Tax revenue up by €213 million, burden eases to 33% of GDP

Total tax revenue last year went up by €213.8 million over the previous year, and stood at €2,961.3 million. All three categories of tax revenue, indirect taxes, direct taxes and social contributions, registered an increase.

The largest rise was recorded in indirect taxes by €92.6 million, amounting to €1,204.4 million, or 40.7 per cent of total tax revenue. This increase was triggered by higher returns from VAT (€41.7 million) and taxes on products (€38.5 million). Although VAT increased to €684.0 million, a decline of 0.1 percentage point of GDP was recorded in 2015. Conversely, the ratio of taxes on production and imports relative to GDP increased by 0.1 percentage point to 5.2 per cent. Other taxes on production and import duties went up by €10.6 million and €1.8 million respectively.

Concurrently, direct taxes increased by €85.3 million, amounting to €1,252.6 million or 42.3 per cent of total tax revenue. The receipts from personal income tax increased by €35.4 million over the preceding year and similarly, corporate income tax increased by 0.4 percentage points of GDP, corresponding to €73.8 million. In 2015, capital taxes increased by €3.2 million, whereas other current taxes registered a decline of €27.2 million.

Social contributions represent 17.0 per cent of total tax revenue, standing at €504.3 million, and translating into a €35.9 million rise over 2014.

Over the last two decades, the contribution of current taxes on income and wealth towards tax revenues increased substantially, from 8.2 per cent of GDP in 1995 to 14.1 per cent of GDP in 2015, surpassing the proportion of indirect taxes by a margin of 0.7 percentage points in 2013. In fact, last year, indirect taxes were equivalent to 13.7 per cent of GDP compared to the share of current taxes on income and wealth which stood at 14.1 per cent of GDP. Meanwhile, the share of social contributions as a percentage of GDP remained relatively the same, around 6 per cent.

In 2015, the tax burden for Malta was 33.7 per cent of GDP, which is slightly lower when compared to the total tax burden recorded in 2014 (34.0 per cent of GDP).

Income tax receipts by institutional sector

In 2015, the household sector accounted for the biggest share of income tax received by Government with 50.5 per cent, while the financial and non-financial corporations sectors contributed 26.7 per cent and 22.3 per cent respectively. On aggregate, non-profit institutions serving households, general government and rest of the world totalled 0.5 per cent. The €109.4 million increase in income tax receipts in 2015 were mainly collected from the non-financial corporations (€40.4 million), households (€35.4 million) and financial corporations (€31.2 million).

Environmental taxes

In 2015, Malta’s total environmental taxes reached €269.3 million, equating to 3.1 per cent of GDP and to 9.1 per cent of the total revenues derived from all taxes and social contributions. Energy taxes made up the largest share of environmental taxes, accounting for 48.9 per cent, followed by transport taxes (40.3 per cent) and pollution taxes (10.8 per cent).