Income tax measures
Malta Budget 2016
Reduction in personal income tax rates
The Minister has announced a reduction in personal income tax by increasing the income on which no tax is payable from €8,500 to €9,100 (single computation), from €11,900 to €12,700 (married computation) and from €9,800 to €10,500 (parental computation).
Furthermore, through a change in the way an individual’s tax charge is computed, individuals with an annual income of up to €19,500 will save €90 tax per year (single computation), individuals with an annual income of up to €28,700 will save €120 tax per year (joint computation), and individuals with an annual income of up to €21,200 will save €105 tax per year (parental computation).
A couple opting for a joint declaration and who earn up to €28,700 will save €120 tax per year, while a couple opting for a separate computation will save up to €180 tax per year.
|2016 Rates||Single Computation||Deduction|
|0%||0 - 9,100||0|
|15%||9,101 - 14,500||1,365|
|25%||14,501 - 19,500||2,815|
|25%||19,501 - 60,000||2,725|
|2016 Rates||Joint Computation||Deduction|
|0%||0 - 12,700||0|
|15%||12,701 - 21,200||1,905|
|25%||21,201 - 28,700||4,025|
|25%||28,701 - 60,000||3,905|
|2016 Rates||Parental Computation||Deduction|
|0%||0 - 10,500||0|
|15%||10,501 - 15,800||1,575|
|25%||15,801 - 21,200||3,155|
|25%||21,201 - 60,000||3,050|
Income tax on sports activities
The optional flat income tax rate of 7.5% chargeable on income derived by qualifying football or waterpolo players will be extended to players of other sports and will now also include income derived by sports coaches.
Incentive for research and innovation
In order to encourage more research and innovation, enterprises that employ persons holding a doctorate or who are studying for a doctorate in science, information technology, or engineering shall be entitled to a tax credit of up to a maximum of €10,000 when the employment of such persons is retained for a minimum of 12 months.
Donations to the Community Chest Fund
Companies that donate a sum of not less than €2,000 to the Community Chest Fund during 2015 will be entitled to a tax deduction equivalent to the amount donated.
Donations to the arts
In order to encourage donations to the arts, a tax deduction equivalent to 150% of the amount donated shall be introduced.
Tax on income earned by police officers
With effect from 1 January 2016, any income earned by police officers from the carrying out of ‘extra duties’ for organisations, individuals, and companies will be chargeable to tax as separate income and subject to a reduced rate of tax of 15%.
As a measure to facilitate the computation of taxable income, a fiscal consolidation regime will be introduced whereby companies under common ownership will be eligible to submit one consolidated income tax return.
Tax deduction on hybrid/electric vehicles
Businesses that buy hybrid or electric vehicles may avail themselves, in the year in which such vehicle is bought, of a tax deduction amounting to 50% of the cost of the vehicle.