Maltese Finance Ministry Clarifies Position On Withholding Tax On Investment Income

by Lisa Ugur, Tax-News.com, London

29 May 2001

According to a report in the Times of Malta, the Maltese Finance Ministry has clarified its position regarding withholding tax on investment income, following a number of inquiries to the Inland Revenue.

The Finance Ministry said that because of international developments, every country would in the near future be obliged to provide information to other countries on interest and dividends paid in that country to foreign investors. The Ministry said the government wanted to explain that individuals who had money invested abroad and would like to bring it back to Malta could deposit the money in local banks and authorised funds.

Malta's tax regime is naturally designed to encourage the repatriation of funds to, and the retention of funds in, Malta. The domestic tax provisions include a final tax on investment income of 15 per cent (withheld at source) in the case of interest paid to residents (interest paid to non-residents remains exempt from withholding tax).

The Finance Ministry said last week that interest received by investors would be reported to the tax authorities only if investors decided not to allow the deduction of the 15 per cent tax on the interest paid. Investors who opt to have 15 per cent deducted do not need to declare the interest or dividend in their income tax return. Most importantly, the bank or fund manager in this case cannot by law pass on any information about the deposits of such investors.

Recommended