The government is estimating that it will collect €480 million more in taxes during 2026 when compared to this year, financial estimates published by the Finance Ministry show.
Finance Minister Clyde Caruana presented the Budget for 2026 in Parliament on Monday, and while the government will not be upping any existing taxes or adding new ones, it is still estimating that it will collect €480 million more in taxes when compared to this year.
Caruana has long been vocal about clamping down on those individuals and businesses which are not paying their taxes, and in summer said that tax authorities would be cracking down on tax dodgers “like a ton of bricks.”
The government is estimating that by the end of the year it will have collected €7.344 billion in taxes for 2025 – which is up from the €7.182 billion collected throughout 2024.
The estimate for 2026, however, is even higher, as the government estimates that it will collect €7.814 billion in taxes – both direct and indirect.
The main powering factors behind this is an increase in the amount of income tax collected, an increase in the amount of Value Added Tax (VAT) collected, and an increase in social security contributions.
The government is expecting to have collected €3.266 billion in income tax during 2025 – which is actually less than the €3.416 billion collected throughout 2024.
For 2026, the government is aiming to return to and exceed the amount of income tax collected to 2024, by estimating that it will collect €3.482 billion – an increase of €216 million.
The estimate the amount of income tax to be collected during 2025 was actually under-estimated: the government had estimated that it would manage to collect €2.848 billion but in actual fact will have managed to collect €418 million more by the end of the year.
As for VAT meanwhile, the government is looking to collect €1.695 billion – an increase of €120 million when compared to the €1.575 billion that it is set to have collected by the end of the year for 2025.
Elsewhere, the government is estimating that it will collect €1.838 billion in social security contributions during 2026 – up by €118 million from the estimated total to be collected in 2025, which in turn was some €154 million more than what was collected in 2024.
The government estimated that it will collect €326 million in customs and excise duties – €2.2 million more than in 2025 – and estimated that it will collect €473 million in “licences, taxes and fines” – up by close to €14 million compared to this year.
Tax collection has long been a bone of contention for Clyde Caruana.
This week he told Parliament’s Public Accounts Committee that some 70% of active companies in Malta do not declare any profit and therefore do not pay a single cent in taxes – despite the government ongoing efforts to improve tax collection, which now also includes an AI-powered system.
“At some point we need to start analysing companies’ profits. What is eating away at their profits, or is this being engineered?” Caruana questioned, as he lamented that there are billions of euros that will likely never be recovered.
In a pre-budget event last week, Caruana said that restaurants pay an average of just €4,500 in corporate income tax per year – lower than most average citizens.
Caruana had been asked about the possibility of the government introducing a lower VAT rate for restaurants – a proposal which did not make it into his speech earlier this week.
