By means of Legal Notice 306 of 2017, the Government of Malta has issued new rule, in virtue of which a new deduction will be given for income tax purposes to companies which will have effect as from year of assessment 2018.
The companies which will qualify for such a deduction are those companies whose annual turnover does not exceed €80,000 or a pro rata amount if the relevant accounting period is other than twelve months. Companies which do not avail themselves of the audit report waiver provided for in the second proviso to Article 19(4)(a) of the Income Tax Management Act, may claim a deduction against its income of 120% of the audit fees incurred.
The deduction shall be applicable for the first two accounting periods of a newly registered company whose sole shareholders are all individuals in possession of educational qualifications as defined below, who would have set up the new company within three years of obtaining the said qualifications. The deduction may not exceed €700 in each accounting period.
Educational qualifications refer to the successful completion of a course of study at MQF level 3, or higher, as recognized by the Malta Qualifications Recognition Information Centre.
The audit report waiver and the deduction will cease to apply with immediate effect if there is a change in the shareholding of the company as a result of which the shareholders will not all be individuals who have attained the educational qualifications as aforementioned.