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Malta's
wide network of double taxation agreements as well as other methods for
relieving double taxation on cross border transactions provide an excellent
basis for establishing tax efficient structures including international
trading and holding companies.
Malta's
full imputation system of taxation and the refund of tax provisions contained
in the legislation make the ITC a very tax efficient vehicle for non-resident
shareholders.
An
ITC is taxed at the normal company rate of tax which is currently 35%.
However, upon a receipt of a dividend from an ITC, non-resident shareholders
are:
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taxed at a flat rate
of 27.5% on the gloss amount of the dividend and are credited with the
amount of tax paid by the company on the profits out of which the dividend
was paid;
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entitled to a refund
under the provisions of the Income Tax Management Act of two-thirds of
the Malta tax paid by the company on the same profits. This refund
is payable by the Inland Revenue not later than the fourteenth day following
the end of the month in which the refund becomes due.
Non-resident
shareholders of a Maltese holding company which has a participating holding
in a non-resident company qualify for a full refund of the Malta tax paid
by the Maltese company on income arising from these foreign holdings.
Such refund is triggered upon a distribution of this income to the non-resident
shareholders of the Maltese company.
ITCs
and IFICs may request for an advance ruling on their taxable status.
Such a ruling guarantees the tax position of the company for a minimum
period of five years and may be renewed for a further period of five years.
Any changes in the tax legislation during these periods will not become
operative before the lapse of two years from the coming into force of the
new law. |
International trading and holding companies
