GLI: Corporate Tax 4th Edition

Kenneth A Camilleri | Published on 06 Sep 2016

GLI Corporate Tax 4th Edition

Chetcuti Cauchi was chosen as the Malta Chapter Specialist on Corporate Tax and was invited to contribute to the 4th edition of Global Legal Insights: Corporate Tax.

Director Kenneth Camilleri at Chetcuti Cauchi has prepared Malta’s Chapter for this edition.

Due to the fact that this is an annual review, it allows for a very meticulous review of the past year, including an overview and key developments which have affected the area of corporate tax law and practice. Moreover, our specialists have included their views on the current tax climate in Malta and which sectors of the industry are seeing substantial growth. Finally, bearing in mind the current trends, our specialist also give their prospects for the coming year.

Overview of corporate tax work over last year

In this section, our specialists gave an overview of the work which was done to consolidate and diversify Malta’s financial services industry with a well-regulated but flexible approach. Under the current global circumstances, with corporate taxation and transparency in tax under the spotlight, Maltese firms have been working hard in the corporate tax area. This section also makes reference to the significant deals and themes Malta underwent over the last year.

Key developments affecting Corporate tax law and practice

These include double taxation treaties and domestic cases and legislation, international and EU developments (such as BEPS and FACTA).

The tax climate in Malta

Fully aware of the changes which international initiatives shall bring to the tax area, Maltese specialists are positive that Malta will manage to adapt and evolve to accommodate such changes and emerge as a stronger jurisdiction through which to do business.

Industry sector focus

The sectors of FinTech, Holding Companies and Intellectual Property (IP) are rapidly expanding in Malta as the jurisdiction continues to become a hub for such areas.

Malta is considered by many as a leading financial jurisdiction and is progressively following suit in the Fintech Industry. Over the years we have seen Malta emerge as an e-gaming and payment services hub. Steadily, this industry will continue to thrive.

In the field of Holding Companies, although Malta does not have a holding company regime per se, it does have a participation exemption regime which exempts from taxation any dividends and capital gains derived from qualifying participation.

With respect to IP, it is expected that Malta will adopt some form of modified nexus approach in relation to royalties derived from patents. Meanwhile, the current full imputation system and tax credit system offer an attractive alternative. 

The year ahead

Whilst awaiting more certainty and direction in relation to the implementation of the BEPS project and the outcome of the proposed anti-tax avoidance directive and package generally at EU level, Malta welcomes co-ordinated measures to ensure global transparency and responsible taxation.

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