XXI tal-1988

INI)USTRIAL DEVELOPMENT ACT, ' 988

Arrange"","1 of Sfclions

PART I

l>rriiminary

ShonTitle

I nterprc lalion

Beneficiaries under tllis Act

PART 11

Main IIICOIM Tu Incenlh"es

Ta~ Holidays

Export inco:nli\"(~ scheme

R ed uced nllc of lax

Investment allowance

Accele rated depreciation

Tax free di vidends

T rain ing costs alk:noo'ance

E~pon promotion allowance

Research and dc\'elopmcn t allowance

Income w pa yable by npatrlale cmploy~

Fe:lsi bility studies

Consequen tial provisions in respect o f double Ia;o;alion trea ties

PART III

O ther Inccn livr(!

Sofl Loans

RelicJ from customs duly

Provision of factories elC.

Training grams

Management servior.; granlli

Exemption from death and donation duly

Expaniate employees

Industry in Go~o

Exceptional incentives and benefits

PA RT IV

or I nn'fllh es

GUHl'lIntfot

Guarantee o f incentilte5

Power o f the Presiden t of Mnl!a

RcvOC/ltion of inccm;vcs and benefits

Establishment of Appeals Board

Summoning of witnesses and admi nistra tion of omh

Appoeal5 to BOMd

Appeals to Coun of Appeal

PAHoT V

Effect on ot her laws

Official sccrecy

Cumu lative incentives and choice

Rcco rds and ce nification

Certai n rCSt rve funds

Pov.·CD of th c Corporation and ot her au thorit ies

PART VI

OlTeoca and Penalties

l'e nalt)· for offences aga inst offtcial secrecy

Penalty for mating inrorrecl stateme nts c lC.

Provisions rcl<tting to fraud etc.

Gene ral pe nal lY

Provision wit h respect 10 o ffences

Prescription for offc llccs

PART VII

nnal Pn ... islo)ns

rov,·cr 10 mate regula tions

Transitory provisions relating to the Aids to Indumies Ordin ance

1 asse nt.

(I •• S.)

PAUL X U E REtI

Acting Presidenl

~'h J ulv. 19&1

ACT No. XX I or 1988

AN ACT 10 encourage Ihe olllblishmelll 01 ne'" induslries and Ihe

expal1$ion al aisling ()lies, and IQ mak.e ancillary arrang .. m .. nl5 in

'e/mion Ihe'''It).

BE IT ENA CTED by the President , by and .... ith the advice and

consent of the House of Represe ntatives. in this JH"C'SCnt Parl iament

lIssembled , and by the authorily of the same, as follows:-

PART I

"'~lim il\Bry

I. This Act may be ci ted as the Industrial Development Act.

1988.

(I ) In this Act, unless the conte~t or subject othe",'i$e

requires

"body of persons" means any partnership. fcno~hip or

society o f pe11iOOS. whether "ested with legal personal ity or not;

"ccrtified public accoun tant and auditor" means an individual

who holds a wa rra nl 10 act in this capacity issued uruler Ihe

Accountancy Profession Act. 1979. or a partnership of such in -

dividuals d uly registered under the said Act

"company" means

(a) a limited liabili tyoompanyconsti tuted in accordance

.... it h the provisions o f the Commercial I' artncrships Ordin-

ance.I962.or

(b) a co-operative society constituted in accordance

with the provisions of the Co-operative Societies Act, 1978;

"Corporation" means the Malta Development Corpon,tion

established under the Malta Development Corporation Act. 1967;

" income tax" means tax charged or chargeable under the

provisions of the Income Tax Act, 1948;

"Maltese company" mcans a company in which Maltese

citizens either -

(a) hold more than half in nominal value of its issued

share capital. excluding any part thereof which. neither as

respects dividends nor as respects capital. carries any right to

participate beyond a specifi ed amount in a distribution; and

(b)

arc entitled to more than half its voting power.

.

"Minister" means the Minister responsible for Industry and

mdudes. to the extent of the authority given. any Parliamentary

Secretary authorised in that behalf;

"person" includes 3 body of persons;

"prescribed" means prescribed by regulation5 under this Act ;

"public officer" has the same meaning as is assigned to it by

section 124 of the Constitution of Malta;

"qualifying company" means a company qualifying for incen-

tives or benefits under this Act in accordance with the provisionsof

section 3.

Ena .. 'tments referred to in th is Act sha ll include any other

(2)

enactments replacing the said laws. and where reference in this Act i5

made to specific provisions of any existing enactment , such reference

shall be deemed to comprise also a reference to the corresponding

provisions of any enactment replacing the said law.

(3) Words and expressions used in thi~ Act and in other

enactments referred to in this Act shall. unless defined in this Act. be

construed and have the same meaning in this Act as in the said other

enactments.

3, (I) Without prejudice to the provisions of section 24 of this S.".fo<i.,k>

Act. the incentives and benefits contemplated by this Act shall be due to unde, ,hj, Act_

and obtained only by a company wh ich carries on or carries out, or

intends to carry on or carry out, in Malta, a trade or business consi~ting

sole Iv of

(a) the production, manufacture. improvement, assembly,

processing. repair. preservation or maintenance of any goods,

materials, commodities (induding computer software). equip-

me nt , plant or machinery; or

(b) the rendering of services of an industrial nature analog-

ous to the activities referred to in paragraph (a) of this subsection ,

including the repair. maintenance , commissioning, installation,

inspection or testin g of plant, machinery or equipment.

(2) A trade or business contemplated in subsection (I) of this

section shall be a lrade or business actually and pllysically earried on or

ea rried out in Malla. so 1I0wcver that where Ihe services referred 10 in

paragraph (b) lhereof are rendered outside Malta, the said sc~ shall .

fo r the purposes of t his section, be deemed to have been re lldered in

Malta if tile actual services are wholly or mai nly rendered by citizens of

Malta .

(J) Subject to the provisions of section 25 of tll is Act. the

Minister may from time to time upon a rcsolution of Ihe House of

Represen tatives by nOlice in IlIe Gazelle e~clude from any or all o f Ihe

incentives and bencfits conlemplated by Ihis Act companies that would

otherwise be qualifying companies bUI wllosoe trade or business

comprises activities specir.ed in the said notice.

(4) Any notice published in accordance ... ;th the provisions

of subscdion (3) of this section may be subsequently revoked or

modified by the Ministe r upon a resolution of the House o f Reprtl>en ·

latlves.

(5) The incen tivt:$ and benefits contemplated by th is Act

sha ll only be due in respe<:t of act ivi ties happening on or after 1st June.

1987. a nd in respect of gai ns or profi ts earne d after that date .

