International Trading Companies(ITC) What is an ITC? - A normal company registered in Malta with the Maltese Registrar of Companies; - Must be engaged solely in carrying on trading activities with persons outside Malta who are not resident in Malta and which has its objects expressly limited to such trading activities; (the only exception is that an ITC may purchase locally manufactured goods for export from local companies or trade with another ITC); - Non-resident shareholders benefit from an advantageous tax treatment as indicated hereunder. Advantageous Tax Treatment Malta operates the full imputation system of taxation and any tax paid by the company is imputed to the shareholder in the event of a dividend distribution. Although ITC’s are initially taxed at the normal corporate tax rate of 35%, the tax paid by the company is then credited towards the shareholders’ tax liability upon a distribution of dividends. Thus:- a. on a distribution of dividends, non-resident shareholders are given a refund derived from the difference between the tax paid by the company (35%) and that payable by the non-resident shareholder (27.5%); b. non-resident shareholders are then refunded two-thirds (2/3) of the Malta tax originally paid by the company on the same profits c. The final result is that the net effective tax rate upon a distribution of the profits is of 4.17%. Click here to see a worked example of the mechanism of this tax refund system. Any tax payable by the company with respect to profits derived from international activities is not payable before the earlier of: (i) the date of distribution of such profits, or (ii) 18 months after the end of the relevant accounting period of the company. Furthermore the tax legislation binds the Maltese tax authorities to issue the refund not later than the fourteenth day of the month following that in which a valid claim for such refund is submitted. Advance Tax Ruling The advantageous tax treatment of an international trading company is covered by an official tax ruling issued by the International Taxation Unit in advance of the commencement of trading of the company. The tax ruling remains valid for a period of 5 years, renewable for another period of 5 years. Company Requirements All requirements applicable to the formation and registration of Maltese companies apply to ITC’s. This also includes the fiduciary shareholding/directorship possibility through our licensed trustee company. The only exceptions relate to the restriction whereby ITC’s must be engaged solely in trading activities with persons outside Malta and who are not resident in Malta and also that the company’s objects must be expressly limited to such trading activities. Setting up an ITC in Malta following a redomiciliation of a foreign company to Malta.  
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