Malta Extends its Preferential 15% Flat Tax

To enhance Malta’s attractiveness for skilled persons engaged in certain high-tech economic fields, the government, in its 2012 budget, has extended its preferential 15% flat tax to international professionals developing digital games.  Maltese companies that commission digital games will qualify for a tax credit of about $20,000.

The government will also exempt royalties from copyright-protected books, film scripts, music, and art.

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Madagascar Enhances its Flat Tax

To improve the investment climate in the African island nation of Madagascar, located off the southeast coast of the African continent, the government’s 2010 budget reduced the flat-rate personal income tax from 24% to 23%, with a personal allowance of MGA 250,000 (US$1 = Malagasy Ariary 1,942), about $125 per month, or $1,500 a year.  Corporation tax was incorporated into the income tax code at the same 23% rate.

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Andorra Implements Non-Residents 10% Flat Tax

Andorra historically had no income or capital gains taxes on residents and non-residents.  In 2007, to slow property inflation, the government levied a 15% capital gains tax.

In late December 2010, Andorra published the Taxation of Non-Residents Act, 2010.  It subjects non-resident companies and individuals to a 10% flat tax on local-source profits and income, minus permitted expenses and deductions.  It plans to reduce capital gains tax on property from 15% to 10% in the near future.

The government plans on introducing a value-added tax to replace the existing consumption tax.  Following the imposition of a 5% VAT, the government next intends to apply the 10% flat tax to resident companies and individuals.

Malta Implements Non-Resident 15% Flat Tax

The publication of Legal Notice 106 - Highly Qualified Persons Rules - implemented a 15% flat tax for non-residents, effective January 1, 2010 (assessed in 2011) in specific eligible offices of employment in Malta for an initial period of five years.

The regulation lists categories of eligible positions and qualifying employment conditions.  The 15% flat rate does not apply to resident Maltese.

To benefit from the 15% flat rate, a qualified employee must earn income of at least €75,000, which is to be adjusted annually in line with the Retail Price Index.  A particular attractive feature of the scheme is that excess income over €5,000,000 is free of tax.