PA RT 11

Main IllC(InM: Tu Incentin5

( I)

Where a qualif)'ing company

(a) is a company consti tuted on o r after 1st June. 1987. and

(b) subj«1. to the proYisionsofsub5ection (5) of this section.

exports in mone tary value not less than ninety five per cent of its

production (calculated "free on board"), or of the services it

re nders, as the case may be. and

(c) carries on or carries ou t a trade Or business which dOl'$ not

co nsist solely or mainly in the mere e~pansion. duplica tion or

rcplacement of a trade or business formerly carried on or carried

o ut in Malt a by any person in any way dir~ctly or indi rectly oon -

ncc-,ed o r associated with the said oompany through shareholding,

vOl mg or o the r ownership or oontrolling righ ts. irrespective of Ihe

person in whom such rights are or m~y h~ve been vesled.

such oompany shall be exempl from income lax on the gai ns or profits

from its trade o r business made during ten conseculive years of &$SeSS-

ment which years shall be comprised within the company's firsl Iweh'e

years of assessmen t as may be de termined by the company by wayof an

irreyocable ootice in writing to the Corporation 10 be give n not laler

t han the end of the third year of assessment.

(2) If a company in any year immediately pre~ding a yearof

assessment comprised in the ten consecutive years of assessment referr-

ed to in subsection ( I) of this section nports less t han ninet y fi~e pe r

cent of its productio n. the company sh~11 fo r Ihat year of assessment

forfe il the e~em pt ion gran ted under Ihe pro~isions of this section

Provided that such forfeiture for any year as aforesaid sha ll not

(a) affect the company's righ t for exemption in any other

year of assessment; or

(b) ob tain for the company exemption under Ihis section for

any year not comprised in the original ten consecutive yean; of

assessment.

(3)

For the purposes of subsection (1) of this section

(a) the acquisition by a company of any trade or business

formerly carried on or carried out by any person not conne<:ted with

the company as set out in paragraph (c) of the said subsection shall

not qualify the said compan y to obta in the exemption from income

tax contemplated by this section;

(b) where on the 1st June, 1987, a company was controlled 31

least as to fifty per cent directly or indirectly by Govemme:1t and

not less than fifty per cent of the shares of the company were owned

directly or indiret:tly by Government, if all such shares are acquired

by any person not under Government control. such company shall

be qualified toobtain the e~emption contemplated in subsection (1)

of this section if the company is aqua tifyi ngcompany and it satisfies

th e condition at paragraph (b) of the said subsection.

(4) The income of any company for any year of assessment in

respect of which e~cmption from income ta~ operates under the provi-

sions of this section shaU be computed in the manner set out in the

Income Tax Act. 1948, and in accordance with its prov isions

Provided that

(a) the provisions of the said Act shall be superseded or

replaced as may be necessary by the provi~ions of this Act;

(b) any entitlement to a deduction under the provisions of

section 12 of this Act for any year of assessment in respect of whi ch

exemption under the provisions of this section is due. shall be

deferred to the first year of assessment next following the tcn

consecutive yea!"1; of assessment referred to in .ubsection (I) of thi s

section;

(c) any unabsorbcd losses or unabsorbed capital allowances

(including the allowances contemplated by this ACI) at the end of

any "ear of assessment exempt from income lax under the

pro\'i$ion~ of thi s sect ion shall be carried forward strictly in the

manner set out in the Income Ta~ Act. 1948. notwithstanding that

such carry forward is from an exempl year into a year when nosuch

exemption is "pcrnllvc.

(5) The words '"not less than ninety-five per cent"" in

subsection (1) of th is section shall be substituted by the words

"substantially the whole" and subsection (2) sh.all be construed

accordingly in any particular line of production or manufacture as may

be de termined by the Ministe r by notice published in the Gazette and

in Ihal case the words Msubslantiall y the whole~ shall mean that

percentage higher Ihan ninety-five pcrcclII as the Min ister ma y

mention in the same notice

Provided that such. substitution shall. in respect of any

quali fying company, be applicable only as from its first accounting

period commencing on a day subsequent 10 that OD which notice is

published as aforClaid.

( I) Where a qualifying company in allY year of assessment up

to and including!lIe year of assewnenl 2001 increases ils expon sales

o\"er such. salcs during a b35C period by the percentages specified in

subsection (5 ) ofthis !iCction. the additional export profits earned toy the

com pany in that year from the upon sala resulting in sw;:h increase

shall be c~cmpt from income fU .

(2 ) The additional pmfit$ exempt from income tax in

accordance ",ith the provisions o f subsection ( I) of this section shall be

calcu lated in accordance with the follo .... ;ng formula:-

)

(··C·

(.oz"

)

wherc:-

··A·· - profits LA base period

··B·· '" expon salcsduring base period

··C' - total sales during base period

··X" = profits earned in year of assessment

.. y" - export sales in year of assessment

·'z·· .. total sales in year of assessment

(3) For the puTJXISC of the computation set out at subsection

(2) of this section

(a) there shall be e~c1uded any income wh ich does not accrue

to the company from a trade or business and any sale or other

componen l of ils turnover which is not connttted wi lh its tradc or

business~

(b) "profits~ and "incomc'· shall in all cases be lak en as

comprised in the company·s chargeable incom e for income Iu

purposes after account has been taken , where appropriate, of any

ince nt ive o r benefit obtained by the company under the provisions

of this Act ;

(c) a loss made in any year of assessment comprised in a base

period shall be deemed te be zero profi ls.

(4) For the purposes of this seefion. profits ~nd e~port sales

during a base period shall be the average profits and e~port sales during

a period of two consecutive yea~ of assessment as follows: -

Year of Assessme nt

Base Period

1989 to 199)

year of assessment

1<,187 and 1988

1988 and 1<,189

1989 and 1990

Base Period

Year of Assessment

yearofasscssment: 1990 and 1991

1991 and 1992

1992 and 1993

1993 and 1994

1994 and 1995

1995 and 1996

(5) Exemption from income tax under this section shall be

due where the increase in export sales is of

(a) ten percent or more over the corresponding base period in

the first year of exemption ;

(b) fifteen per cent or more ovcr the corrcspondi ng ba&e

period in the second year of exemption; and

(c) twenty-five per cent or more over the correspondinc base

period in the third and subsequent years of exemption

Provided that no gain or profit earned by a company from

increased export sales shall be exempt from income tax in any yea r of

assessment which succeeds by more than nine years the first year of

assessment in which exemption under this section is due.

(6)

The provisions of this section shall on ly be applicable to

(a)

a qualifying company constituted before 1st June 1987,

and to

(b) a qualifying company constituted on or after that date if

that company. for any year of assessment, would have been entitled

to benefit from an exemption contemplated in section 4 of this Act

but for the provisions of paragraph (b) of subsectio n (1) thereof.

(7) For the purposes of this section. export sales shall in an

cases and for all years of assessment be taken to be the monetary value of

e xport production of a qua li fying company calculated "frce on board".

or of the services it exports. as the case may be.

(I) Subject to the provisions of subsection (2) of this section. ReJ oood ,,'e of , ..

where it appears to the Corporation that the gains or profits or part

thereof derived by a qualifying company from its trade or business or

part the reof in the yearof assessment commencing on ISI January. 1988.

or in subsequent years of assessment. have been set aside for the

cxclusive purpose of financing any project as shall have been approved

by the Corporation. and that the gains or profits or part thereof have in

fact been used for the purpose for which they were set aside, the

Corporation Shall issu e to the qualifying company a certificate showing

compliance and thereupon the rate of income tax chargeable on the

gains or profits or pa rt thereof so used shall be reduced by seven teen and

a half percentage points. and in any soch case the tax chargeable shall be

assessed. or reasse"sed and where necessary refunded, a.s the case may

require

Provided that where the qualifying company is a Mal tese

oom pan~,

the rate of income tax chargeable shall be reduced b~

nineteen and a quarter percentage points.

