General Overview of the MTCA 2025 Annual Report
Earlier this year, the Malta Tax and Customs Administration (MTCA) published its Annual Report (the “Report”) for 2025, outlining the progress made under its three-year strategic plan “Delivering Transformation”. The strategy prioritised voluntary tax compliance through greater engagement, improved digital services and more efficient administrative processes.
The Report highlighted the growing role of data analytics, artificial intelligence and other digital tools in strengthening the MTCA’s compliance efforts, enabling the identification of potential risks and allowing resources to be directed where they are most needed.
The Report also outlined a number of initiatives in support of this strategy, including the launch of the MTCA’s redesigned website, the continued development of e-Invoicing, e-Receipting and VAT Digital Reporting in preparation for the European Union’s VAT in the Digital Age (ViDA) framework, and the implementation of integrated reporting systems through Power BI dashboards. These initiatives are intended not only to simplify compliance for taxpayers but also to provide the MTCA with more timely and reliable data to support its compliance and enforcement activities.
A focus on collection and compliance
One primary theme which emerges clearly from the Report is the push to improve voluntary compliance and foster a stronger compliance culture, which from the MTCA’s perspective, aims not only to increase taxes collected but also to reduce enforcement costs. According to the Report, this objective is pursued through a combination of measures, including direct communications with taxpayers through letters and reminders, and encouraging taxpayers to make use of digital services and online filings. While the Report indicates that these efforts contributed toward improvements in collection and compliance over 2025, no specific statistical data was provided in this regard.
Notwithstanding these improvements, the Report acknowledges that Malta’s compliance levels remain below international best practice, particularly in relation to reporting and filing obligations. As a result, the MTCA has indicated that ongoing efforts will focus on further strengthening engagement, improving support mechanisms, and applying proportionate enforcement measures to further increase timely compliance.
The effects on property transactions
As the MTCA’s compliance efforts have intensified, we have observed a notable increase in the number of assessments raised by the Commissioner, particularly in relation to property valuations and stamp duty on transfers of immovable property.
From a legal perspective, a taxpayer who disagrees with an assessment raised by the Commissioner has the right to contest it — generally by first lodging a formal objection, and thereafter, if no agreement is reached, by appealing to the Administrative Review Tribunal.
The Duty on Documents and Transfers Act (Chapter 364) (the “DDTA”) provides that, in the context of a transfer of immovable property, stamp duty is chargeable on the higher of the consideration or the property’s market value.
The rules governing valuations are supplemented by the Duty on Documents and Transfers Rules (S.L. 364.06) which set out the relevant valuation date in different circumstances. According to the proviso to Rule 3, where a promise of sale has been entered into, the relevant valuation date is the date of the promise of sale.
There is a common misconception that this rule applies in all cases, however, it should be noted that, where:
- the promise of sale is for a period of more than 1 year (or more than 3 years in the case of certain properties consisting of a unit in a project acquired on plan); and/or
- improvements are made to the property between the date of the promise of sale and the date of transfer;
the relevant valuation date shifts to the date of transfer (i.e. of the final deed).
The Commissioner retains the power to obtain an independent valuation from a government-appointed architect and where the declared consideration is less than 85% of the property’s value as determined by the government-appointed architect, the property transfer is subject to additional duty.
Of course, certain factors that may have influenced the purchase price agreed between the parties may not be fully reflected in a subsequent architect’s valuation, including in particular, encumbrances or burdens affecting the property, as well as the physical state of the property and/or its internal structures at the relevant valuation date. Such factors may give rise to a strong basis on which a taxpayer may look to object to a notice of assessment served against him.
Concluding comments
What is clear is that the increased use of technology and risk-based compliance measures has enabled the MTCA to identify transactions warranting scrutiny more efficiently, and taxpayers are increasingly finding themselves subject to assessment proceedings.
As enforcement activity intensifies, it is increasingly important for taxpayers to ensure their positions are properly documented and supported from the outset.
