Malta, a European Union (EU) member state, has fully implemented the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13 framework, including Country-by-Country Reporting (CbCR) requirements. This move is part of Malta’s commitment to international tax transparency and combating tax avoidance by multinational enterprises (MNEs). This guide is designed to provide Chief Financial Officers (CFOs) and financial executives in Malta with the necessary information to understand if their business is affected by CbCR regulations and how to ensure compliance with Maltese law.

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Applicability of CbCR in Malta

Criteria for Reporting:

• CbCR obligations in Malta apply to multinational enterprise (MNE) groups with consolidated annual revenues of €750 million or more in the previous fiscal year.
• The ultimate parent entity of an MNE group that is tax resident in Malta must file the CbC report.
• If the ultimate parent entity is located in a jurisdiction that does not have CbCR obligations or does not exchange CbC reports, a surrogate parent entity in Malta may be required to file the report on behalf of the group.

Relevant Legislation:

• Malta implemented the CbCR requirements through the Cooperation with Other Jurisdictions on Tax Matters Regulations (Subsidiary Legislation 123.127).
• The regulations align with the EU’s Council Directive 2016/881, which amends Directive 2011/16/EU on administrative cooperation in the field of taxation. The Maltese CbCR rules are also aligned with the OECD BEPS Action 13 framework.

Reporting Requirements

Information to be Reported:

• The CbC report must include financial data for each tax jurisdiction where the MNE operates. The report must contain:
  • Total revenues (broken down into related-party and unrelated-party revenues)
  • Profit or loss before tax
  • Income tax paid and accrued
  • Stated capital and accumulated earnings
  • Number of employees
  • Tangible assets (other than cash or cash equivalents)
• Additionally, the report must list all constituent entities of the MNE group and indicate their respective tax jurisdictions and main business activities.

Form and Submission:

• The CbC report must be submitted electronically in XML format through Malta’s tax administration portal, CFR eServices.
• The report must adhere to the OECD’s standard template for CbCR filings.
  • For details on how to submit the CbC report, visit the Commissioner for Revenue (CFR) website.

Filing Deadlines

• The CbC report must be filed within 12 months of the end of the MNE group’s fiscal year. For example, if the fiscal year ends on 31 December 2023, the CbC report must be submitted by 31 December 2024.
• MNEs operating in Malta but with a parent company in another country must notify the Maltese tax authorities of the entity responsible for filing the CbC report, and this notification must be made no later than the last day of the fiscal year.

Penalties for Non-Compliance

Penalties:

• Failure to submit the CbC report or filing inaccurate information can result in penalties. Malta imposes the following fines for non-compliance:
  • Late or non-filing of a CbC report can result in fines of up to €50,000, with additional penalties of €100 per day for continued non-compliance.
  • Filing an incomplete or incorrect report may also attract penalties, and businesses may be subject to further investigation by tax authorities.

Defences:

• Multinational enterprises may present reasonable cause for delays, errors, or non-filing to reduce or eliminate penalties. However, such cases are assessed individually by the Maltese tax authorities.

Confidentiality and Use of Information

Data Protection:

• Malta follows the OECD’s guidelines on confidentiality and the protection of sensitive information. The CbC reports are treated as confidential tax documents and are not made available to the public.
• Malta exchanges CbC reports with other tax authorities under the Multilateral Competent Authority Agreement (MCAA), ensuring that reports are shared only with jurisdictions that meet OECD confidentiality standards.
• The information is primarily used for assessing potential risks related to base erosion and profit shifting (BEPS) and is not used for automatic tax adjustments.