Tax deduction for transportation costs

John Huber & associates

26 February 2018

The Government of Malta has issued new rules which provide for a tax deduction to undertakings carrying out a trade or business that incur costs for the transportation of employees to and from the place of work by means of LN 67 of 2018.The tax deduction is equivalent to 150% of the transportation costs incurred during the year.

The deduction is capped at Eur25,000 p.a. or Eur300 per employee, for whose transportation costs would have been incurred by the undertaking during the year, whichever is the lower. No other tax deduction will be possible if the undertaking has benefitted from this deduction in terms of these new rules.

To benefit from this deduction, the undertaking must:

  1. maintain proper records of all transportation costs incurred;
  2. claim such a deduction in its income tax return in the year in which the transportation costs were incurred;
  3. submit, together with its income tax return, a declaration signed by a Certified Public Accountant confirming that it has correctly computed the said costs. 
These rules shall be applicable as from year of assessment 2018 and will remain in effect up to year of assessment 2020