(2). The Corpo ration shall not grant an); approval for the

purposes of subsect ion (I) of this section-

(a) later than twent~ four months after the end of the ~ear

immediately precedi ng the yea r of assessmen t in which the income

in respect of which approval may be given falls to be charged to tax

"'

( b) in respeet o f a n ~ project req uiring for its realisatio n a

period of more than five years from the date of approval.

I""",,"'<n' .Ik>wanct

( I) Wh ere a qualifymg COmpan)' after t st June 1987 mcurs or

has incurred e xpend it ure in acqu iring plant or machinery. or an

industrial building or st ructu re (including a warehouse). for the

purposes of its trade or business. and in consequence of its incurring

such expenditure the plant. machinery. industrial buildingor structure is

o wn ed by the company. such company sha ll be ent itled in computing its

chargeable income for income tax purposes in respect of th e year o f

assessment in which th e relative asse t is first used by the company in its

trade or business. to an investment allowance which shall be expressed

as a percen tage of the cost o f the asset as follows: -

Wh en owned by

When owned by

Mal tese companies

other companies

Plant and

machinery

33%

30%

Industrial

building and

structure

15%

5%

(2) No allowance under this section shall be oue exce pt in

respect of assets wh ich are first used by the company. having been

acquired unused and not second hand

Provided tha t th is subsectio n shall not apply in respect of

industrial buildings or structures acquired from the Government ,

(3) Whe re an allowa nce has been granted to a company

under Ihis section:-

(a) the com pany shall not be entitl ed to any deduclion in

respect of the same asset under the provisions of paragraph (k) of

subsection (I ) of ~tion IOof the Income Tax Act. 1948

(b) the provisions of section lOB of the "aid Act shall not

apply in respect of th~ relative asset ;

(cl not hing con ta ined in the said Act s h~1t \Opera te so as to

prevent the in vestment allowance and any othe r allowance g,<,nted

under this Act in respect thereof. when taken together, from

exceeding the original cost of the a~t .

(4) The provisions of subsection (5) of section 8 of this Act

shall apply in respect of any investment allowance granted under this

section.

(5) In this section and in section 8 of this Act. immovable

propeny held by title of emphyteusis shall be deemed to be held in

owneNhip.

8. (I) Where a qualifying company is enti tled to an investment A=Ie~ .... d

allowance in respect of any asset under the provisions of section 7 of this ""'p,e,,,.,,,,,,

Act. the company shall, in addition. be entitled to a dcduction in respect

of wear and tear at the following rates on account of the same asset for

the purpose of computing 'its chargeable income for income tax

purposes: -

When owned by

When owned by

other companies

Maltese companies

25%

33''';%

Plant and machinery

per annum

per annum

Industrial

building and

4%

5%

structure

per annum

per annum

(2) The allowances for which provision is made in subsection

(l) of this section shall be granted as from the year of asse~sment in

respect of which the re lative allowance is first due to be gramed and shall

be computed on the straight line method.

(3) The allowances granted in terms of this section shall

replace any allowances otherwise due to the qualifying company for any

year of assessment under the provisions of paragraph (g) of subsection

(l) of section \0 of the Income Tax Act, 1948.

(4) The cost of the land on which any industrial building or

st ructure is constructed or ere.::ted shall. in all cases, be excluded from

any expenditure in respect of which a deduction is due to be granted

under the provisions of this section.

(5) Saving the provisions of this section and of section 7 of

this Act. investment allowaflces and aceelerated depreciation shall for

the purposes of the Income Tax Act, 1948 be deemed to be deductions

granted under paragraphs (g) and (k) of subsection (I) of section 10 of

the said Act and all the relevant provisions of that Act shall accordingly

apply,

(6) No allowance under this section shall be due except in

respect of as~ets ",hich arc first used by the company. having been

acquired llnu.<ed and not second hand

Provided that tllis subsection shall not apply in respect of

industrial buildings or st ructu res acquired from the Government.

(7) For the purposes of sections 26 and 27 of the Income Tax

Acc 1948. the tax paid or payable in respect of income distributed by a

company by way of dividend to il~ members may. at the request of the

company. be calculated as if the company was not entitled to a deduction

under this section. but to the deductions oon\cmplated by paragraphs

(g) and (k) of subsection ( I) of section to of the Income Tax Act. 1948.

9. (1) Any dividends (or part thereof) distributed by a

qualifying company out of its gains or profits, or pari thereof. which.

under the provisions of this Act. have been relieved from the payment of

income taJO. and to which. the provisions of this secti{1n apply. shall be

exempt from income tax in the handsofthe members of the company in

receipt of such distribution.

(2) Where a dividend referred to in subsection (I) of this

section is distributed to a member whieb is also a company (in this

subsection referred toas "the second company"), the said dividend shall

likewise be distributable by the second company to its own members in

the form of dividends exempt from income tax in the hands of the

recipients, and where a membe r of the second company is again a

company. the preceding provisions of this subsection shall apply mutatis

mUlandis as though references to the first company were references to

the second company and as though references therein to the second

company were references to that member, and Ihe principle set out in

this )ubseetio.l shall continue to be applied for as long as the gains or

profits or part thereof to which this section applies are distributed by

way of dividends.

(3) The provisions of thi s section shall apply 10 the gains or

profit>. or part thereof, of a company wbich are relieved from income

tax -

(a) under the provisions of section 4 of this Act. being gains

or profits derived in any year by a company in respect of which it is

t"ntitled to a tax holiday

(b) under the provisions of section 5 of this Act. being part of

the gains or profits of a company relieved from income tax for any

year under the export incentives scheme

(c) under the provisions o f section 7 of this Act , being gains or

profits of a company for any year relieved from income tax through

the grant of an investment allowance.

(4) Every company shall. upon Ih e distribution of a dividend

exempt in whole or in part from income tax under the provi~ionsof

this section, furnish to each member in receipt of such dividend a

certificate setting out the amount of Ihe dividend paid. the year in

which the gains or profits so distributed were earned by the

company. and declaring which part of that dividend is exempt from

income tax as provided in this section.

10. ( I ) Subject 10 t he provisions of sub:;e<;lion (2) of this section. l',,,n;"~ """_

where Ihe Corporation is satisfied that a training programme approved

by it after the coming inlO force of this Act can increaS{' Ihe skill and

expt:rtise of the employees of a qualifying company. the Corporation

,h~!I issue a certificate accordingly and the company shall be emitled 10

deducl onc hundred and twenty per cem of Ihe actual expenditure

incurred by It in organisiog the training programme In the compulation

of ItS total income for the purposes of the income Tax Act. 1948

Provided that where the Corporation is satisfied that any

training programme caters wholly or maioly for handicapped persons,

the deduction shall be one hundred and fifty percentofthe expenditure.

(2) The total deduclions due 10 a company for any year of

assessmem under the provisions of this section shall not exceed one-

Iwenlielh of the 10lal sum paid by the company for Ihal year by way of

wages. salaries and other emoluml"nts.

