Malta - Taxation

In 1999, the ruling Nationalist government announced that it would raise taxes in an effort to bring the budget in line. An integral part of the new package would be measures to combat tax evasion, a phenomena that Finance Minister John Dalli characterized as a "national sport." In 1998, one of the Nationalist's first steps was the reintroduction of the value-added tax (VAT) that the previous Labor government dismantled. In 2002, the corporate tax rate was a flat 35%. Individual incomes were taxed according to a progressive schedule with rates from 15% to 35%. Social security taxes totaled 19%, 10% paid by the employer and 9% by the employee. Reduced rates were available under certain circumstances on both corporate and individual income taxes. The main indirect tax was the VAT, set at a standard rate of 15%. There were also stamp taxes.