The Maltese Commissioner of Revenue has published the long awaited technical Guidelines on the Notional Interest Deduction (“NID”) Rules.
These guidelines provide clarifications to certain interpretations in relation to Legal Notice 37 of 2018 which was published on 02nd of February, 2018 and which has introduced the Notional Interest Deduction Rules.
The NID Rules allow an undertaking (which includes a company, partnership or a permanent establishment) to claim certain deductions based on its so-called ‘risk capital’.
NID Rules were introduced to minimise the tax difference between equity and debt. NID is a theoretical or notional deduction for tax purposes that is not actually incurred by a Malta Company for accounting purposes. NID may also be applied on the profit reserves held by a company.
NID may potentially reduce the effective tax rate incurred in Malta to 3.5%.
FF International actively advices clients on how to optimise and reduce their tax leakage in Malta.
Please contact for further details on how you company may apply NID:
Franco Falzon CPA LL.M (International Tax Law)
(Managing Partner)
E: franco@ffinternational.com.mt
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