The ITA provides for various exclusion and exemptions from the Maltese taxable base. Most notably, foreign-source income derived by persons who are either not resident or not domiciled in Malta is not subject to tax in Malta unless remitted to Malta. The same rule applies for foreign capital gains in the hands of such persons even if remitted to Malta (see Sec. 4. above).

The above remittance rule generally applies to passive foreign source income and does not extend to income derived by a Maltese resident (non-domiciled) person deriving income from foreign sources as a result of a trade or business being carried out in or from Malta. In the latter case, such income would be considered as sourced in Malta and subject to tax according to normal rules. An exception to this principle applies in case of income derived from the ownership, operation or leasing of aircraft or aircraft engines used in the international transport of cargo and/or passengers. Such income is deemed to arise outside Malta even if the country of registration of the aircraft or the aircraft engines is Malta and/or the aircraft is based in or operates from Malta. This measure is part of a larger set of fiscal and non-fiscal incentives launched by the Maltese government to launch Malta as a jurisdiction of choice in aviation operations.

Article 12 of the ITA also provides a number of exemptions:

any interest, discount, premium or royalties accruing to or derived by a non-resident person;
any gains or profits derived by non-residents from transfers of units in a collective investment scheme, units in linked long term business of insurance, interests in partnerships, shares or securities in a company;
the income of certain retirement funds or retirement schemes;
the profits of a non-resident ship owner (based on reciprocity);
the income of a collective investment scheme other than from Maltese immovable property;
any income or gains derived by a Malta company from a participating holding or from the transfer of such holding (participation exemption – see Sec. 10.1. for greater detail); and
royalties or similar income derived from patents, trademarks or copyrights (see Sec. 10.3. for greater detail).

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