As Maltese businesses continue to respond to the practical implications of transfer pricing rules introduced in 2024, the focus has shifted decisively from awareness to execution. Organisations are increasingly expected to demonstrate how tax outcomes align with economic substance, governance and real‑world decision‑making.

 

These themes were explored during a recent RSM Malta‑led conference that brought together tax advisors, regulators and industry representatives. Opening perspectives from William Spiteri Bailey, President of the Malta Chamber of Commerce, Enterprise and Industry, and Manfred Barbara, Director General (Verifications and Audit) at the Malta Tax and Customs Administration, underscored the strategic importance of transfer pricing within Malta’s wider tax modernisation agenda, particularly in relation to transparency and international alignment.

 

A central focus of the income tax discussion was led by Dr Timothy Zammit, Tax and Corporate Partner at RSM Malta, who guided an in‑depth examination of Malta’s transfer pricing framework and its practical implications for multinational groups. Contributions from Efrem Debono (Founder, TAX/ED), Andrew Seidler (Tax Partner, RSM UK) and Nick Xuereb (Group CFO, Toly Products Ltd) highlighted how the framework’s threshold‑driven application is reshaping expectations for cross‑border structures.

 

Key emphasis was placed on accurate delineation, where substance takes precedence over form, supported by strong functional analysis and documentation that genuinely reflects how value is created and decisions are made in practice. Robust documentation, including Master and Local Files, was consistently positioned as a core risk‑management tool rather than a compliance formality. Early and well‑considered implementation remains critical, particularly as tax authorities move towards more active scrutiny. Benchmarking challenges in smaller markets such as Malta further reinforce the need for carefully justified methodologies when relying on foreign comparables.

 

The VAT implications of transfer pricing adjustments formed a dedicated and substantive part of the discussion. Michela Scicluna, Manager, Indirect Tax Advisory at RSM Malta, introduced the topic by setting out the key areas of interaction between transfer pricing and VAT, framing the implications for businesses as they move from policy design to implementation.

 

This was followed by a focused fireside chat with Dunstan Farrugia, Senior Manager at the Malta Tax and Customs Administration, and Kenneth Cremona, Senior Manager, Indirect Tax Advisory at RSM Malta. The discussion examined how transfer pricing adjustments, particularly year‑end true‑ups, may give rise to VAT consequences where they affect the consideration for intra‑group supplies. Recent CJEU decisions, including Arcomet and Högkullen, were discussed in detail as pivotal in clarifying when such adjustments fall within the scope of VAT, reinforcing the importance of consistency across transfer pricing policies, contractual arrangements, invoicing practices and VAT reporting.

 

As Karen Spiteri Bailey, Managing Partner at RSM Malta, observes:

 

“Transfer pricing may be technical, but at its core it is about understanding how businesses really operate. It has evolved beyond a documentation exercise into a key governance and risk management consideration.”