Malta: Budget 2014 and other fiscal developments

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Malta: Budget 2014 and other fiscal developments

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David Farrugia


Donald Vella

On November 21 2013 the Maltese parliament approved the 2014 Budget. The Budget is mainly geared towards small and medium enterprises and family businesses, a sector which plays a very significant role in the Maltese economy in general. Notable Budget measures from a taxation perspective include:

  • The continuation of the gradual reduction in the tax rate applicable for the top tax bracket for personal income tax by reducing the rate applicable to such bracket of any individual (up to €60,000) from 32% to 29%. Any income derived by an individual exceeding the amount of €60,000 would continue to be subject to the rate of 35%;

  • Changes to the tax regime applicable to income derived from rental of residential property – an optional election may now subject such income to a final tax at the flat rate of 15%;

  • Tax credits to small businesses and self-employed persons were also introduced whereby subject to certain conditions, such businesses or persons are now eligible to claim tax credits equivalent to 45% or 65% of their qualifying capital expenditure.

Tax treaty network

Malta signed a double tax treaty with Ukraine in September 2013, which was followed by another treaty signed between Malta and Liechtenstein in the same month. The treaty signed with Ukraine provides for restricted tax rates on dividend payments whereas under the treaty signed with Liechtenstein, any dividend payments are to be taxed exclusively in the state of the recipient's residence. These treaties mark another satisfactory year for Malta in this regard, where continuous efforts to increase its treaty network have resulted in another treaty being signed with Russia and another treaty signed with India earlier during 2013. The treaties signed in 2013 have significantly enhanced Malta's tax treaty network which is now increased to 70 tax treaties, which are largely based on the OECD Model Convention.

David Farrugia (david.farrugia@camilleripreziosi.com) and Donald Vella (donald.vella@camilleripreziosi.com)

Camilleri Preziosi

Tel: +356 21238989

Fax: +356 21223048

Website: www.camilleripreziosi.com

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