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New Rules on Audit Report Waivers and Deductions
The Ministry for Finance has introduced new subsidiary legislation under the Income Tax Management Act (CAP 372), following LN 139 of 2025. These new rules repeal the previous Audit Report Waiver and Deduction Rules and bring in updated measures on audit requirements.
Key updates include:
• Two-Year Audit Waiver or Tax Deduction
Newly registered companies with individual shareholders holding MQF Level 3+ qualifications (obtained within the past three years), and turnover below €80,000, may choose between:
o A two-year exemption from filing an audit report; or
o A tax deduction of 120% of audit report costs (capped at €700 annually).
These benefits end immediately if there is a change in shareholder eligibility.
• Reduced Audit for Existing Companies
Small companies that meet certain criteria under the Companies Act may benefit from reduced audit obligations, ranging from a simplified review report to a full audit exemption.
• Shipping Companies
Companies registered under the Merchant Shipping Act that already qualify for exemptions under the Merchant Shipping Regulations remain exempt from statutory audit requirements.

New Simplified Dissolution Procedure for Companies

On 11 July 2025, the Companies (Amendment) Act (Act No. XVIII of 2025) was published, introducing important changes to Maltese company law.

The Act, which is not yet in force, will add a new Article 214A to the Companies Act, creating a simplified dissolution procedure for private limited liability companies.
This new process will allow directors of inactive companies to apply directly to the Registrar of Companies to have the company struck off the register, without the need to appoint a liquidator.

To qualify, the company must have been dormant for at least six months, with no trading activity, employees, outstanding filings, or pledged shares.
The procedure is designed to make winding up faster, cheaper, and less burdensome, particularly for small or dormant companies.

Safeguards remain in place: directors must provide statutory declarations, shareholder approval, and ensure all accounts are closed. False declarations may result in fines or imprisonment, and a three-month objection period will still apply.The reform is expected to ease the administrative load on businesses and streamline the register, though its effectiveness will depend on how it is implemented.

New 7.5% Tax Rate for Artists

The Government of Malta has published LN 137 of 2025, introducing a special tax regime for individuals earning income from artistic activities.

Under the new rules, artists will be taxed at a flat rate of 7.5% on their net earnings (after deductible expenses), up to a maximum of €50,000.

Any income above this threshold must be declared in the individual’s tax return and taxed at the normal progressive rates.
It is also clarified that the 15% part-time work tax rate under Article 90A of the Income Tax Act does not apply to artistic income.
For income to qualify, it must be certified by Arts Council Malta as derived from artistic activity.

New 7.5% Tax Rate on Sports Income

Through Legal Notice 147 of 2024, the Government of Malta has introduced new rules on the taxation of income earned from sports activities.
Under the rules, individuals receiving income from employment related to sports may opt to have such income taxed at a flat rate of 7.5% on the gross amount, instead of the standard progressive rates. This tax is final, meaning no refunds or set-offs will be granted.
The reduced rate applies to income derived from services provided in the course of, or directly related to, a sports activity, whether on a full-time or part-time basis, in the following roles:
• Registered players or athletes
• Licensed coaches
• Licensed match officials
• Match analysts
• Team managers or sporting directors
• Sport administrators
• Team doctors
• Team physiotherapists

New Special VAT Scheme for Small Undertakings

From 1 January 2025, a new EU-wide special scheme for small enterprises will come into effect and has been transposed into Maltese law through amendments to the Value Added Tax Act (VATA).
The scheme allows small businesses established in one EU Member State to exempt cross-border supplies from VAT in another Member State, in the same way domestic small businesses may already benefit from VAT exemptions locally.

In Malta, the new provisions are split into two parts:

• Article 11A – for taxable persons established in Malta
• Article 11B – for taxable persons established outside Malta

Article 11A – Small Undertakings Established in Malta
Businesses established in Malta may apply to register under Article 11A if they qualify as small undertakings under the Sixth Schedule of the VATA. Registration will only take effect once confirmed by the Commissioner for Tax and Customs, and the VAT number will include the suffix “EX”.
To qualify, an undertaking must meet the following conditions:

• Its Union annual turnover in the previous calendar year is below the EU threshold;
• It makes supplies in at least one Member State where it is not established and qualifies for that Member State’s small business exemption;
• The value of such supplies does not exceed the exemption threshold of that Member State.

Applications under Article 11A must be submitted electronically via the designated portal and must include company details, Member States where the scheme will be used, and turnover figures for both the previous and current year.
Enterprises registered under Article 11A are obliged to electronically notify the Commissioner of any changes, including:
• The decision to apply the scheme in a new Member State;

• or The decision to stop applying the scheme in a particular Member State.

The exemption becomes effective only once the Commissioner has notified approval.