Malta Launches 15% Final Corporate Tax Regime as a Simplified Alternative to Imputation System

In a landmark reform of its corporate tax framework, the Maltese government officially enacted the Final Income Tax Without Imputation Regulations on September 2, 2025, introducing a 15% elective final tax on company profits.

The move marks one of the most significant overhauls of Malta’s business taxation system in recent years, offering what the government describes as a simpler and more transparent alternative to the long-standing imputation and refund model.

From 35% to a Streamlined 15%

For decades, Malta’s corporate tax system operated with a statutory rate of 35%, partially offset by a shareholder refund mechanism that typically reduced the effective rate to between 5% and 10%. While this structure made Malta one of Europe’s most attractive jurisdictions for international corporate setups, it also introduced administrative complexity and drew occasional scrutiny from EU regulators due to the intricate refund process.

The new 15% elective regime seeks to eliminate this complexity. Under the reform, companies may now elect to pay a flat 15% tax on chargeable income, with no imputation credits or shareholder refunds applicable. This creates a cleaner, more direct taxation approach for companies seeking simplicity and certainty.

Key Features of the 15% Final Tax

The new system introduces a number of important provisions:

1. Optional structure – Companies can choose between the traditional 35% tax with shareholder refunds or the new 15% final tax regime.

2. Final and non-refundable – Once the 15% tax is paid, it is considered final, and shareholders cannot claim any refunds.

3. Same tax base – The calculation of taxable income remains unchanged; the difference lies solely in the rate and treatment.

4. Final Tax Account (FTA) – Profits taxed under the 15% regime are recorded in a new Final Tax Account, from which dividend distributions will not qualify for refunds.

5. Five-year election period – Companies opting for the new system must apply it for a minimum of five consecutive years.

6. Effective date – The reform applies from the basis year ending December 31, 2024, corresponding to the assessment year 2025.

Implications for Businesses

The reform is designed to bring greater flexibility and simplicity, especially benefiting small and medium-sized enterprises (SMEs) and locally focused companies that do not rely on complex international ownership or refund structures.

Advantages include reduced administrative burdens, more predictable cash flows, and clearer tax obligations. Considerations, however, remain for larger groups and international holding structures that may find the traditional 35% plus refund model more advantageous under certain circumstances.

Strategic Outlook

From a broader policy perspective, Malta’s 15% elective corporate tax aligns with global tax initiatives, notably the OECD and EU’s Pillar Two framework, which sets a 15% minimum corporate tax rate. By maintaining an optional approach, Malta preserves its signature flexibility, allowing both traditional international structures and simpler, locally oriented business models to operate side by side.

Final Thoughts

The introduction of the 15% final tax underscores Malta’s determination to modernize its fiscal system while maintaining its appeal as a destination for international investment, regional headquarters, and holding companies.

Ultimately, the decision for businesses will hinge on their ownership composition, income characteristics, and administrative capabilities. For some, the streamlined 15% model may offer the clarity and efficiency they seek; for others, the traditional imputation system may continue to deliver optimal results.

The overarching message is clear: Malta remains a competitive jurisdiction — now offering a simpler, more stable path to compliance for businesses prioritizing transparency and tax efficiency. 

By fLEXI tEAM