In presenting the Malta Budget 2017, the Minister for Finance announced the introduction of the Notional Interest Deduction (NID) – a fresh concept in Malta, which aims to simplify the Maltese tax system and approximate the tax treatment of equity with that of debt.
The legal notice outlining the rules was published on 5 October 2017 as legal notice 262 of 2017.
From a tax perspective, many entities find that debt financing is more efficient to raise finance for business investment and operations as opposed to equity. This is because finance costs incurred by companies upon the granting of loans may be allowable as a deduction against chargeable income.
In this respect, the introduction of the NID aims to bring on par the tax treatment of equity financing with that of debt financing by providing entities with a deduction of interest they are deemed to have incurred on the said equity.
We have dedicated team of advisors that can assist you in understanding how the NID could impact your business.
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