How does provisional tax work in Malta?
Provisional tax is paid in three instalments: 20% on 30 April, 30% on 31 August and 50% on 21 December of the provisional tax benchmark, which is normally the latest assessed tax.
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Detailed Explanation
## The three dates
Provisional tax is paid during the basis year. The instalments are 20% on 30 April, 30% on 31 August and 50% on 21 December.
## The benchmark
The benchmark is normally the latest assessed tax. A company that expects lower profit can apply to MTCA for a provisional tax reduction.
## Non-calendar year ends
Companies with non-calendar year ends start with whichever instalment date falls first in their basis period.
## Late payment
Late income tax bears interest of 0.6% per month or part of a month, capped at 100% of the tax.
## What Finn does
Finn tracks the three dates, compares the benchmark with the year's profit and flags when a reduction application may be worth considering. You pay through MTCA channels.
Source: https://legislation.mt/eli/sl/372.18/eng
Real-World Examples
Benchmark of €10,000
The company pays €2,000 on 30 April, €3,000 on 31 August and €5,000 on 21 December.
Profit falling
A company expects lower profit and applies to MTCA for a reduction before the first instalment.
Missed December
A company misses 21 December, which carries half the tax, and interest of 0.6% per month starts to run.
Common Mistakes to Avoid
- Missing 21 December, the largest instalment
- Not applying for a reduction in a lower-profit year
- Using equal instalments instead of 20%, 30% and 50%
- Assuming the return date is the payment date
Frequently Asked Questions
When are the instalments?
30 April, 31 August and 21 December.
What percentages apply?
20%, 30% and 50%.
What is the benchmark?
Normally the latest assessed tax.
Can I reduce it?
Yes, by applying to MTCA for a provisional tax reduction.
What interest applies?
0.6% per month or part of a month, capped at 100% of the tax.
Practical Tips
- Diarise all three dates at the start of the year
- Plan cash for 21 December
- Review profit in March for a reduction application
- Keep payment receipts for the return
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