It is time to consider reducing corporate tax for local companies, Sandro Chetcuti, President of the Malta Developments’ Association, replied when asked to list his top three priorities for Budget 2021.

He noted that corporate tax had already been reduced for foreign companies and it was noted that such measures boosted the economy. However, he pointed out, the move also created an unlevel playing field for Maltese companies.

According to the website of the Commissioner for Revenue, Maltese companies are subject to corporate tax at the rate of 35 per cent on their worldwide income and capital gains. Foreign companies incorporated outside Malta and carrying out business activities on the island are liable to tax on income arising in Malta.

When companies are taxed at the standard rate of 35 per cent, following the distribution of dividends, shareholders are entitled to a refund of part or of all the tax paid by the company. The purpose of such imputation system is to eliminate any double taxation that might arise on the distribution of such dividends and, thus, company profits will only be subject to tax at corporate level.

Another priority for Mr Chetcuti that should be taken into account in the upcoming Budget is the allocation of funds for forward planning because “we are in a desperate situation in terms of quality developments”.

The MDA President also expects to see more incentives with regard to the transfer and stamp duty on property. He believes that such measures would serve to encourage people continue to invest in the property market.

The Budget for next year is expected to be presented in October.