Under the Maltese Tonnage Tax Regulations, income derived from shipping activities by licensed shipping organisations are exempt from income tax in Malta. Inapplicability of the Maltese Income Tax Act The inapplicability of the Maltese Income Tax Act results in no tax being chargeable on:
- Any income derived from shipping activities, including income derived by a ship manager from ship management activities
- Any profits or gains derived from the sale or other transfer of a tonnage tax ship or from the disposal of any rights to acquire a tonnage tax ship
- Any gain arising on the liquidation, redemption, cancellation, or any other disposal of shares, securities held in any licensed shipping organisation owning a tonnage tax ship while she was a tonnage tax ship
- Interest income in relation to any financing of the operations of licensed shipping organisations, or the financing of any tonnage tax ship
- The distribution of tax-exempt profits derived from shipping activities remain tax-exempt in the hands of the shareholders.
Conditions for eligibility
- The vessel qualifies as a “tonnage tax ship”, defined as a ship so declared to be a tonnage tax ship by the Minister, or a Community ship of more than 1000 net tonnage which is owned entirely by a shipping organisation.
- All registration fees and tonnage taxes have to be duly paid.
- The activities of the shipping organisation are that of shipping as defined according to Maltese law
- Should the shipping organisation have additional activities other than shipping, then separate accounts have to be kept clearly distinguishing the payments and receipts relating to shipping activities from payments and receipts in respect of any other business.
- In the case of a licensed shipping organisation, which has no income whatsoever or has no income other than income from shipping activities, a declaration may be submitted to the Commissioner of Inland Revenue by a certified public accountant/auditor or an advocate in lieu of a tax return.
- No restrictions are be imposed on capital transactions connected with the ownership, operation, administration, management, purchase or financing of a tonnage tax ship, or any other shipping activity.
- No social security contribution is paid in Malta by the non-resident employees of a licensed shipping organisation and the organisatio itself.
- No duty shall be payable in resepect of any documents related to:
- The registration of a tonnage tax ship and other registrations relating to it
- The issue, purchase, transfer, assignment or negotiation of any security or interest of a licensed shipping organisation
- The sale or other transfer of a tonnage tax ship or any share
- The registration of any mortgage or other charge over or in relation to any ship or licensed shipping organisation, any transfer or discharge thereof, any receipt relative thereto, and any assignments granted in connection
- The assignment of any rights and interests, or the assumption of obligations in respect of any ship or share.