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Tax accounting for
companies
Up
to basis year 1994 there were two categories of distributable income in
a Maltese company - taxed and untaxed income. From basis year 1995
a third category of income will be created by dividing the taxed income
into a “Maltese Taxed Account” and a "Foreign Income Account":
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the Foreign Income Account
includes all income and capital gains derived from overseas assets and
profits derived from an overseas branch, agency, or permanent establishment.
This account is needed in order to identify the type of income which benefits
from the flat-rate foreign tax credit and the refund provisions;
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the Maltese Taxed
Account contains the balance of the taxed income that has not been allocated
to the Foreign Income Account. The difference between the distributable
income of the company and the sum of these two is allocated to the Untaxed
Account. Dividends to Maltese individuals paid out of the Untaxed
Account suffer a final withholding tax of 15%.
Inter-company
distributions are allocated to the account of the company receiving the
dividend which corresponds to the account of the paying company from which
the dividend was paid.
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Malta
as a Tax Friendly Jurisdiction
