Corporate Tax 2024 Practice Guide | Chambers And Partners – Withholding Tax

Donald Vella, Kirsten Debono Huskinson and
Gabriella Chircop have
contributed, once again, the Malta Chapter to the Corporate Tax 2024
Global Practice Guide, published by Chambers and
Partners.

In summary, the Guide covers the following topics:

Types of Business Entities, Their Residence and Basic Tax
Treatment

Corporate structures and tax treatment; transparent entities;
determination of tax residence of incorporated businesses;
applicable income tax rates.

Key General Features of the Tax Regime Applicable to
Incorporated Businesses

The calculation of taxable profits including deductibility of
allowable expenses; special incentive schemes that are available to
support companies investing in research and development in
different areas of science and technology; basic rules on loss
relief; the limitations imposed on deduction of interest; basic
rules on consolidated tax grouping; taxation of capital gains,
imposition of stamp duty, VAT and customs duties.

Division of Tax Base between Corporations and Non-Corporate
Businesses

The tax treatment relating to the payment of dividends by a
Maltese company, including the full imputation system and tax
refund mechanism; the tax treatment of a sale of shares held by
individuals in closely held corporations versus publicly traded
corporations.

Key Features of Taxation of Inbound Investments

Imposition of withholding taxes on dividends and payments of
interest or royalties from a Maltese company to a resident or
non-resident person; Malta’s tax treaty network; principal
purpose test; transfer pricing issues and disputes.

Key Features of Taxation of Non-Local Corporations

Difference in tax treatment of local branches versus local
subsidiaries; capital gains accruing to non-residents; change of
control provisions; constraints on related-party borrowing.

Key Features of Taxation of Foreign Income of Local
Corporations

Tax treatment of foreign income generated by Malta tax resident
companies; applicability of the participation exemption; taxation
of dividends from foreign subsidiaries; taxation of gains derived
from the transfer of intellectual property or profits from
royalties derived from the licensing of intellectual property.

Anti- Avoidance

General anti-avoidance rule under Maltese Income Tax Act; ATAD
anti-abuse measures including interest limitation rules, exit tax
rules, general anti-avoidance rule, controlled foreign corporation
rules, rules on hybrid mismatches.

BEPS

Implementation of the OECD’s Base Erosion and Profit
Shifting (BEPS) Project’s action points; the ratification of
the Multilateral Instrument; adoption of the EU Minimum Tax Directive
(Pillar Two), transfer pricing changes; transparency and
country-by-country reporting.

You can view the full chapter by clicking here.

Reproduced with permission from Chambers and Partners. This
Guide was first published in Chambers and Partners Practice
Guides.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.