Malta’s Finance Minister Clyde Caruana presented the 2027 Budget on 26 October 2026, proposing a reduced corporate income tax rate for small businesses alongside changes to personal taxation, VAT and tourism-related contributions.
Malta’s Finance Minister Clyde Caruana presented the 2027 Budget to parliament on 26 October 2026, outlining tax measures aimed at supporting businesses and households while addressing the costs associated with tourism and infrastructure.
Corporate tax measures
The Budget proposed a new 25% corporate income tax rate for companies with annual turnover not exceeding EUR 1 million, compared with the existing 35% rate. The reduced rate would apply to retained or reinvested profits, while distributed profits would remain subject to the 35% rate.
The government also proposed targeted measures to address tax avoidance in property transactions involving airspace sales and intermediary developer structures. These would require disclosure of the actual consideration paid to ensure property transfers were taxed on their full economic value.
Personal tax measures
The government proposed further personal income tax relief for parents, continuing a three-year programme intended to benefit around 68,000 parents. The measures would increase tax-free income thresholds for married couples and single parents, with the allowances depending on the number of children and the applicable tax computation.
A tax-free super bonus of up to EUR 1,000 would be paid to eligible individuals in the first quarter of 2027, based on 2025 employment data. Workers earning at least EUR 12,000 would receive EUR 1,000, while lower earners would receive proportionately smaller payments. Self-employed people, working pensioners and part-time workers would also qualify.
The Budget also outlined a reform under which individual tax returns would become the default for married spouses, while allowing them to opt for joint returns.
VAT measures
A mandatory reverse-charge mechanism would be introduced for construction-related supplies between businesses. The measure would shift responsibility for accounting for VAT to purchasing businesses, with the aim of addressing VAT fraud and fictitious invoicing.
Tourism and environmental contributions
The government proposed increasing eco-contributions on collective accommodation and short-term rental properties, as well as introducing or increasing charges for cruise passengers and visitors to Comino.
The proposed accommodation charges would rise to EUR 8 per night for collective accommodation, capped at EUR 64 per person, and EUR 10 per night for short-term rental apartments, capped at EUR 80 per person. Cruise passengers disembarking and re-embarking would face a EUR 10 fee, while visitors to Comino would pay EUR 5.
Other proposed revenue measures included increasing the application fee for work permits for non-EU nationals from EUR 600 to EUR 800 and introducing an annual EUR 400 infrastructure contribution per worker, payable on initial applications and renewals.
Cost-of-living and pension measures
The Budget set the weekly cost-of-living adjustment at EUR 6.41. The government also proposed increasing the national minimum wage by EUR 10.41 per week in 2027 and raising pensions by EUR 10 per week, including the cost-of-living adjustment.
The tax-free threshold for pension income would increase by EUR 520 to EUR 37,624 a year. Minimum-wage earners would continue to be exempt from income tax, while eligible low- and middle-income households would receive additional annual cash bonuses ranging from EUR 200 to EUR 1,500.
Economic and fiscal outlook
Malta’s real gross domestic product growth was forecast at 4.1% in 2026 and 3.8% in 2027. The public deficit was projected at 2.6% of GDP in both years, while public debt was expected to rise slightly from 46.7% of GDP in 2026 to 46.8% in 2027.
The government planned to maintain energy and fuel price stabilisation measures, with spending of approximately EUR 400 million a year in 2026 and 2027.
The proposed Budget will be debated in parliament over the coming weeks before lawmakers vote on its approval.
