Audit Exemption Rules, 2025

L.N. 139 of 2025

INCOME TAX MANAGEMENT ACT

(CAP. 372)

Audit Exemption Rules, 2025

IN EXERCISE of the powers conferred by articles 19(4) and 58

of the Income Tax Management Act, the Minister responsible for

finance has made the following rules:-

(1)

The title of these rules is the Audit Exemption Rules,

commencement.

2025. (2) These rules shall come into force with effect from

accounting periods commencing on, or after 1 January 2024

Provided that rule 6 shall come into force with effect from

accounting periods commencing on, or after 1 January 2025.

In these rules, unless the context otherwise requires

"Act" means the Income Tax Management Act;

"Commissioner" shall have the same meaning as assigned

to it in the Income Tax Act;

"Minister" means the Minister responsible for finance;

"review report" shall have the same meaning as assigned to

it in guidelines published on the website of the Commissioner for

Tax and Customs in accordance with the provisions of article

96(2) of the Income Tax Act.

Without prejudice to the fulfilment of any other conditions

as prescribed by these rules, the auditor’s report referred to in article

19(4)(a) of the Act shall not be required for the first two (2) accounting

periods of a newly registered company whose sole shareholders are

individuals in possession of educational qualifications and who have

set up the new company within three (3) years of obtaining the said

qualifications

Provided that for the purposes of this rule as well as rules 4

and 5

"company" refers to a company as defined in the Income

Tax Act whose annual turnover does not exceed eighty thousand

euro (€80,000) or a pro rata amount if the relevant accounting

period is other than twelve (12) months;

"educational qualifications" refers to the successful

completion of a course of study at MQF level 3, or higher, as

recognised by the Malta Qualifications Recognition Information

Centre.

(1) Where a company does not avail itself of the audit Deduction.

report waiver in accordance with rule 3, it may claim a deduction

against its income of one hundred and twenty per cent (120%) of the

costs incurred for such auditor’s report.

(2) The deduction under sub-rule (1) shall apply for the first

two (2) accounting periods of a newly registered company whose sole

shareholders are individuals in possession of educational qualifications

and who have set up the new company within three (3) years of

obtaining the said qualifications.

(3) The deduction claimed under this rule may not exceed

seven hundred euro (€700) for each accounting period.

The audit report waiver in accordance with rule 3 and the Exclusion.

deduction in accordance with rule 4 shall cease to apply with

immediate effect if there is a change in the shareholding of the

company as a result of which the shareholders shall not all be

individuals who have attained the educational qualifications as

referred to in rule 3.

(1) Without prejudice to the provisions of rules 3, 4 and 5 Audit

and save for companies registered under the Merchant Shipping Act: exemption.

(a) where a company registered in Malta benefits from an

exemption in accordance with article 185(2) to the Companies Cap. 386.

Act on the basis of satisfying two (2) of the three (3) criteria

establishing therein, the audit report requirements in connection

with the records that shall be kept in accordance with article

19(4)(a) of the Act, shall also be deemed to have been discharged

when a review report has been made;

(b) where a company registered in Malta benefits from an

exemption in accordance with article 185(2) of the Companies

Act on the basis of satisfying three (3) of the three (3) criteria

established therein, the audit report requirements in connection

with the records which shall be kept in accordance with article

19(4)(a) of the Act, shall be deemed to have been discharged

despite the absence of a statutory audit.

(2)

When a company that is required to prepare consolidated

accounts in accordance with the Companies Act, fulfils the criteria

referred to in sub-rule (1), the treatment under paragraphs (a) or (b) of

sub-rule (1) shall apply as long as the group of which it forms part

continues to qualify as a small group in accordance with the criteria

established in article 185(5) of the said Act.

(1) Without prejudice to the provisions of rules 3, 4 and 5

where a company registered in Malta is registered under the Merchant

Shipping Act and benefits from an exemption provided for in

regulation 64 of the Merchant Shipping (Shipping Organisations –

Private Companies) Regulations, the audit report requirements in

connection with the records that shall be kept in accordance with

article 19(4)(a) to the Act shall be deemed to have been discharged

despite the absence of a statutory audit.

(2) When a company that is required to prepare consolidated

accounts in terms of the Companies Act, fulfils the criteria referred to

in sub-rule (1), the treatment under this rule shall apply as long as the

group of which it forms part continues to qualify as a small group in

accordance with the criteria established in article 185(5) of the said

Act.

Provided that in any case such thresholds shall be those as

established in regulation 64 of the Merchant Shipping (Shipping

Organisations – Private Companies) Regulations.

The provisions of article 185(3) to the Companies Act shall

apply in determining whether, at balance sheet date, a company

registered in Malta may avail itself of the option provided for in rules 6

and 7 for that accounting period.

Where a company registered in Malta is one to which the

proviso to article 19(4)(a) to the Act applies, the determination as to

eligibility under rules 6 or 7 shall be established by reference to the

criteria as applicable to the said company’s activities in Malta.

The Audit Report Waiver and Deduction Rules are hereby

repealed without prejudice to anything done or omitted to be done

thereunder.

€0.27