By means of Legal Notice 139 of 2025, the Government has published the above-mentioned rules, with the aim of easing certain compliance obligations and offer targeted relief to newly established companies meeting specific criteria.
A summary of the rules is the following:
● With effect from accounting periods commencing on or after 1st January 2024, a newly registered company will not be required to have its financial statements audited in respect of the first two accounting periods, subject to the satisfaction of a number of conditions.
● The conditions include that the company must be fully owned by individuals who are in possession of educational qualifications as prescribed and who have set up the company within 3 years of obtaining the said qualifications. The other condition to be satisfied is that the annual turnover of the company cannot exceed Eur80,000 per annum.
● Where a company does not avail itself of the above-mentioned waiver, it may claim a deduction against its income of 120% of the costs incurred for such audit report, provided that the deduction claim cannot exceed Eur700 for each accounting period.
● With respect to other companies (excluding companies registered under the Merchant Shipping Act), where such companies satisfy two of the three criteria established in accordance with Article 185(2) of the Companies Act, the audit report requirements shall be deemed to have been discharged when a review report is made. The meaning of a ‘review report’ shall have the same meaning as established in Guidelines still to be published by the Commissioner for Tax and Customs.
● On the other hand, companies that satisfy all three criteria established in accordance with Article 185(2) of the Companies Act, are not required to submit an audit or review report.
● The above-mentioned treatment extends to companies preparing consolidated accounts, provided the group qualifies as a small group in terms of article 185(5) of the Companies Act.
● Companies registered under the Merchant Shipping Act and benefitting from the exemption stipulated under regulation 64 of the Merchant Shipping Regulations are deemed to have satisfied their audit obligations under the Income Tax Management Act, even where no audit is carried out. The same applies to small groups preparing consolidated accounts.
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