Legal Notice 117 of 2015, published on the 2 June 2015, has raised the maximum amount of tax credit provided for by Article 57(1)(b) of the Income Tax Act from €150 to €300.

Through this provision, any tax payer will be able to obtain a tax credit against income tax chargeable in Malta. This will be applicable on any contributions made by a person to any personal retirement scheme or premiums paid in respect of a qualifying policy of insurance. The tax credit will be equal to the lower of:

• 15% of the aggregate of the contributions or premiums paid; and

• €300.

This means that if a taxpayer falls within the 15 per cent income tax bracket, s/he can utilise €2,000 of his/her annual income to contribute to a personal retirement scheme or a qualifying insurance policy without paying tax on that €2,000. If, on the other hand, a taxpayer falls within a higher tax bracket, the maximum tax saving by the taxpayer would be €300.

This Legal Notice has therefore doubled the fiscal incentive for Maltese residents to save up for their personal pension by investing in private products offered by local banks, life insurance companies and financial institutions.