Malta Revises its Tonnage Tax Rules – EU approved for a period of 10 years

Following the European Commission’s decision with respect to the review of the Maltese tonnage tax system which was published at the end of last year, Legal Notice 128 implementing the measures taken to reflect the Commission’s decision was published on Friday 13th April 2018 and will come into force on the 1st of May. In its decision, the European Commission endorsed Malta’s tonnage tax scheme subject to Malta committing itself to introduce certain amendments to clarify the applicability of its scheme and limit it to core activities relating to Maritime Transport with the aim of ensuring a level playing field between Maltese and European shipping companies.

The European Commission granted Malta 4 months from notification of the decision to implement the necessary measures to ensure that Malta’s tonnage tax regime is in line with the decision. The legal notice reflects the changes which Malta committed to implement in its laws so as to ensure clarity on the parameters to which the revised Tonnage Tax Regime extend. Among other matters, it clearly lists the type of vessels to which the tonnage tax scheme applies as well as those which are excluded from its applicability, provides criteria to be satisfied for vessels which are bareboat chartered out of Malta to benefit from the scheme, includes provisions relating to ship management activities, lists the ancillary activities which may fall within the scheme and provides qualifications relating to towage and dredging activities.

The Legal Notice 128 is accompanied by another legal notice – Legal Notice 127 –  which contains a revised registration/ tonnage tax payment tariffs applicable to both non-tonnage tax ships as well as to tonnage tax ships including annual tonnage tax payable to the Maltese authorities.  Shipowners wishing to avail themselves of the Malta tonnage tax scheme are now required to file with the Registrar of Ships a prescribed declaration to this effect and the Registry will, upon considering same, decide whether to not to declare a vessel as a tonnage tax ship.

The legal notices are intended to provide shipowners with clear guidelines on the applicability of the Maltese tonnage tax regime thereby providing the certainty required within the shipping industry on the applicability of the Maltese tonnage system which has been endorsed by the European Commission for a period of ten years.

The legal notices are available as follows: