The 15% final tax election now runs through the income tax return
Malta’s Final Income Tax Without Imputation regime, known as FITWI, gives qualifying entities the option to be taxed at a flat 15% final rate on chargeable income instead of applying the full imputation system with tax refund system. It was introduced by Legal Notice 188 of 2025, published on 2 September 2025, and is available from year of assessment 2025 (basis year 2024) onwards.
A tax election that used to run in its own process is now a part of the compliance calendar, with the same filing deadline as the tax return itself. For entities with a 31 December financial year end, that means 30 September for a manual return and an extension to the end of November for electronic filing.
As a minimum requirement, the FITWI liability can never be lower than the effective Malta tax that would have applied under the standard corporate tax system after refunds.
In brief: FITWI lets qualifying Maltese entities elect a 15% final tax on chargeable income, with no imputation credit and no shareholder refund on those profits. Since March 2026 the election is made through the income tax return rather than a separate form, and it binds the entity for five consecutive years of assessment.
Key takeaways
- FITWI was introduced by Legal Notice 188 of 2025 under Article 22B of the Income Tax Act (Cap. 123), now Subsidiary Legislation 123.217.
- Qualifying entities may elect a final 15% tax on chargeable income, applicable from year of assessment 2025 (basis year 2024) onwards.
- Tax paid under FITWI is final. It cannot be credited, set off or refunded to any person, including at shareholder level.
- Since the MTCA notice of 27 March 2026, the election is made through the income tax return and must be submitted by the applicable online filing deadline.
- The election binds the entity for five consecutive years of assessment. An entity that reverts to the full imputation system afterwards cannot re-elect FITWI for at least another five years.
- A “higher of” rule means FITWI can never produce a lower effective Malta tax charge than the standard system, taking shareholder refunds into account.
What FITWI changes
Malta’s long-standing corporate tax system applies a 35% rate under Article 56(6) of the Income Tax Act, combined with full imputation. Tax paid by the company is imputed to the shareholder and set off against the shareholder’s liability on dividends paid out of taxed profits, which removes economic double taxation. On top of that, shareholders of a Maltese company may claim a refund of part of the tax paid, which brings the combined effective Malta charge well below the standard rate.
FITWI takes a different route. An electing entity pays tax at a rate of 15% on its chargeable income, with no further Maltese tax arising on those profits.There is no imputation credit attached to the dividend and no refund claim at shareholder level. Profits taxed under FITWI are allocated to the Final Tax Account, and distributions out of that account carry no refund entitlement.
The regime does not replace the full imputation system nor shareholder refunds. Both remain available and FITWI sits alongside them as a third route.
Who falls within scope
The regulations apply to companies, to bodies of persons that elect to be treated as a company or are deemed to be a company under the Income Tax Act, and to trusts that have elected to be taxed in the same manner as companies.
Not everything the entity earns is caught by the 15% charge. For FITWI purposes, chargeable income excludes:
- dividends received from profits that are not allocated to the Final Tax Account of another company registered in Malta; and
- income that has already been taxed at a final rate under another provision of the Income Tax Act and is allocated to the Final Tax Account.
In practice, the entity’s tax account allocations determine the profits to which the 15% rate applies. Accordingly, these allocations must be prepared accurately before the tax return is completed.
FITWI cannot undercut the standard system
Legal Notice 188 of 2025 includes a safeguard. The tax payable under FITWI can in no case be lower than the effective Malta income tax that would have arisen had the entity and its shareholders applied the standard full imputation system, including refunds claimable under Article 48(4) and 48(4A) of the Income Tax Management Act.
FITWI is not a route to a lower Malta tax burden than the refund system produces. What it offers is a single, final charge at entity level, settled without a refund cycle and without a claim at shareholder level. Whether that trade is worth making for a given entity is a question for the entity and its tax advisers. It turns on the shareholder position, and on how the Maltese charge is treated in the shareholder’s own jurisdiction.
Five years in, five years out
The election is binding for five consecutive years of assessment, starting with the year of assessment in which it is made. After that period the entity may notify the Commissioner for Tax and Customs that it is reverting to the full imputation system. If it does, it is then locked out of FITWI for a minimum of five further years.
This makes FITWI a five-year commitment rather than an annual filing choice.
The Pillar Two backdrop
FITWI was introduced against the background of the EU minimum taxation directive, Council Directive (EU) 2022/2523. Malta has deferred application of the Income Inclusion Rule and the Undertaxed Profits Rule and has not introduced a qualified domestic minimum top-up tax. FITWI does not change that. It is elective and taking it up is a choice made by the individual entity.
