Tax Guidelines for Insurers Under New Reporting Rules

Malta’s tax guidelines provide insurers with an option to defer tax payments arising from adoption gains due to financial reporting adjustments. Instead of settling the entire tax amount immediately, businesses can distribute their tax liabilities over a period of up to five years. This approach helps insurers manage cash flow effectively while remaining compliant with their tax obligations.

Deferring Tax Payments on Adoption Gains

Businesses have the option to defer part of the tax due in the year of adoption. Instead of paying the full amount immediately, taxpayers can spread the payment over a selected deferral period, up to a maximum of five years.

How to Apply and Register

To opt for the deferral, taxpayers must complete and submit the designated Registration Form, available at the CFR. The completed form should be sent via email to ictuforms.mfin@gov.mt.

When completing the form, taxpayers must:

• Indicate the number of years over which they wish to spread the tax payment
• Declare the total adoption gain resulting from changes to an insurer’s accumulated profits or losses due to the new financial reporting standards.
• Specify the tax amount due on this adoption gain.

Who Can Apply?

The option to defer tax payments is available for 10 years, covering the 2024 to 2033 assessment years. Each taxpayer can only make this election once. For example, if a taxpayer opts for deferral in the 2024 assessment year, they cannot apply again in future years.

To qualify for this scheme, the insurer must be fully compliant with all tax obligations at the time of filing. This means there must be no outstanding balances or pending submissions under the Income Tax Acts, Value Added Tax Act, or the Final Settlement System Rules.

The deadline for submitting the election is 30th September of the relevant assessment year. However, for the first year (2024), the deadline has been extended to 22nd November 2024.

Tax Guidelines for Insurers with a December Year-End

For insurers with a financial year ending in December, the submission period runs from 1st June to 30th September each year, except for the first year, where the deadline is extended to 22nd November 2024.

Tax Guidelines for Insurers with a Non-December Year-End

For insurers with different financial year-ends, the filing period varies depending on the specific month in which their financial year concludes. Generally, applications must be submitted within a few months following the year-end, with deadlines ranging from March to August of the following year.

Paying Deferred Tax

Taxpayers who choose to spread their tax payments must ensure they pay the annual installment by 21st December each year. The first payment, for the 2024 assessment year, is due by 21st December 2024.

For companies with alternative tax settlement deadlines as per Rule 5(b)(iii) of S.L. 372.16 Income Tax (Statutory Dates) Rules, the first payment for the 2024 assessment year must be made by 30th June 2025, while the second payment is due by 21st December 2025.

It is important to note that the deferral applies only to the tax on adoption gains. The due dates for tax on an insurance business’s chargeable income remain unchanged.

Failure to comply with the terms of the election will result in losing the deferral benefit. In such cases, the full amount of tax will become immediately payable, including any applicable interest.

If an insurer ceases to be subject to tax under these rules during the deferral period, they must inform the Commissioner by emailing ictuforms.mfin@gov.mt to confirm that the election no longer applies.

Final Considerations

The tax deferral scheme for adoption gains provides insurers in Malta with a structured way to manage their tax liabilities while adapting to financial reporting changes. By adhering to the eligibility criteria and deadlines, businesses can benefit from a smoother transition without immediate tax burdens. However, maintaining compliance is essential to retaining the deferral benefits and avoiding penalties.

Get in touch with us today to ensure your business stays compliant and makes the most of tax deferral opportunities.

Weitere Lektüre

Quellen

CFR (Commissioner for Revenue)

Income Tax Act – Malta

Income Tax (Statutory Dates) Rules (S.L. 372.16)

VAT Act – Malta