By means of Act III of 2026, the Government of Malta has published the legislative framework to implement the budget measures for the financial year 2026 together with other administrative measures, amongst which are a number of amendments to the ITA, a summary of which follows below.
- Definition of a company
The definition of a ‘company’ now also includes any Special Limited Partnership Fund established in accordance with the Investment Services Act (Special Limited Partnerships Funds) Regulations. This is applicable as from year of assessment 2026.
- Deduction in respect of expenditure incurred on research, development and innovation expenses
With effect from such date as may be provided by the Minister responsible for finance by notice in the Gazette, a deduction amounting to 175% of the actual amount incurred on research, development and innovation activities may be claimed by any person engaged in a trade, business, profession or vocation. Such amounts have to be incurred for the use and benefit of the said business. Such expenditure of a capital nature shall be spread equally over the year in which it has been incurred and the five subsequent years, unless the expenditure consists of capital expenditure incurred on industrial buildings and structures and plant and machinery on which wear and tear allowances are being claimed under other sections of Article 14 of the Act.
The Minister will shortly be publishing rules to define the activities that would constitute research, development and innovation for the purposes of this deduction as well as other applicable conditions.
- Deduction in respect of fees payable to homes for the elderly and the disabled
With effect from year of assessment 2027, the maximum allowable deduction previously amounting to Eur2,500 in respect of fees payable by a taxpayer on his own behalf or on behalf of a family member, to a private home for the residence of an elderly or disabled person, or to a respite centre for the disabled, has been increased to Eur4,500.
- Revised income tax brackets
Article 56 of the Act has been revised to incorporate the new tax rates applicable to individuals with effect from year of assessment 2027.
The new tax rates are as follows:
Married Rates
| Chargeable Income (€) | Rate | Tax Deduction |
| 0 – 15,000 | 0% | 0 |
| 15,001 – 23,000 | 15% | 2,250 |
| 23,001 – 60,000 | 25% | 4,550 |
| 60,001+ | 35% | 10,550 |
Single Rates
| Chargeable Income (€) | Rate | Tax Deduction |
| 0 – 12,000 | 0% | 0 |
| 12,001 – 16,000 | 15% | 1,800 |
| 16,001 – 60,000 | 25% | 3,400 |
| 60,001+ | 35% | 9,400 |
Parent Rates
| Chargeable Income (€) | Rate | Tax Deduction |
| 0 – 13,000 | 0% | 0 |
| 13,001 – 17,500 | 15% | 1,950 |
| 17,501 – 60,000 | 25% | 3,700 |
| 60,001+ | 35% | 9,700 |
Parent Rates with one child
| Chargeable Income (€) | Rate | Tax Deduction |
| 0 – 14,500 | 0% | 0 |
| 14,501 – 21,000 | 15% | 2,175 |
| 21,001 – 60,000 | 25% | 4,275 |
| 60,001+ | 35% | 10,275 |
Parent Rates with two child or more
| Chargeable Income (€) | Rate | Tax Deduction |
| 0 – 18,500 | 0% | 0 |
| 18,501 – 25,500 | 15% | 2,775 |
| 25,501 – 60,000 | 25% | 5,325 |
| 60,001+ | 35% | 11,325 |
Married rates with 1 child
| Income (€) | Rate | Deduction |
| 0 – 17,500 | 0% | 0 |
| 17,501 – 26,500 | 15% | €2,625 |
| 26,501 – 60,000 | 25% | €5,275 |
| 60,001+ | 35% | €11,275 |
Married rates with 2 or more children
| Income (€) | Rate | Deduction |
| 0 – 22,500 | 0% | 0 |
| 22,501 – 32,000 | 15% | €3,375 |
| 32,001 – 60,000 | 25% | €6,575 |
| 60,001+ | 35% | €12,575 |
Disclaimer
The above does not constitute tax or legal advice and is up to date on the date it was published. Please ensure that you take appropriate advice from tax or legal professionals before making any decisions based on the above.
If you need any help or assistance with the above-mentioned, please do not hesitate to contact us on infoact.com.mt