Malta Tonnage Tax System & Shipping Organisations

Dr. Silvana Zammit | 11 Jul 2018

Malta Tonnage Tax System  Shipping Organisations

Recent statistics have boosted Malta’s reputation in the international maritime transport sector by acknowledging Malta’s ship register as the largest ship register in Europe. There are many factors contributing to such success including the steady adherence to international standards, a relatively quick registration procedure and the establishment of beneficial fiscal solutions to ship owners/charterers and an advantageous tax regime.

Malta Tonnage Tax - Advantages

Indeed, one of the major factors of success for Malta is the efficient implementation of the Malta Tonnage Tax Regime resulting in a number of benefits including:

  • inapplicability of the Income Tax Act resulting in an exemption from tax payment on income derived from shipping activities;
  • exemption from tax on the distribution of profits derived from shipping activities to the shareholders; provided that such profits are also declared exempt from tax when in the hands of the shipping organisation;
  • inapplicability of the Social Security Act - in the cases where persons operating as officers or employees of a licensed shipping organisation are not resident in Malta, such organisation shall, in respect of such officers and employees, be entitled for exemption from the provisions of the Social Security Act. As a result, such employees need not pay any national income contributions in Malta;
  • inapplicability of the Duty on Documents and Transfers Act - Maltese law also provides for the exemption from duty on documents in respect of any instrument connected with or involving (a) the registration of a Malta tonnage tax ship under the Malta flag or (b) the issue or allotment of any security or interest of a licensed shipping organisation or the purchase, transfer, assignment or negotiation of any security or interest of any licensed shipping organisation; or (c) the sale or transfer of a Malta tonnage tax ship or any share thereof; and
  • inapplicability of the External Transactions Act:  The External Transactions Act establishes the liberalisation of external transactions in that, unless otherwise specified, all capital transactions involving operations between resident and non-resident persons or other entities, whether in or outside Malta, including their related payments, may be carried out without restriction. Inapplicability of such Act means that, any restrictions which may be imposed from time to time on capital transactions, shall not apply for transactions relating to the ownership, operation, administration, management, purchase or financing of a Malta tonnage tax ship.

Malta Tonnage Tax - Requirements

For the Malta tonnage tax regime to apply the following conditions need to be fulfilled:

  • the vessels are operated through a shipping organisation
  • the vessels are classified as Malta tonnage tax ships as defined in the law;
  • the activities undertaken are qualifying shipping activities;
  • separate accounts are kept clearly distinguishing receipts and payments relating to shipping activities from those relating to any other business; and
  • ship registration fees and Malta tonnage tax are paid.

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