11. (I) SUbject to the provi,ions of this section. where a E,pon

qualifying company incurs or has incurred exporl promolion P'O""» ;'-'"

expend iture afler lsl June. 1987 principally for Ihe purpose of seeking .I~" .. o«

opportunities or creating or increasing demand for the export of its

goods or services. Ihat company shall be entitled, in compuling ils lotal

income for income tax purposes. 10 deduCI an amounl equivalenllo onc

hundred and twenly per cent of the expendi ture so incurred.

(2) The deduction contemplated in subsection (\) of this

seclion shall stili be due notwithstanding that the relative

expendilurc:-

(a) was incuffed in opening or seeking to open new export

lines or vemure s; or

(b)

does nOI achieve any export sales or increased export

sales.

(3) The total deduclion due for any year of assessment 10 a

company under the provisions of this sectio n shall not exceed Lm24.0C()

()r a s um equivalent 10 five per ceOI of the total export sales of the

company for th;l! year > whichever sum is the higher.

(4)

For the purposes of this scclion: -

(~ ) e~port sales shall be taken to be the monetary vallle of

export produclion calculalcd "frce on board", or of the services

e" f'Orled ;

(b) "l"xporl promotion expeoditure" shall include. but nOllO

the exclusion of other appropriate items. expenses incurred in: -

(i) advertising or olher means of securing publicity or

soliciting bll~iness

(ii) c<lfrying 0111 Ilt,[fkel research or obtaining market

infnrm;uion

(iii) providing free of charge samples or technical

information 10 a person outside Malla

(iv) ; nve ,t;gating. preparing designs, making est imates

and similar activities connected with tendering for the supply

o f goods or services

(v) research into methods of packaging or presenting

goods for e.~port

(vi)

participation ,n trade fairs outside Ma lta;

(vii)

cost of bringing potential buyerl; to Malta.

(cl Me xport promotion expenditure" sllaJl not ,"clude

salaries. wages and other emolu ments except where these arc paid

10 officerl; o r employees of a company registered in Malta for the

period or periods in any yea r during which tllcy are required 10

te nder their services outside Ma lt, ..

12. (I) In the case of a qualifyi ng company. the provisions of

paragraphs (i) and (j) of subsection (1) of section 10 of th e Income Tax

Act. 1948. shall in any year in which the company is entitled to a

deduct ion the reunder as from the yea r of assessment 1988:-

(a) be deemed to allow a deduction in respect of expenses

incurred as follows in ;1dditio n to any o ther expc nses contemplated

in the said paragraplls:-

(i) experimental or theoretical work aimed at the

discovery of new knowledge related tu its trade or husiness

(ii) searching for applicat;ons of such work and

knowledge ;

(iii) formulation and design of possible applications for

such work ;

(iv) tesling in searcll for. or eV3lu;1tioll of. product or

process alternatives

(v) design. construction and testing of pre-production

prototypes and mode ls

(vi) design of product. proces\.Cs, S)~lems or scrvi<;c,

involving new technology or substantially improving th,,,,,,'

a lready produced or installed

(b) be deemed not 10 allow as a deduction any expt'nscs

incurred as follo"'~: -

rou rin e design. re,ring ~nd an"ty<i~ of equipmenr or

(i)

product for tile purpose of quality or qua Qtity control.

(ii) routine o r periodic alterations to e x i~ting products

or processes

(iii)

operational research

(iv) legal and admini>trative work in connection with

patent applications. records and litigation and the sale or

lil-ensi ng of paten ts and patent rights

(v) any activity. includmg design and construction.

relating to the construction. relocation, rearrangemcm or

start-up facilities or equipmem other Ihan facilities or

equipment whose sole use is for a specified and particular

research or development project

(c) be read and construed as if all the provisos thereto were

omitted,

(2) Deduclions due under the provisions of paragraphs (i) or

(j) of subsection (I) of section 10 of Ihe Income Tax Act. 1948. as

modified by the provisions of this section, shall be allowed for the

purposcsof the sa id ACI alone hundred and twenty percem of the actual

amount of Ihe expenditure incurred, but Ihe tOlal deduction granted as

aforesaid shall not. for any year of assessment. exceed five per cent of

Ihe turnover of the company for Ihat year

Provided that if the amounl of the deduction is such that the

full nmount thereof cannot be allowed in the year in which it is incurred.

t hat part which cannOI be so allowed shall be added to any deduction due

in this respect for the following year and be deemed to be part of Ihat

deduction or. if there is no such deduction for that year. bedeemed to be

the deduction for that year, and so on for subsequem years.

(3) Noth lng in this section shall be considered to grant an

allowance in respect of research and developmem which is nOI

substantially carried out in Malta.

IJ, Where an individual who is nOI domiciled in Malta or who. if

so domiciled. is not ordinarily resident therein. is employed with a

qoalifying company. t he tax on Ihe chargeable income of such individual

shall, as from the year of assessment commencing on 1st January. 1989.

be charged althe rates oontemplakd by the Inoome Tax Act , 1948. so

however thal any rate of lax in exces~ of 30 cents on every Maltese lira

.<hall be reduced to 30 cents

Provided that the lax payable by any ind ividual as aforesaid

,hall not be less than Lml(O} per annum. reduced however on a pTO

mIll basis when Ihat indiv idu al is not so employed during the whole

year

Provided further that the amount of tax payable by any such

individual shall not be increased 10 more than would have been payable

by him but for the provisions of I~is section.

14. Any expenses and outgoings on feasibility ~tudies incurred on F •• >it>itil)'

or after 1st June. 1987 by ~ oompany constituted on o r after that date ,<0.<1." ,

sh;, \I . when such expenses or outgoings are wholly and exclusively

incurred for the purposes of a trade or business which entitles or may

entitle the company to be a qu~lify;ng compan)' for the purposes of this

Act. and to the extent to which such e xpenses and outguings arc wholly

and exclusively so incurred . be dcemed for the purposes of subsection

(I) of section 10 and of section 11 of the Income Tax Act. 1948. to have

been incurred b} that company not earlier than the first dayon which Ihe

said trade or business is carried on. and. in any case. as being properly

deductible in computing the amount of the gains or profits arising from

the trade or business for rh e purposes of the said Act .

IS. Where a member of a qualifying company is a residem of a

state or territory with which Malta has made an arrangement under the

provisions of the Income Tax Aet. 1948 for the grant of re lief from

double taxation . and under Ihat arrangement a dividend. or part

thereof. dis tributed by the qualifying company i~ subject to income tax

in Malta at a rate lower than that chargeable on the income out of which

the dividend is distributed. the company shall be entilled to require Iha!

Ihe gains or profits. or part thereof. derived by it for the year of

assessment 1988 and for subseq uent yea rs o f assessment and which are

distributable by way of dividend subject to tax at a reduced amoun t as

aforesai d shall. notwithstanding that the divide nd. or part thereof has

not been distributed. be taxed a l the sa id redul-cd rate and 1'1 01 al the rale

properly chargeable under the Income Tax Act. 19.:8 on the gains or

profits of the company.