What the regime does offer to in-scope multinational groups is the ability to pay a 15% charge in Malta rather than leave the difference to be picked up elsewhere. Whether the Maltese charge counts as a covered tax in the parent’s jurisdiction is a question for advisers in that jurisdiction, which is a reason to settle the election well before the filing deadline.
How the election is made in 2026
When FITWI first came into force, entities elected by submitting a prescribed form. That form required a director to declare the election under Rule 3(2) of the regulations, together with the entity’s name, tax identification number and the year of assessment from which the election was to apply.
The MTCA notice of 27 March 2026 replaced that mechanism. An election is now made by the taxpayer through the income tax return, by completing the relevant questions in it, and must be submitted no later than the applicable online filing deadline set by the MTCA.
For year of assessment 2026, the MTCA published the following corporate filing deadlines in January 2026. A few examples:
| Financial year ending | Manual return deadline | Electronic filing deadline |
|---|---|---|
| 30 September 2025 | 30 June 2026 | 31 August 2026 |
| 31 October 2025 | 31 July 2026 | 30 September 2026 |
| 30 November 2025 | 31 August 2026 | 30 October 2026 |
| 31 December 2025 | 30 September 2026 | 27 November 2026 |
There are two operational points that follow this. First, a five-year tax position is now recorded in the same document as the annual return, which places it inside the same preparation cycle and the same review chain. Second, the deadline for taking the position is the filing deadline. There is no separate window to catch it later.
Entities that already elected for year of assessment 2025
An entity that submitted the prescribed form by 28 November 2025 is already inside its five-year period, which began with year of assessment 2025. The change of mechanism in March 2026 governs how a new election is made; it does not restart or reopen an election already in force. Where there is any doubt about how an existing election is reflected in the year of assessment 2026 return, the point is worth raising with the entity’s tax advisers before the return is filed rather than after
What this means in practice
For entities weighing FITWI, the tax analysis belongs with their tax advisers. The administrative consequences, though, land in the day-to-day running of the entity.
An election made in the return has to be supported by records that hold up across five years: accurate tax account allocations, statutory financial statements that reconcile to the return, board minutes evidencing the decision and the year of assessment it applies from, and a distribution history consistent with the Final Tax Account treatment.
Trustmoore’s Malta team supports entities and their advisers on exactly this layer. We maintain statutory records and registers, administer board and shareholder meetings and the resolutions arising from them, prepare and maintain accounting records, and manage the annual compliance calendar so that filings and the positions taken within them are executed on time and properly documented. Trustmoore Malta’s role is not to provide tax advice, but to maintain the record trail behind whichever position the entity takes.
Frequently asked questions
FITWI stands for Final Income Tax Without Imputation. It is an optional regime introduced by Legal Notice 188 of 2025 that allows qualifying Maltese entities to be taxed at a final rate of 15% on chargeable income, in place of the full imputation system with shareholder refunds.
The regulations cover companies, bodies of persons that elect to be treated as a company or are deemed to be a company under the Income Tax Act and trusts that have elected to be taxed in the same manner as companies. Whether the election makes sense for a particular entity is a separate question for its tax advisers.
Since the MTCA notice of 27 March 2026, the election is made through the income tax return by completing the relevant questions in it. It must be submitted by the applicable online filing deadline set by the Malta Tax and Customs Administration.
For a financial year ending 31 December 2025, the MTCA deadlines are 30 September 2026 for a manual return and 27 November 2026 for electronic filing. The election has to be in the return by that date.
Not within five years. The election is binding for five consecutive years of assessment, beginning with the year in which it is made. After that the entity can revert to the full imputation system, but it is then unable to elect FITWI again for at least five years.
No. Tax paid under FITWI is final and is not available as a credit, a set-off or a refund to any person, including shareholders. Profits taxed under FITWI are allocated to the Final Tax Account, and dividends from that account carry no refund entitlement.
No. The regulations include a minimum threshold: the FITWI liability cannot be lower than the effective Malta income tax that would have arisen under the full imputation system, taking into account refunds claimable under Article 48(4) and (4A) of the Income Tax Management Act. What FITWI offers is a single final charge rather than a lower one.
Dividends received from profits that are not allocated to the Final Tax Account of another company registered in Malta, and income already taxed at a final rate under another provision of the Income Tax Act and allocated to the Final Tax Account.
No. Malta has deferred the Income Inclusion Rule and the Undertaxed Profits Rule and has not introduced a qualified domestic minimum top-up tax. FITWI is an elective regime that allows an entity to pay 15% in Malta, and it does not alter Malta’s position on those rules.
Records that hold up across the full five years: tax account allocations, statutory financial statements that reconcile to the return, board minutes recording the decision and the year of assessment it applies from, and a distribution history consistent with Final Tax Account treatment.
