Malta’s Budget 2027 was presented on 26 October 2026. Several measures will affect business taxation, employment costs, recruitment and investment decisions. Here is a summary of the key announcements for business owners.
Economic context
Economic growth is forecast at 4.1% for 2026 and 3.8% for 2027, while inflation is projected at 2.5% and 2.7% respectively. The general government deficit is expected to remain at 2.6% of GDP in both years. Energy and fuel prices will continue to be supported by government subsidies.
Corporate tax reduced to 25% for smaller companies
The corporate tax rate will be reduced from 35% to 25% on qualifying retained or reinvested profits, for companies with annual turnover below €1 million.
For example, on €50,000 of qualifying profits, the tax would decrease from €17,500 to €12,500, a potential saving of €5,000.
The reduced rate is intended to encourage businesses to reinvest their earnings, including in technology, expansion and productivity improvements. Profits distributed to shareholders remain subject to the 35% rate. How the measure applies in detail will depend on the implementing legislation and its conditions.
Higher wage costs
The weekly Cost of Living Adjustment (COLA) will increase by €6.41 in 2027. The national minimum wage will increase by €10.41 per week, inclusive of COLA.
Employers should account for these changes when preparing their 2027 payroll budgets and assessing staffing costs.
Higher costs for third-country nationals
Work permit application fees for third-country nationals (TCNs) will increase by €200, to €800. An annual infrastructure contribution of €400 will also apply to relevant applications and renewals.
From 1 January 2027, free childcare and public transport will be restricted to eligible groups, including Maltese and EU citizens and qualifying long-term residents. Employers that depend on TCN workers should review the potential impact on recruitment, retention and workforce costs.
Tourism and eco-contributions
The eco-contribution on tourist accommodation will increase from €1.50 to €8 per night for collective accommodation, capped at €64 per person. For short-let accommodation, it will rise to €10 per night, capped at €80 per person.
A €10 eco-contribution will also apply to cruise passengers who disembark and reboard the same vessel in Malta. A separate €5 contribution will apply to tourists visiting Comino.
These measures may affect accommodation providers, tourism operators and businesses reviewing their pricing and operating costs.
Energy and infrastructure
Government subsidies will continue to support stable energy and fuel prices. The Budget also provides for significant investment in electricity distribution infrastructure, alongside wider energy projects.
Businesses should continue to assess their energy consumption and plan investments that improve efficiency and productivity.
What should business owners do next?
Budget 2027 creates opportunities for businesses that retain profits for investment, while increasing certain employment and recruitment costs. We recommend three practical steps.
1. Are you making the most of your profits?
If your company has turnover below €1 million, assess whether the reduced corporate tax rate could affect your decisions on distributing or reinvesting profits.
How we can help: Our Strategic Reviews and business planning services help you assess your priorities, evaluate opportunities and develop a practical plan for sustainable growth, working alongside your accountant or tax adviser where needed.
Ready to plan your next move? Let’s explore where your business could go next.
2. Are rising employment costs eating into your margins?
Account for the wage increases and assess the additional costs of recruiting and retaining TCN workers.
How we can help: We help businesses review their organisational structures, workforce requirements and operational costs to identify opportunities to work more efficiently.
Know your numbers before costs catch up with you. Let’s review your business priorities for 2027.
3. Are your processes helping you grow, or holding you back?
Consider whether investment in automation, digitalisation, equipment or expansion could improve productivity. Review the available funding schemes, including Malta Enterprise incentives and other relevant grants, alongside the tax measures.
How we can help: Our Process & Systems Review identifies bottlenecks, duplicated work and manual processes, helping you prioritise improvements and make informed investment decisions.
Stop paying for inefficiency. Start building smarter processes. Talk to us about reviewing your business operations.
Business Doctors Malta supports businesses in improving performance, streamlining processes, developing strategy and identifying opportunities for growth. Whether you are reviewing your operations, planning an investment or looking to strengthen your business for the year ahead, our team can help you identify the right steps forward.
Contact us to discuss how Budget 2027 may affect your business.