PART III

Other In<<nti'"e8

16. (I) Where the Corporation is satisfied that in the case of a

qualifying com pany it would be consistent with the aims and objeetivcs

of the industrial policy of the Government. the Corporation may

gran! loans to the said company for the acquisi tion of new plant .

machinery ana othe r fixed assets. but excluding land and buildings. in

accordance with the teons and conditions herein specified.

(2) The Corporat ion may grant loans as provided under

subsec\ton ( I) of this section when the plant , machine ry or fixed assets

(a) arc acquired by the company unused and not second

hand . and

(b) are acq uired as pari of an investmen t programme of not

more than three years' duration as may be approved by the

Corporation. and

(c) such mvest ment programme is o f not less Ihan

LmJOO,OOO in Ihe case of companies cOIIslituted on or after 1st

June , 1987, and of not less than Lm75.000 in the case of any other

company.

(3) Loans under the provisions of th is section shall in no case

exceed thirty three per cent of the projected capital investment

approved by the Corporation, but no loan shall e~ ceed -

(a) Lm500.<XXl in the case of companies satisfying the

condition laid down in paragraph (b) of subsection (I) of section 4

of this Act, and

(b)

Lm200,OOO in all OIher cases.

(4) The rate of interest charged by Ihe Corporal ion on loans

granted under Ihis secl ion shall be the maximu m chargeable on such

loans in terms of direclives issued from time to time by the Minisler

responsible for Finance under the Banking Act , 1970, less-

(a) four percentage points in respect of loans made under

paragraph (a) of subsection (3) hereof, and

(b)

lWO percentage points in respect of othe r loans.

(5) The repayment of the pri ncipal as well as the payment of

interest on any loan granled under this section shall be secured by a

general hypothec ovc ( the propertyofthe company rcceiving the loan in

"addition to any other security which Ihe Corporation may require

Provided that for the purpose of Tille XXIII of Pan 11 of Book

Second of the Civil Code, the Corporation may allow a hypolhecary

debt in respect of a loan due to a financial institution situated in Malta 10

ran k immed iately prior to the general hypothec or other security of the

Corporation re lative to such loan.

(6) The repayment of any loan made under this section, and

of the interest thereon. shall be made within a period and at instalments

as may be agreeJ with the Corporation, but such period shall in no case

exceed ten years from the dale of the first loan payment received b~ the

company

Provided that for the first two years following the fim loan

payment the company shall only pay interest on the loan.

(7) Any loan made under this section shall be applied by thc

company for only such purpose as may be authorised by Ihe

Corporation.

(8) Where the Corporation has granted a loan to a qualifying

company under the p rovisions of this section it shall-

(a) from ti me to ti me make or cause to be made such

exam ination o f books. documents. premises and all other things

and mallers of that co mpany whatsoever as may be necessary to

ensure that the loan is being applied for the purpose for which it had

been made: and

(b) request such financial statements fro m the company as it

may require. to be submitted quarterly or at shorter intervals at the

discretion of the Corporation .

(9) Where the Corporation has approved that a loan be

granted by instalments. and allY paT! of such loan has not yel been

advunced. Ihe Corporation. without prejudice 10 any other remedy.

'nay withhold any portion of Ihe loan still outslandillg if -

(a) any sum of money, whether principal or interest due in

respect of any loan under this section, remains unpaid; or

(b) any prior loon made under this section has not bee n

applied for the purpose for which it was made or has not been

e~pended in a careful, timely and econom ical manne r; or

(c) the company has gone into liqu idation or has become

insolvent or has assigned property for the benefit of creditors; or

(d) there has been a breach or non-observance of any

condi tion attached to the loan.

(10) The gra nting of loans made under this section shall not

be subject to the provisions o f the Ellchange Control Act, 1972.

(I) Where the Corporation is satisfied that any article is

being imported by a qualifying company -

(a)

for the construction, alteration, reconstruction or

el<t e~ion of any industrial building or structure or for any

el<lension thereof. or for the purpose o f effecting repairs to an

industrial building or structure or the extension thereof, or

constitutes equipment, tools, machinery or plall1, contained in or

related to any industrial building or structure or extension thereof.

or is intended to replace any such equipment , tools , machinery or

plall1, and in all cases for the purposes of the trade or business

camed on or intcnded to be camed on by the said company; or

(b) to serve as materials, componems or accessories which

are necessary for and u5Cd by oron behalf of the company for anyof

thc purpose~ refcrred to in subsection (\) of ~cction 3 of th i! Act,

the Corporatio n shall issue a certificate accordingly, and the company

shall be entitled to import the articlc free from customs duty or at a

reduced rate of customs duty.

(2) Eve ry company which imports into Malta any article free

of customs duty or at a reduccd rate of customs duty under subsection

(I) of this section shall:-

(a) keep a record of th e art icles wh ich it so imports in such

form and contai ning such particulars as may be specified by the

Comptroller of Customs (hereinafter referred to as "the

Comptroller")

(b) cause the art icles so imported to be marked In the

manner specified by the Comptroller;

(c) permit any officer of the Comptroller al all reaso"able

times to inspect the record of the articles so imported and 10 have

access to any premises of the company for the purpose of examining

any such arlicles which he may believe to be there in and of

satisfying himself of the accuracy of the particulars in relation to

such articles in the said record.

(3) No art icle imported into Malta by a company free or at a

reduced rate of customs duty under the provisions of subsection (I) of

this section shall be sold. given away or otherwise disposed o f by th e

company except

(a) in the ease of an ind ustrial building or struct ure for the

con5lruction. alteration. reconstruction. exten~ion or equipmL nt of

which sueh article was imported into Malta:-

(i) to the perso n for whom such industrial building or

structure was CO llst ructed; or

(ii) .. fler payment of the amount of customs dUly which

would have bee n payab le upon the importation of such article

but for subs:eetion (1) heTCOf; Or

(iii ) with the wriuen authority of the Comptroller afte r

the expiration of five years from the importation into Malta of

the article if such articlc has bee n actually used for the purpose

for which it was imported into Malta;

(b) in the case of materials, components or ae<:essories

imported into Malta for any purpose referred to in subsectio ll (I) of

section 3 of this Act

(i) if incorporated in the articles or commodities in

respect of which they were imported into Malta : or

(ii) after payment of th e amoun t of custom~ duty which

"'ould have been payable upon the importation of such

materials or components but for suhscction (I) hereof.

(4) Where any article is sold or disposed of to a qo.:alifying

company entit led to relief from cu~toms duty in pursuance of 11

certificate issued under the provisions of this section , and the sale or

disposal of such article 10 the cumpany ta kes place under circumstances

which, but for thc operation of this section, would cause such article 10

be deemed to be taken out of bond and duty to become payable thereon

by the company in accordance with any of the provisions of the Import

Duties Act. 1976, such art icle shall (to the extent o llly that the company

would have been entitled to relief from customs duty in respect thereof

as afore<~id if it had imported that article at the time of its sale or

disposal to it in Malta) be deemed to be imported by the company at the

time at which such article is sold or disposed of to it.

