Malta: 2020 Budget Implementation Act

The Budget Measures Implementation Act, 2020 (‘the Act’), published on 20 March 2020, contains a number of amendments to the Income Tax Act (‘ITA’), Income Tax Management Act (‘ITMA’), Commissioner for Revenue (‘CfR’) Act and Duty on Documents and Transfers Act (‘DDTA’).

It did not present major material changes to the Maltese system of taxation but a few changes are still significant, mainly those that relate to low income earners, and final tax on certain capital gains. Some changes and new plans for certain compliance matters were announced by the Minister, as well as amendments to the final tax on capital gains and some minor changes to definitions in Article 2.

The significant amendments are highlighted below:

  1. The definition of ‘company’ in relation to Cell Companies has changed :             
A cell company in  the definition of ‘company’ in Article 2(1) is now extended to incorporate cells of SICAV’s and cell companies incorporated to be utilized in the shipping and aviation industries.

  1. Provisional tax on transfers of shares in a property company or an interest in a property partnership : 
This tax will now not exceed 35% of the higher of market values and the consideration for the transfer.

  1. Amendments in compliance:
Late payment of Provisional Tax now attracts interest of 0.33% monthly.

The minister of finance has pledged that there will be an exercise to increase efficiency in tax compliance.

Certain taxpayers will now become exempt from submitting an income tax return if they corroborate an assessment.

Tax refunds for companies should start to get settled within 6 months, thus reducing substantially the processing period which was around 10 months by the end of 2019.

  1. New tax benefits to low income earners:
There were a variety of tweaks and new measures concerning lower income earners, important ones being:
  • a reduced rate of 15% will apply on income derived from the first 100 hours of overtime work who does not earn more than €20,000 of employment income in a calendar year;
  • pension income of less than €13,799 will not be taxed;
  • the exempt portion of duty available to firsttime buyers of property situated in Malta has been extended for the coming year, also increasing the exempt portion subject to duty from €150k to €175k.

For more information, please contact Mark Ciappara at

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