Interest is chargeable to tax under the provisions of Article 4(1)(c) of the Income Tax Act. Interest received from sources situated outside Malta is taxable in Malta and does not benefit from an exemption related to income from participating holdings under the Income Tax Act or under any other law.
It is hereby being clarified that income from a loan, including a loan that has characteristics of both debt and equity e.g. where the lender is entitled to voting rights, to profits etc.) shall be considered to be interest for the purposes of Article 4(1)(c) of the Income Tax Act and is not considered to be income from share capital or from an equity holding for the purposes of the Income Tax Act.