Task 6 Part I:
Registration of legal forms
The operations and activities of companies in Malta are regulated by the companies Act of 1998. The company act stipulates that all companies in Malta must be registered with the registry of companies. The registry of companies is administered by the registrar of companies and the Malta financial services authority (Government of Malta, 2012)
The business organisation is incorporated in Malta as a limited liability company. The company, first is registered under the Companies Act (the ‘Act’). A limited liability company is formed by means of capital divided into shares. The liability of the shareholders is limited to the amount, if any, unpaid on the shares held. (MFSA, 2009)
The company is to be registered as a private company, since its decree limits the number of its shareholders up to 50. It provides limitations on the transfer of shares and bans any offer to the public to contribute for shares. (Business first, 2017)
A company is constituted by virtue of a memorandum of association, which must, as a minimum, contain the following; the company’s name, the registered office, the company objects which cannot be described as trade, the particulars of the shareholders and their respective subscription, and so more.
The company might implement any name that is not previously used, as long as it is not found offensive by the Registrar of Companies. The Registrar of Companies is plausible to object if the name selected is the identical as that of another business, or is similar as to make a misunderstanding. Furthermore, if the company concerned is private company, the words “private limited liability” or “limited” or the abbreviation “ltd” must be specified at the end of the name.
Before registration, a minimum amount of the preliminary paid-up capital in a bank account titled “Company Name—Company in Formation” must be deposited. A copy of the bank deposit slip must be submitted to the Registrar of Companies together with the memorandum and articles of association.
The memorandum and articles of association must be delivered to the Registrar of Companies, who will then register the company and publish a certificate of registration. This will typically take a few days from the date when the complete documentation is filed. Consequent to registration of the memorandum and articles of association, the company comes into existence and is capable of starting the business. The fee for the registration of a company ranges from a minimum of €245 to a maximum of €2,250 depending on the amount of the authorised capital. Annual fees for the filing of the company’s annual return range from €100 and €1,400, depending on the company’s authorised share capital.
Tax Identification Number
A business should have its own tax identification number. This is a form that could be found and filled online. For this procedure there are no fee, however once a year the tax return form must be filled.
Another requirement to start a business is registering with the VAT department. For businesses which expect an income of over €20,000, depending on the business, charging VAT varies. VAT would need to be charged, if the turnover values are above this figure. Obtaining a VAT number is free and the process is extremely fast.
As the company is a limited liability company, one is automatically working for the company, therefore everyone working there is an employee. The PE number is obtained by filling an online form by the Inland Revenue Department. This has no fee and the process usually takes a maximum of 4 days to be processed.
Register with the Jobs plus
The Employment and Training Centre, Jobs plus, is in charge for all employment registration in Malta. Every employee is required to fill a form upon registration and termination of the job. The process is quick and free of charge.
The Social Security Act provides for a number of benefits, including retirement and disability pensions, sickness, injury and unemployment benefits, medical assistance and other social allowances and benefits. For the purpose of contribution obligations, the Social Security Act categorises persons into persons in insurable employment, self-occupied persons and self-employed persons. EU Council Regulation (EEC) No. 883/2004 governing social security outlines in the European Union must be observed.
Contributions in respect of an employed person are payable both by the employee and by his employer. The rate is, in each case, ten percent of the basic wage payable by each of the employee and employer. However, this is subject to a maximum and minimum rate. Currently, the minimum weekly contribution stands at € 17.51. On the other hand, the maximum weekly contribution varies depending on the age of the employee. In respect of an employee born before 1/1/1962, the maximum weekly contribution stands at € 33.50 whereas in the case of an employee born on or after 1/1/1962, the maximum weekly contribution stands at € 37.85.
The employees’ contributions are paid by means of a deduction from the employee’s wages, together with and in a similar way as that of tax (FSS). Every employer is accountable for sending, both the employees’ and his share of social security contributions, monthly to the Department of Inland Revenue. The Department of Inland Revenue acts as the collecting agent for the Department of Social Security.
The principal taxes under Maltese law are the income tax, which includes tax on income and on capital gains of individuals, companies and other entities, the Value Added Tax, Customs duty and excise tax. Other taxes include the eco-contribution, motor vehicle registration tax, the oil bunkering tax and a number of licence and registration fees. Social security contributions are payable by employees and their employers and by self-occupied and self-employed persons. There is no tax on capital, other than stamp duty and there are no local taxes.
The laws regulating income tax are the Income Tax Act and the Income Tax Management Act. Subsidiary legislation under these laws includes rules on capital allowances, the final settlement system (FSS), provisional tax, fringe benefits and capital gains.
As a member of the European Union, Malta has adopted all EU tax directives which include the parent-subsidiary directive, the mergers directive and the interest and royalties directive. There are different rules for determining the taxable amount of income and the taxable amount of capital gains. Similarly, certain provisions apply or do not apply in the computation of the taxable amount falling under specific categories of income or capital gains. But the tax is charged on a unitary basis and, as a rule, a taxpayer is liable to one tax on the total amount of his taxable income and capital gains for the respective year. Saving those cases where special rules apply, “income” is used to denote income and capital gains.