Total tax revenues during 2007 increased by €169.0 million, or 9.8 per cent over the previous year, and amounted to €1,889.2 million, implying a tax burden of 34.9%. Tax revenue may be broadly classified under three main headings: indirect taxes, direct taxes and social security contributions.

Indirect taxes, at €825.4 million, made up 43.7 per cent of total tax revenues. Indirect taxes are defined as taxes linked to production and imports. This tax category includes VAT, import duties, excise and other specific taxes on services, and on financial and capital transactions. Within this heading VAT is the most important component, followed by taxes on products (including excise duties). Total revenue from VAT amounted to €420.0 million, making up 22.2 per cent of total tax revenues.

Direct taxes are current taxes on income and wealth plus capital taxes and other current taxes. Income taxes are made up of both personal and corporate taxes. During 2007, direct taxes increased by €117.2 million, to €741.6 million, making up 39.3 per cent of total tax revenue. This increase was essentially brought about by an increase of €112.6 million in revenue from corporate tax.

Social contributions are compulsory actual social contributions paid by the employees, by employers, as well as by self- and non-employed persons. Revenue in this category increased by €7.2 million, totalling €322.1 million, and making up 17.1 per cent of the total tax revenue.

The overall tax burden is defined as the total amount of taxes and actual social contributions expressed as a percentage of GDP. The tax burden for Malta moved up to 34.9 per cent in 2007, from 33.8 per cent one year earlier.

This data takes into account a change in the method of recording taxes and social contributions in Malta. The revision was done in order to comply with Council Regulation 2516/2000.

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