(I) Subject to the provisions of subsection (4) of thi s Prov;"",, <>I

section, the Corporation may, consistently with the aims and objectives f>ctor;",e«

of the illdust rial policy of the Government. procure for a qualifying

company industrial building., and ,t ructures at the following rent:-

(a) Lml .75 per ann um per square metre for the first three

years of the lease;

(b) at a rate which shall not exceed Lm4 per square metre per

annum for the next thirteen years of the lease;

(c) thereafter at the rate dete rm ined under the preceding

paragraph which rme. however, shall be adjusted immedimc!y. and

subsequently every five years, to take account of movements in the

inde x of inflation contemplated in the Schedule to the Housing

(Decontrol) Ordinance, 1959 between the first yearofthe lease and

the date on which every such adjustme nt is effected.

(2) Subject to the provisions of subsection (4) of this section,

the Corporation may. consistently with the aims and objectives of the

ind ustrial policy of the Government. procure for a q ualifying company,

land on the following terms -

(a) in the case of land adjoining a n industrial building or

structure. by lille of lease and the rent payable shall be -

(i) 23 cents per square melre per annum for the first

sixteen years of the lease

(ii) thereafter at a rate which shall be adjusted

immediately, and subsequently every five years, !O take

account of movements in the aforesaid index of inflation

between the fi rst year of the lease and the date on which every

such adjustment is effected

(b) in the case of land which is made available by the

Corporation in an undeveloped state. the land shall be gran ted hy

title of temporary emphyteusis for a minimum consideration of 23

cents per MjuaTe metre per annum which shall be revised every

twenty·five years (whether the concession is subsequently

e~tended or not) to take account of movements in the said index of

inH3Iion as from the date of the grant.

(3) The Corporation may in any particular case provide

indust rial buildings and structures constructed according to the

requirements of a qualifying company, or make alterations to existing

buildings and structures. on such terms as the Corporation may agree

with the compa ny.

(4) The Minister may from lime to time, by notice in the

Gazelle . vary the ratcs established in subsections (I ) and (2) of thi s

Section.

(I) Where the Corporation is satisfied that any employee

engaged by a qualifying company on or after 1st June. 1987 is a full -tim e

employee engaged for an indefinite period, and that such employee is

undergoing training related to the activities of the company in

accordance with a training programme approved by the Corporation. a

traini ng grant may be given by the Corporation to the company

equivalent to one-half of the statutory weekly minimum wage for every

week of actual training undergone by each such employee up to a

maximum of forty eight weeks.

(2) Where the Corporation is satisfied that any trainee in

respect of whom a grant is paid under the provisions of this sectio n is a

handicapped person, the Corporation ma~, in its discretion, increase

the grant in respect of the said trainee to threc quarters of th e statutory

weekly minimum wage_

(3) A training grant reC<'ived by a compan~ under tliis

scction shalt not constitute a taxable receipt under tlie Income Tax Act,

1948. 20, (I) Whe re a qualifying compan~ which is a Maltcse M .... re""'n'

com pany with an actual or foreseen total sa lcs revenue not exceedi llg ","""ice. ,,.n ..

Lm350,OOO in its latest or actual financial year satisfies the Corporation

that it may enhance its potential for development by employing

qualified personnel to perfonn admlllistrative, technical, marketing or

finan cial functions, or by engaging consulta nts to carry out such

functio ns, in accordance with a three·year plan submitted for tlie

Corporation's approval, Ih e Corporation may reimburse twenty-five

per cent o f th e emoluments or fees disbursed by the compan~ in any year

for such personnel or consultants for a period of three years, so howeve r

that the reimbursement shall nOI exceed Lm5,OOO in any year.

(2) No reimbursement unde r the provisions of th is section

shall be made in respect of emolumcnts or fces paid or payable to any

person who is in an~ way, whct her direetl~ or indirectly, closely

con nected or related to any member of the qualifying company.

(3) The reimbursement received by the company under tliis

section shall not constitute a taxable receipt under the Income T ax Act,

1948. 2 1. (1) Notwithstanding ;lIlything contained in the Death and

IXlllation Duty Act. 1973, no duty shall be payable thereunder in respect

of allY in terest in a qualifying company possessed by any person when -

(a) such interest is comprised in a chargeable transmission

liappcning on or after 1st June, 1987, and

(b) the former owner thereof before the happening of the

chargeable trall smission and the new owner after its happening

arc both persons not domiciled in Malta, and

(c) the imerest is an interest to which the provisions of this

sect ion apply.

(2) The provisions of this sectio n apply to an interest in a

qualifying company being -

(a)

shares thereof

(b) any dividend distributed or due \0 be distributed by the

said company;

(c) any money loaned or advanced to the compan~, and any

other credit whatsoever, irrespective of the way in which the lo~n

or adv;lI1ce has been made, or has resulted, and the security granted

thercfor;

(d) any interest on money or other income paid or due to

be paid by the company before the happening of the chargeable

transmission.

(1) M inkejja d.1k li jimab fI -AIl la' 1-1973 dwar it-Taxxa EieR2pni

m:\r ....

tal-Mew! u tad-Donau.joni. e!xl .. ta:<xa ma ghandha tithallas tahl dak

I-At! ghar-rigward ta' xi schcm Ii jkollha xi persuna fkumpaniJa :;';~":~~i,

kwalifikanti mcta:-

(a) dak is-sehcm flu komprii fi trasfcrimcnt taxxabbli 1; jsehh

nhar jcw wara l·l1a' Gunju. 1987. u

(bl is-sid ta' qabel la' dak is-r.chcm qabel ma jschh

iHrasfcrimcm taxxabbli u s-sid il-gdid wara li jschh. ikunu t-tncjn

pcrsuni mhux domiciljati fMaha. u

"

(c) is-schcm

ikun

wiched

ghalih

japplikaw

id-dispoiizzjonijic t la' dan I-artikolu.

(2) Id-dispoziu.jonijict t,,' dan l·arli\;olu japphkaw ghal

schcm fkumpanija kwali fikanti mcta dan ikun maghmul minn-

(a)

al.l.jonijict fil-kumpanija

(b) kull dividend im'lassam jcw h ghandu jilqassam minn dik

il-kumpanija

(c) xi flus mislufin jcw avvanzali 1i!1·kumpani ja. u kull kredi tu

ichor 1i jkun. irrispcllivamcnt minll kif ikun saT is-s.e lf jcw I-avvanz.

jcw minn kif gic. u mill-garanzija moghtija b'akkont licgnu

(d) kull schem fuq flus jew itlc(JI1II! iehor imhallas jew li

ghandu jithallas mill -kumpanija qabel is-sehn lat -lrasfcrimcnt

taxxabbli.

(1) . 1I-Korporanioni tista' ti"""rtlfika li individwu 1i mhux I"'rj<~,i

(I) The Corporation may certify that an individual who is

not an e~empt person under the Immigration Act, 1970 would, if

granted a licence under the said Act to be employed by a qualifying

company, contribute towards the industrial development nf Malta

through his technical or managerial knowledge and e~perience.

(2) Where an individual in respect o f whom a certificate has

been issued unde r subsection (I) of this section occupies a senior

managerial or technical position or office, if the relative company

employs such individual for an extended period, it shall satisfy the

Corporation that adequate arrangements are concurrently being made

by it to enable an other individual of Maltese citizenship to acquire such

knowl edge and experience as will enable him in due course to occupy

the said position or office.

