Malta Audit Exemption & Review Rules (Legal Notice 139 of 2025)

The Ministry for Finance has published the Audit Exemption Rules, 2025 (L.N. 139 of 2025), introducing updated statutory audit waivers, tax deductions, and review report frameworks under the Income Tax Management Act.

Below is a breakdown of how these rules apply to qualifying companies in Malta.

1. Newly Registered Companies

Newly registered companies are exempt from submitting an auditor’s report for their first two (2) accounting periods if they meet all of the following conditions:

• Shareholders: The sole shareholders are individuals who hold educational qualifications at MQF Level 3 or higher (as recognized by the Malta Qualifications Recognition Information Centre).
• Company Setup: The company was incorporated within 3 years of obtaining those qualifications.
• Turnover Cap: Annual turnover does not exceed €80,000 (calculated pro-rata if the accounting period is not 12 months).

If a qualifying start-up opts not to use the audit exemption and instead undergoes a full audit, it can claim a 120% tax deduction on the audit costs:

• Applicable for the first two (2) accounting periods.
• Capped at a maximum deduction of €700 per accounting period.

Important Note on Shareholding: Both the audit waiver and the 120% tax deduction will immediately cease if there is any change in shareholding resulting in non-qualifying individuals acquiring shares.

2. Audit Exemptions & Review Report Requirements

Effective for accounting periods starting on or after 1 January 2025.

For companies qualifying as small companies under Article 185(2) of the Companies Act:

• Meeting 2 out of 3 Small Company Criteria: Statutory audit requirements under tax law are satisfied by submitting a Review Report in place of a full statutory audit.
• Meeting 3 out of 3 Small Company Criteria: Fully exempt from statutory audit requirements for tax purposes.
• Groups / Consolidated Accounts: For parent companies required to prepare consolidated financial statements, these provisions apply as long as the overall group continues to qualify as a small group under Article 185(5) of the Companies Act.
• Non-Resident / Branch Operations: For companies where the proviso of Article 19(4)(a) applies, eligibility is determined strictly by reference to the company’s activities within Malta.

The three criteria are the following:

• Balance sheet total does not exceed €46,600
• Revenue does not exceed €93,000
• Average number of employees does not exceed 2

3. Merchant Shipping Companies

Effective for accounting periods starting on or after 1 January 2025.

Companies registered under the Merchant Shipping Act that benefit from exemptions under Regulation 64 of the Merchant Shipping (Shipping Organisations – Private Companies) Regulations are deemed to have discharged their audit obligations for income tax purposes without needing a statutory audit. For groups, this eligibility is maintained as long as the group qualifies under the specified thresholds.

How We Can Help

Determining whether your company qualifies for an audit exemption or a review report depends on whether you meet the above captioned criteria. Even if you meet the criteria to be exempted from undertaking an audit, you will still need to draft up financial statements in line with an accounting reporting framework and submit these to MBR. Once your accounts are complete, we will proceed to draft up your financial statements and once signed and approved, we will proceed with the relevant submissions.