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Malta has launched an optional 15% final corporate income tax regime – Final Income Tax Without Imputation (FITWI). If you elect in, the 15% is final (no shareholder refunds or credits), and the election is binding for at least five years. A safeguard ensures your outcome isn’t lower than it would be under the ordinary full-imputation system after shareholder refunds.
Why Malta introduced FITWI
Malta’s traditional system taxes profits at 35%, then grants shareholder refunds on distribution. FITWI offers a simpler, predictable alternative: tax is computed at the entity level at 15% and stops there, with no downstream refund machinery. This can help with compliance efficiency and global ETR transparency (e.g., for Pillar Two modelling).
Who can elect the 15% final tax?
- Companies incorporated or resident in Malta
- Bodies of persons taxed as companies
- Trusts opted to be taxed as companies
These may choose FITWI instead of the ordinary full-imputation system.
Core mechanics of the regime
- Flat rate: 15% on chargeable income.
- Finality: Tax under FITWI is not refundable, creditable, or imputed to shareholders.
- Tracking: Profits are allocated to a Final Tax Account.
- Scope & carve-outs: Certain income streams are excluded or otherwise ring-fenced by the rules, so classification and record-keeping matter.
The “higher-of” safeguard
Your FITWI liability cannot be lower than the tax that would arise under the ordinary system after taking shareholder refunds into account. This avoids arbitrage against the imputation model.
Election timing, form, and lock-in
- Start: Available from YA 2025 (basis year 2024) onward.
- Binding period: Five consecutive years minimum. If you later revert, you must remain under the ordinary rules five years before re-electing FITWI.
- Process: Board resolution → submit the MTCA election form (director-signed) → maintain the Final Tax Account from the election year.
Alternative paths that remain valid (and can still deliver ~5%)
5% effective Malta tax via shareholder refunds (still available)
Under the full imputation system, distributions of trading profits typically entitle shareholders to a 6/7ths refund, bringing the effective Malta tax burden to roughly 5% (fact patterns vary based on income character and specific rules). This route remains fully available and may be preferable where refund timing, investor profiles, and cash-flow planning align with your goals.
5% straight for groups electing Fiscal Unity (still available)
Malta’s Fiscal Unity regime lets qualifying groups form a Fiscal Unit and compute a single tax base at the principal taxpayer level. For eligible groups, guidance commonly frames outcomes as an effective ~5% burden without relying on shareholder refunds, simplifying administration and cash-flows. (Eligibility, exclusions, and passive income profiles can affect the actual effective rate; detailed modelling is recommended.)
Who is likely to benefit from FITWI?
- Teams prioritising simplicity and a clean, final 15% charge.
- Groups sensitive to global ETR optics where a final tax can assist predictability (subject to GloBE analysis).
- Companies with stable profitability comfortable with the five-year lock-in.
FAQs
Is 15% FITWI replacing Malta’s 35% corporate rate?
- No. It’s an optional alternative to the full imputation system.
Can shareholders claim refunds under FITWI?
- No. The 15% is final; no refunds or credits arise at shareholder level.
Can I still get ~5% via the traditional refund system?
- Yes. The 6/7ths refund mechanics remain available under the ordinary system, subject to the usual conditions and the nature of income.
Can groups still achieve ~5% without refunds?
- Yes – qualifying groups may elect Fiscal Unity, which can deliver an effective ~5% outcome at unit level (fact-dependent).
How long am I locked in if I elect FITWI?
- Five years. If you revert, you must remain under the ordinary rules five years before re-electing FITWI.
When can elections start?
- From YA 2025 (basis year 2024) onward.
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