Tax Treaties
Maltese tax efficient status is a combination of low ONSHORE taxation plus the comfort and versatility of an extensive tax treaty network. Malta currently has favourable treaties with more than 34 countries including: Albania, Australia, Austria, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Germany, Hungary, India, Italy, Korea, Latvia, Lebanon, Libya, Luxembourg, Malaysia, Netherlands, Norway, Poland, Romania, Slovakia, South Africa, Sweden, UK.

Use of Malta’s Double Taxation Agreements
Although these fiscal advantages arise upon distribution of profits, an ITC may reduce its tax payable in Malta by claiming double taxation relief Double taxation relief is available in Malta under the domestic provisions of the Income Tax Act if foreign tax has been suffered in a country with which Malta has a double tax treaty or in respect of Commonwealth income tax. To date, Malta has almost 30 double taxation agreements and several other treaties are underway.

Status as an Overseas Company based in Malta (ie similar to a Branch office), or routing the purchase of shares via a Maltese company can neutralize domestic capital gains impositions on sale or assets, since this would be treated as a profit & loss item. It must be stressed however that to sustain preferential tax treatment, the overseas company MUST clearly demonstrate that there is effective management from Malta and not merely a 'brassplate presence', hence the need to appoint an actual Malta based management team, and strengthen the Malta role - eg internet invoicing and banking, hosted in Malta and actual international marketing initiatives.

Relief from double taxation has been extended by introducing unilateral relief and a system of flat rate foreign tax credit. Unilateral relief is given if no treaty exists but the income arises outside Malta, has been subject to tax and it is income of a person resident in Malta. On the other hand, where no proof of foreign tax suffered is available, a company may claim a flat rate foreign tax credit of 25% of the net income provided a certificate from the auditor is obtained stating that the income in question arose from overseas. This certificate will be sufficient to claim the flat rate foreign tax credit. The interaction of these reliefs ensure that an International Trading Company will never suffer double taxation on the same income. The flat rate foreign tax credit may also be used by an ITC to reduce the tax payable in Malta.

Availability of Dividend Feeder Company
A shareholder wishing to retain funds in Malta or in the company itself may incorporate another company as a dividend feeder company and the refund provisions will still apply. The dividend feeder company may then plough back the funds into the distributing company. It is thus possible for a non-resident to benefit from these fiscal advantages without ever receiving any dividend from the company.