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New Financial Reporting Requirements in Malta

New Financial Reporting Requirements in Malta, Introduction to the General Accounting Principles for Small and Medium-Sized Entities (GAPSME)

The new year has brought about significant change to financial reporting requirements in Malta and the EU. The EU Single Accounting Directive 2013/34/EU, which has been transposed into Maltese law, replaced the fourth and seventh directive, bringing about a new set of financial reporting requirements and introducing, what is meant to be, a financial reporting framework that promoted comparability, simplicity and enhances the potential of SME businesses through the removal of unnecessary and disproportionate administrative costs.

The EU directive has been transposed into Maltese law through the introduction of the General Accounting Principles for Small and Medium-Sized Entities (GAPSME), as well as through amendments to the Maltese Companies Act. GAPSME simplifies the preparation of financial statements for ‘small’ companies, defined as those companies which satisfy two of the following three thresholds:

Malta Small and Medium-Sized Entities Threshold Small Threshold Mediuum
Balance sheet total ≤ €4,000,000 ≤ €20,000,000
Revenue ≤ €8,000,000 ≤ €40,000,000
Average number of employees ≤ 50 ≤ 250

GAPSME reduces the amount of financial information that needs to be presented by small companies in their financial statements. Such companies need only present a balance sheet, an income statement and notes to the financial statements to comply with the new presentation framework. The statement of changes in equity and statement of cash flows are now only required in the case of medium-sized entities, also defined in the new legislation. GAPSME superseded the previous GAPSE framework, widening eligibility and reducing reporting requirements in the areas of Revenue, Property Plant and equipment, Investment Property, Intangible assets other than goodwill, Impairment, Leases, Government grants and Inventories for small companies. Additional disclosures are required for medium-sized companies.

GAPSME is applicable to financial reporting periods starting on or after 1 January 2016.

The EU Directive also brought about amendments to the Maltese Companies Act including changes to the ‘small’ company thresholds to bring them in line with GAPSME rules, the removal of the requirement to produce a director’s report for small companies, the elimination of the financial holding consolidation exemption and the removal of the postponement of the filing deadline for companies whose activities are undertaken outside Malta.

Follow this link to Read More about Malta Tax Law – Full Text and Facts

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