Malta has enacted the Final Income Tax Without Imputation Regulations, 2025 through Legal Notice 188 of 2025, published on 2 September 2025. This legislation introduces an optional 15% flat-rate tax regime for companies, offering an alternative to Malta’s traditional imputation system. The new framework is strategically aligned with the OECD’s Pillar II global minimum tax initiative.

Existing tax system

Malta currently operates a full imputation system, whereby corporate tax paid by a company is credited to its shareholders. This credit offsets the shareholders’ personal tax liability on dividends, effectively eliminating economic double taxation.

New elective regime

Under the 2025 regulations, eligible entities may opt to be taxed at a flat rate of 15% on their chargeable income. Key features include:
 

  • The 15% tax is final and non-refundable.
  • No tax credit or offset is available at the shareholder level.
  • The regime excludes:
    - Dividends from profits not allocated to another Maltese company’s final tax account.
    - Income already subject to a final tax rate.

Once elected, the regime applies for a minimum of five years, and the same lock-in period applies if the entity chooses to revert to the standard imputation system.
A safeguard clause ensures that the tax paid under this regime is not lower than what would be payable under the standard system after shareholder refunds.

Strategic considerations 

Although Malta has not yet implemented the OECD’s Income Inclusion Rule (IIR), Undertaxed Profits Rule (UTPR), or a Qualified Domestic Minimum Top-up Tax (QDMTT), this elective regime allows companies to voluntarily meet the 15% global minimum tax threshold. It provides:
 

  • Predictability in tax outcomes.
  • Flexibility in aligning with GloBE rules.
  • A proactive approach to international tax compliance.

How we can assist

This regime presents an opportunity for Maltese taxpayers to align with global tax standards while maintaining control over their domestic tax strategy. 

We can support you by:

  • Evaluating your position under both the imputation and final tax regimes.
  • Advising on strategic and long-term tax implications.
  • Assisting with the election process and preparing the necessary documentation for submission to the Commissioner for Tax and Customs.
     

Written by Melanie Ciappara, Senior Manager – Direct Tax Advisory & Compliance