity and certainty.
And, the right choice depends on your company’s structure, shareholders, income types, and long-term goals.
Equitas Advisory boasts extensive experience supporting small businesses and entrepreneurs across multiple industries, ensuring that each client receives personalized attention and expertise. We understand that every business has unique needs, which is why our fees are specifically tailored to fit the individual circumstances of our clients. Whether you’re a small business or a large corporation, Equitas Advisory delivers reliable and cost-effective solutions designed to support your entrepreneurial journey and your financial success. We are just 1 message away.
The sole practitioner at Equitas Advisory is a member of the Malta Institute of Accountants and the Association of Chartered Certified Accountants and is authorised to practice the profession of Accountancy in Malta in line with the Accountancy Profession Act. Cap.281. by the Malta Accountancy Board – Warrant number 121176.