Flat tax option for foreign high-earners

A 15 per cent flat tax on income to attract foreign workers engaged in specialised jobs will shortly be introduced to make it attractive for companies to engage experts on a temporary basis.

The legislative move will complement the income tax regimes currently in force for foreign workers in Malta and is intended to help companies attract scientists and experts who may be required for particular jobs, a Finance Ministry spokesman said.

Details of the proposed tax are still being worked out but the initiative has already got thumbs up from Angelou Economics, the American consultants appointed by government to draw up an economic development plan based on the administration's Vision 2015.

"There are instances when companies find it difficult to find Maltese with expertise in specialised areas and this tax initiative will help them attract the necessary human resources from abroad. These are high-income jobs," the spokesman said.

In its analysis of the economy Angelou Economic noted "significant gaps in human resources availability and training across many sectors", adding that upcoming legislation to attract foreigners and expatriates with a 15 per cent flat tax rate was a "move in the right direction".

As things stand today, foreigners who are resident in Malta for tax purposes are taxed at the same rates applicable to Maltese residents. These are progressive rates of tax with a maximum rate of 35 per cent with different tax bands for single and married individuals.

Income arising in Malta to non-resident foreigners is also taxed at progressive rates with a maximum rate of 35 per cent. However, the tax bands are significantly different. The first €700 are tax-free while the next €2,400 are taxed at 20 per cent and the next €4,700 are taxed at 30 per cent. The remainder is taxed at 35 per cent. The current regime also has a flat tax rate option for foreigners who are registered in terms of the Resident Scheme Regulations. These are taxed at a flat rate of 15 per cent subject to a minimum tax payment of €4,192 per annum.

The proposed legislation will apply to high income non-resident foreigners engaged on a temporary basis.