Malta: Developments in Malta's Corporate International Tax Framework (2025)

1. Introduction

This article provides a comprehensive overview of recent developments in Malta's corporate international tax framework, with particular emphasis on the implementation of the OECD Pillar Two Global Minimum Tax, the introduction of elective compliance mechanisms, and broader regulatory trends. These reforms aim to align Malta with evolving international tax norms while preserving the country's competitiveness and appeal to foreign investors.

2. Transposition of the EU Pillar Two Directive

On 20 February 2024, Malta formally transposed the EU Directive on ensuring a global minimum level of taxation for multinational enterprise (MNE) groups, via Legal Notice 32 of 2024. The Directive applies to MNE groups with annual consolidated revenues exceeding €750 million and mandates a minimum effective tax rate of 15%.

Malta has exercised the deferral option under Article 50 of the Directive, thereby postponing the application of both the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) until 31 December 2029. This transitional period provides additional time for in-scope entities to adapt their operational structures and compliance frameworks.

3. Introduction of the Elective Domestic Pillar Two Regime

In April 2025, Malta introduced an elective domestic minimum tax regime, applicable retroactively from fiscal year 2024. This optional regime allows in-scope MNE groups to voluntarily align with Pillar Two standards within Malta, thereby mitigating potential exposure to top-up taxes in foreign jurisdictions.

The regime is designed to provide fiscal certainty and preserve Malta’s investment attractiveness. It includes jurisdictional top-up tax computations that adhere to OECD GloBE (Global Anti-Base Erosion) Model Rules, while avoiding the immediate imposition of a Qualified Domestic Minimum Top-up Tax (QDMTT).

4. Qualified Refundable Tax Credits (QRTCs)

Complementing the elective regime, Malta is developing a framework for Qualified Refundable Tax Credits (QRTCs) that meet the criteria of covered taxes under the OECD’s Pillar Two framework. These credits are intended to preserve the value of existing tax incentives while ensuring that such benefits do not undermine the application of the minimum tax rate.

The design and eligibility criteria for QRTCs are currently under stakeholder consultation, with further guidance expected in the second half of 2025.

5. Roadmap for Corporate Income Tax Reform

A formal roadmap for broader corporate income tax (CIT) reform is underway, intended to complement Malta’s Pillar Two strategy. The roadmap is expected to promote greater transparency, coherence, and predictability within the CIT regime.

Anticipated milestones include:

• Phased implementation of the IIR and UTPR from 2026 onward,

• Finalisation of the QRTC framework,

• Enhanced reporting and administrative infrastructure to support new tax obligations.

6. Implications for Multinational Enterprises

Multinational enterprises with operations in Malta should consider the following strategic actions:

• Evaluate the potential advantages and compliance requirements under the elective domestic minimum tax regime.

• Monitor the development of QRTCs and assess how they interact with existing or future investment incentive structures.

• Prepare for the eventual enforcement of IIR and UTPR by 2029, including potential restructuring or policy adjustments.

• Review internal compliance and reporting systems to align with emerging international tax transparency standards.

7. Conclusion

Malta is pursuing a calibrated, business-friendly approach to implementing international tax reforms. By introducing an elective regime and deferring binding rules under the EU Directive, Malta aims to maintain legal certainty and investor confidence while conforming to OECD-aligned standards.

Ongoing stakeholder engagement and regulatory clarity will be crucial as the framework evolves and final implementing measures are introduced in the coming years.

Reference/ Citation

• Council of the European Union. (2022, December 14). Council Directive (EU) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union. Official Journal of the European Union, L 328, 1–47. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32022L2523

• Government of Malta. (2024, February 20). Legal Notice 32 of 2024: European Union Minimum Tax Implementation Regulations, 2024. Malta Government Gazette No. 21,212.

• OECD. (2021). Global anti-base erosion model rules (Pillar Two). Organisation for Economic Co-operation and Development. https://www.oecd.org/tax/beps/global-anti-base-erosion-model-rules-pillar-two.htm

• OECD. (2022). Commentary to the global anti-base erosion model rules (Pillar Two). Organisation for Economic Co-operation and Development. https://www.oecd.org/tax/beps/commentary-to-global-anti-base-erosion-model-rules-pillar-two.htm

• OECD. (2023–2025). Administrative guidance on Pillar Two GloBE Rules (periodic updates). Organisation for Economic Co-operation and Development. https://www.oecd.org/tax/beps/pillar-two-administrative-guidance.htm

• Ministry for Finance and Employment. (2025). Press releases and policy updates on Pillar Two implementation and tax reform. Government of Malta. https://finance.gov.mt

• Commissioner for Revenue. (2025). Technical circulars and guidance on Pillar Two compliance and QRTCs. Government of Malta. https://cfr.gov.mt

‍