()) Subject to endoTSCment by the Corporat ion. where a

person who is not domiciled or ordinarily rcsident in Malta holds forty

per cent o r more of the shares o f a qualifying company, such person shall

be entitled to require that one individual named by him shall , subjecl to

the provisions of the Immigration Act, 1970, be granted a licence under

that Act 10 be employed by Ihe company in Malta.

( I) The provisions of this section shall apply in the case of

any qualifying company where the Corporation is satisfied that all or

part of the activi ties of the company (hereinafter referred to as "Gozo

com pany") are being carried on or carried out in Gozo.

(2) The Corporation shall give a grant to a Gozo company

to cover the actual , additional and necessary transport costs incurred

by the Company in transporting between Malta and Gozo machinery.

plant. materials. goods or products connected with its activities in Gozo

related to export.

(3) Whcre a Gozo company satisfies thc condition laid down

in paragraph (b) of subsection (1) of sect ion 4 of this Act , the Corpo·

ration shall give ~ grant to th e company to cover the actual , additional

and necessary costs incurred by thc company to accommodate in Gozo

Maltese citizens who arc not ordinarily resident in Gozo and who

occupy senior manJgerial or technical positions, which grant shJiI be

limited to a period of three consecutive years

Provided that the grant shall not exceed Lml.SOO per annum

in respect of any single employee nor Lm5.000 to the company in any

onc year.

(4) The maximum period in respect of which a trainin g grant

may be given under th e provisions of section 19 of this Act shall be ex-

tended to three years in thecasc of an employee of a Gozooompa nyunder-

going training if such employee was ordin arily resident in Gozo for a

period of not less than o ne year immediately before the commencement

of his train ing.

(5) Th e costs referred to in subsect ions (2) and (3), and the

training referred to in subsection (4) of this section, respect ively. shall

be cos ts incurred a nd training carried OUI after the co min g into force of

this Act.

(6) Grants received by a Gozo company unde r tllis section

shan not constitute taxable receipts under the In come T ax Act, 1948.

(I) The Corporation may. in its discrelion. grant the iflCen - & ""I";"n, 1

tives and benefits set oUl in subsecti ons (2), (3) and (4) of this section ;:-n'; .... oo

to afl intermedia ry company, to an e~port house or to a small business.

(2) An intermed ia ry company may be granted soft loans

under the terms and conditions laid down in paragraph (a) of subsection

(3) and in paragraph (a) of subsection (4) of section 16 of thi s Act

notwit hstanding Ih"t the int~rm~diary company does not satisfy Ih~

cond ition laid down in paragraph (b) of subsection (I ) of section 4 of

this Act.

(3) An export house may be granted a train ing allowancc.

an e~ poTl promotion allowance and a training grant provided for under

sect ions 10. 11 and 19 of this Act. respective ly, no twi thsland ing Illat

the e~port house may not be a qualifying comp;my.

(4)

A small busincss ma y be grantcd or provided w;th:-

(a) rdief from customs duty as provided in sect ion 17 of

this Aec and

(b) ind ustrial buildings. structures and land on such

con dIti ons as the Corporation ma y from time 10 time determine;

notwithstanding that that small business is not a quahfying

comp"ny.

(5)

I n this scction:-

"export house" means a comp:lIly which . in any year. derives

not less th an ninety-five per cent of its sales revenue from o r

through the export of goods or serv ices produced or provided,

as the case may bc. by 'lu"lifying comp3nies othc r than the export

housc itself;

"interm ed ia ry rompany" means a q ualifying company which.

in any ycar, de rives more than fifty per cent o f its wles revenue

from qua li fying companies which , in the same yea r, export in

monetary value not le ss than ninety-five per cen t of their produc-

tion (calculated "free o n ooMd" ), or of the services they rende r, as

th eeasemaybe

"small business" means a pe rson other than a company who

carri es o n or carries out a trade or business contemplated under

paragraphs (a) or (b) of subsection (t) o f section 3 of this Act .

PART IV

Gua rant« of Incenti .'e:'i

( I) Where after the coming ill10 force of this Act a qualify·

ing company or its members or employees are entitled to an incentive

or benefit under any of the following provisions. thcre shall be deemed

10 have come into existence a contract between the company or its

members or employees and the Government, or the Corporation, as

the case may be. guaran teeing the grall1 and enjoyment of the relative

incentive or benefit in accordance with the provisions of this Act as

hereunder indica ted:-

(a ) the incentives and benefits cOll1e mpl ated under sections

4.5,7.8, 11, 12 and 14 of this Act when and as soon as the

company becomes e nti tled to a benefit thereunder for any year

of assessment;

(b) exemption from ta x on dividends under section 9

(c) the rate of tax chargeable in respect of an e xpatriate

employee under section 13 when and as SO(ln as Ihe employee

becomes so chargeable;

(d) gai ns or profits contemplated in section IS for as long

as the relative arrangement is still in force;

(e)

exemption from duty under sect ion 21; and

(I) grants due to a Gozo company in acoorda nce with the

provisions of subsections (2) and (3) of section 23.

(2) Where any incentive or be nefit contemplated under the

provisions of this Act is not due as of right to a qualifying company or

other beneficiary but depends on the use of discretion vested in the Cor-

poration, the use of such discretion in favour of a beneficiary shall con-

sti tute a contract between Ihe beneficiary and the Government, or the

Corporation, as Ihe case may be, guaranteeing th e grall1 and enjoymell1

of the incentive or benefit in accordance with the provisions of this Act,

(3) Without prejudice to any other proof available to a qual-

ifying company. a cerlificate released by the Corporation to the effect

that a trade or business carried on or carried out, or intended to be car-

ried on or carried OUI, by the company does not consist solely or mainly

in the mere expansion , duplication or replacement of a tradeorbusiness

formerly carri ed on o r carried out in Malta by any person directly or in-

directly connected with the said co mpany, shall be conclusive evidence

to th is effect for the purposes of paragraph (c) of subsect ion (1) of sec-

tio n 4 of this Act. A certificate to like effect may also be issued by the

Corporation for the purpose of determining any question ari sing under

the provisions of paragraph (a) of subsection (3) of the said section.

(4) The guarantees given by this section shall not be nullified

by any rctrospective actiO Il , whcther by legislatioll or othcrwise.

(5) The provisions of this section shall be without prejudice

10 the controlling and regulatory provisions laid down in this Act and

to the powers o f the President under section 26 hereof.

No i"centive or benefit contemplated by this Act shall be

enjoyed by any qualifying company or other beneficiary for any year

or year of assessment if the Preside nt of Malta by order in writing

declares that the grant or acquisition or continued grant and acquisition

of such incentive or benefit is or would be against publ ic policy (ordre

public), and where such an order is made it shall have effect as from

the date therein specified but in no case shall an order have retrospec-

tive effect.

(I) Where a qualifyi ng company or other beneliciary fa ils

to comply or cause compliance with any of the condi tions anaehed to

the grant of any incentive or benefit by the Corporation under this

Act. the Corporation may either revoke the incemive or benefit or hy

notice in writing require such company or other beneficiary within

thirty days of the receipt of such noticc

(a) 10 comply or cause compliance with such conditions; or

(b) to establish to the satisfaction of the Corporation that

failure to comply or cause compliance with such conditions was

due to Mlme caur.e beyond its control and that the re are actual

prospects of complying or causing com pliance with such condition.

withi" such time as the Corporation may consider reasonable.

