Legal Notice 139 of 2025, titled the ‘Audited Exemption Rules’ (the “Rules”), aims to relieve certain types of companies from the obligation to conduct an audit in terms of the Income Tax Management Act (the “ITMA” – Chapter 372 of the Laws of Malta). These Rules revoke the previous ‘Audit Report Waiver and Deduction Rules’ (Subsidiary Legislation 372.29).

1. Effective from accounting periods commencing on or after 1 January 2024, the audit requirement stipulated in the ITMA will no longer be applicable for the first two accounting periods in respect of:

2. Newly registered companies whose shareholders are all individuals in possession of educational qualifications with MQF level 3, or higher; and

3. The new company is incorporated within three (3) years of obtaining the said educational qualifications.

The Rules also provide for an audit exemption under the ITMA, for companies that are registered under the Companies Act (Chapter 386 of the Laws of Malta).

With effect from accounting periods commencing on or after 1 January 2025:

1. Companies that satisfy any two of the three criteria set out in Article 185(2) of the Companies Act, the statutory auditor’s report in terms of the ITMA is no longer required provided that a ‘review report’ (as defined) has been produced.

2. Companies satisfying all the three criteria, shall be fully exempt from audit under the ITMA.

These provisions also apply to companies that are required to prepare consolidated accounts, provided the group continues to qualify as a small group in terms of Article 185(5) of the Companies Act.

The Rules also cater for an audit exemption under the ITMA for companies registered under the Merchant Shipping Act (Chapter 234 of the Laws of Malta).

With effect from accounting periods commencing on or after 1 January 2024:

1. Companies registered in Malta under the Merchant Shipping Act that benefit from an exemption provided in regulation 64 of the Merchant Shipping (Shipping Organisations – Private Companies) Regulations, will no longer be required to prepare a statutory auditor’s report in terms of the ITMA.

2. These provisions also apply to companies that are required to prepare consolidated accounts in terms of the Companies Act, provided the group qualifies as a small group under Article 185(5) of the Companies Act. However, the thresholds for determining what constitutes a small group shall, in all cases, be those established under Regulation 64 of the Merchant Shipping (Shipping Organisations – Private Companies) Regulations.

For the purposes of determining whether a company registered in Malta may make use of the options referred to in Rules 6 and 7 for a given accounting period, the provisions of Article 185(3) of the Companies Act shall apply as at the balance sheet date.