Tax Revenues Forming Larger Part Of Maltese Government’s Income

by Robert Lee, Tax-News.com, London

08 December 2004

According to figures released by the Maltese National Statistics Office, tax revenues are forming an increasingly important part of the government’s overall income.

According to the NSO, during 2003, tax revenues amounted to Lm603.6 million and accounted for 81.6% of the government’s total recurrent revenues, up from 77.8% in 2002.

Indirect taxes, at Lm257.1 million or 42.6% of total tax revenues, were found to be the most important source of revenue. These taxes include VAT, import duties, excises and other specific taxes on services, and on financial and capital transactions.

Direct taxes, including income and corporate taxes, have also increased as a share of total revenue from 32.7% in 2000 to 37.1% in 2003. However, while income tax has maintained a consistent share over the four year period at 19.6%, the share of corporate tax has increase to 13.9% from 10.3%.

Meanwhile, the relative share of tax revenues made up from social contributions by employees and employers has declined from 22.6% in 2000 to 20.3% in 2004.

At 32.7%, the NSO notes that Malta’s tax-to-GDP ratio is considerably lower than the EU-25 average of 40.3% for 2003. However the gap between Malta and the EU-25 has narrowed considerably since 2000, when Malta’s ratio was estimated at 28.5% compared to an EU-25 average of 41.3%.

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