Malta's Taxes On Income And Wealth Surpass Production And Import Taxes

2nd November 2017

This increase surpassed the proportion of taxes on production and imports by a margin of 0.6 percentage points in 2013.

Over the period of 20 years, the contribution of current taxes in Malta on income and wealth towards tax revenues increased substantially from 8.2 per cent of GDP in 1995 to 13.9 per cent of GDP in 2016, according to figures released by the National Statistics Office (NSO).

This increase surpassed the proportion of taxes on production and imports by a margin of 0.6 percentage points in 2013.

Total tax revenue in 2016 amounted to €3,243.3 million, implying a tax burden of 32.6 per cent. It went up by €272.8 million over the previous year, and stood at €3,243.3 million.

Tax revenue can be broadly classified under three main headings: indirect taxes, direct taxes and social security contributions. All three categories of tax revenue registered an increase.

As opposed to the previous year, the largest increase was recorded in direct taxes by €147.4 million, amounting to €1,399.9 million, or 43.2 per cent of total tax revenue. This increase was triggered by higher tax receipts from individuals (€82.7 million) and corporations (€63.3 million), corresponding to an increase of 0.4 and 0.2 percentage points of GDP respectively over 2015.

Concurrently, indirect taxes increased by €87.4 million, amounting to €1,301.0 million or 40.1 per cent of total tax revenue. The two main components of indirect taxes namely VAT and Taxes on Products, witnessed an increase of €44.5 million and €42.6 million respectively. Other taxes on production went down by €0.2 million to €61.4 million.

Social contributions represented 16.7 per cent of total tax revenue in 2016, standing at €542.4 million, equivalent to a €38.1 million rise over 2015.

Last year, direct taxes were equivalent to 14.1 per cent of GDP compared to the share of indirect taxes which stood at 13.1 per cent of GDP. Meanwhile, the share of social contributions as a percentage of GDP stood at 5.5 per cent of GDP, fairly stable over the years.

The overall tax burden denotes the total amount of taxes and actual social contributions, expressed as a percentage of GDP. In 2016, the tax burden for Malta was 32.6 per cent of GDP, which is slightly higher when compared to the total tax burden recorded in 2015 (32.0 per cent of GDP). Throughout the past six years, total tax burden has been consistently above the 32 per cent of GDP, while the average tax burden for the period 1995 to 2016 is at 30 per cent.

In 2016, Malta’s total environmental taxes increased slightly by €7.8 million, amounting to €276.7 million, representing 2.8 per cent of GDP and 8.5 per cent of the total revenues derived from all taxes and social contributions. Energy taxes (which include taxes on transport fuels) made up the largest share of environmental taxes, accounting for 52.3 per cent, followed by transport taxes (40.8 per cent) and pollution taxes (7.0 per cent). The latter went down by €2.8 million over the preceding year.


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