Maltese Government To Propose Tax Reforms

by Robert Lee, Tax-News.com, London

18 July 2006

The Maltese government is lining up some changes in taxation in order to boost the island's economic growth and competitiveness.

According to a report in the Times of Malta, the government is preparing to release a pre-budget document next month which is likely to contain some tax relief measures and detail the work being carried out by the Tax Reform Commission.

The Commission is said to have drawn up a number of proposals dealing with company and personal taxation, and has suggested that the 35% corporate tax rate should be lowered and the tax system modified in line with international trends.

The review of the Maltese tax system is part of a five-year strategy announced by Dr Gonzi at the launch of a Pre-Budget Document last year, designed to improve Malta's overall economic competitiveness.

According to this Document, the government is hoping to change the taxation system so that: tax policy stimulates economic growth; the system is re-engineered from direct taxation to environment-related taxation; the regime promotes the uptake of the household rental market through tax incentives; and reporting requirements are further simplified to lower administrative costs.

The Document is one of three important documents which will guide government action in the coming years, the other two being the National Reform Programme which is intended to address Malta’s competitiveness in terms of the EU’s Lisbon Agenda, and the National Strategic Reference Programme, which will outline the strategic priorities for Objective 1 structural funds from the EU for the period 2007-2013.

The latest pre-budget document will shortly be put before the cabinet before a public consultation in launched, the Times report stated.

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