(2) Where a q ua li fying company or other beneficiary estab-

lishes to the satisfaction of the Corporation that fa ilure to comply or

cause compliance with any conditionsanaehed to the grantor any incen-

tive or benefit under this Act was due to some cause beyond its cont rol,

and that there a re actual prospects of complying or ca using compliance

with such condit ions within a reaMlnable time, the Corporation may a u-

thorise reasonable postpo nemem for the purpose of compliance with

such conditions, as it thin ks lit.

(3)

Wh ere a qualifying company or o'he r beneficia ry

(a) having bee n required so 10 do by notice under subsection

(1) of this section. fails to establish to the sa tisfaction of the Cor-

poration that its failure to comply or cause complia nce wi th any

conditions aHached to the grant of any incentive or benefit was

due to some cause bcyond its control and that there are actual

prospects of complying or causing compliance wit h such conditions

within a reasonable time; or

(b) having been all owed a postponement under subsection

(2) of this section, fails with in the period of such postponement

to comply or cause compliance with such conditions,

the Corporation may revoke any incentive or benefit granted to the

C<'mpany or other beneficiary under this Act, and that revocation shall

be operative from such date as may be determined by the Corporation.

(4) Where the gr~nt of any incentive or benefit under this

Act is revoked in accordance wit h the provisions of this section. the

relative company or other beneficiary shall payor repay to the Govern-

men! or 10 Ihe Corporalion. as the ease may be. a ny sums which it

would have paid to the Governmem or the Corporation but for the

provisions of this Act or which it had rece ived thereunder. and any

sums which the company or other beneficiary is w liable to payor

repay may be set off against any sums which may be due from the

Government or Ihe Corporation to the company or other beneficiary

for any reason what soever. without prejudice to any righl of the Gov.

ernment or the Corporation for the recovery of any balance remaining

d ue.

(5) The provisions of this seclion shall only apply where the

grant of an incentive or benefit under th is Act depends on the use of

d i>cretion vested in the Corporation .

(6) In all cases of revocation under the provisio ns of this

section. an appeal sh aJllie by the aggrieved party 10 the Appeals Board

constituled under section 28 of this Act.

28 (l) There shall be an Appeals Board. hereinafter referred

10 as "the Board" . which shall have exclusive jurisdiction 10 hear and

determine appeals in accordance with the provisions of section 30 of

this Act. The Board shall consist of a Chairman and two other members.

appointed by the Prime Minister from among persons who. in his

opil1iol1. arc conversan t wilh thc ma tters contemplated by this ACI .

(2) A person shall be disqualified from be ing appointed to or

from continuing to be a member of the Board so long as he is a member

of the House of Representatives. or a public officer.

(3) Every person appointed to be a mcmbe r of Ihe Board

shall, before entering upon his officc. ma ke and subscribe a declaration

on oath in the form prescribed to that effect before a commissioner for

oaths which shall be deposi ted wilh Ihe Attorney General.

(4) Subject to Ihe provisions of th is section. thc office of >l

member of the Board shall become vacant -

(a ) at the expiration of five years from the date of appoint -

ment to that office; or

(b) upon the resignation or deat h ofa member before the C ~ ­

piracion of his tcrm of officc: or

(c) upon the removal from office of the member by the Prime

Ministe r for inability 10 discharge the functions of his office.

whether arising from infirmity of mind or body or for any olher

cause . or for mi,behaviour.

(5) Any mcmber of the Board may be challenged or shall

abstain in the same circumstances as a judge of the Superior Court~, and

in any such case the Pri me Mi nister sha ll appoint in his stcad anolher

person who is qualified to be a member for the partkular case in re~pcct

of which Ihe membe r has been challenged or has absta ined .

(6) When the office of a membe r of the Board is vacant or

when a member is for any reason unable to perfonn the functions of his

office. the Prime Min ister shall appoint a perwn who is qualified to be

appointed to be a member. to be a temporary memberofthe Board: and

~ny pcrwn so appointed shall . subject to the provisions of subsections

(4) and (5) of th is section. cease to be such a member when a person has

been appo inted to fill the vacancy or. as the case may be. when the

member who was unable to perform the functions of his office resumes

those functions.

(7) The members of the Board shall not be personally liable

for any acts or defaults of the Board done or om itted to be done in good

faith in the course of the proceedings of the Boa rd.

(8) The re shall be a secretary to the Board who shall be a

public officer designated by the Prime Minister to perform the fu nctions

of secret~ry. T he Board shall ~lso have such other staff ~s the Prime

Minister may deem necess~ry and design~led as aforesaid.

(9) The membe rs of the Bo~rd shall rece ive such remunera·

tion as the Prime Minister may determine .

(10) The Minister may ma ke regulat ions govern ing appeals

10 the Board and. without prej udice to the general ity of the foregoing.

may make regul~tions -

(a) prescribing the manner in which an appet,1 shall be made

to the Boa rd;

(b) prescribing the procedure 10 be adopted by the Board in

hearing an appeal and the records to be kept by the Board

(c) prescribing the manner in which the Board shall be oon-

vened and the places where and the times at which the Board shall

hold sitt ings

(d) prescribing fees to be paid in respect of appeals to the

Board; and

(c) generally for the carrying out of the provisions of this Act

relati ng to the Boa rd.

211. (I)

The Board shall have power, exe rcisable through ils

Chairman -

(a)

to summon wit nesses

(b) to admin ister an oath to any witness and to require him to

give evidence or to produce hooks or other documents before it

(2) A su mmons m;,y be served e ither by hand or by post.

Where it is served by hand it shall be sufficient to prove service by evi-

dence that the summons was left with a person over the age of 16yearsat

the place of residence or of business of the person summoned; and if

se rved by post it shall be sufficient \0 prove service by evidence th~t the

sum mons was properly addressed and posted.

(3) Any per~on summoned ~s aforesaid who refuses. or with -

out sufficient cause fails. to allend at the time and place mentioned in

the summons. or refuses, without sufficient cause. 10 answer or to an-

swer fully and satisfactorily. to the best of his knowledge and belief. all

questions pU! 10 him by or with the concurrence oflhe Board . or refuses

or fails. without su fficient cause. to produce any document he was re-

quired to produce by or with the concurrence of the Board. shall be

gui lty of an offence agai nst th is Act

Provided th3l. witbout prejudice to the generalityofthe provi-

sions of paragraph (b) of subsection (I) of this section, no person giving

evidence before the Board may be compelled to answer any question

which tends to expose him to any criminal prosecution, and every such

person Shall. in respect of any evidence given by him before the Board.

be entitled to the same privileges to which a witness giving evidence be-

fore a court of I~w is entitled.

( I) II· Bord ghandu jkollu s·se tgha , li liSi ezerCi lata permezz ToJuik ta' xhiedo.

lac-CllllirmlJfl tieghu -

(a)

li jharrek xhieda

(b) li jaghli I·gurament lil kuJl xhud u li jehliegu jixhed Jew

igib kOlba Jew dokumenti ohm quddie mu .

(2) Tahrika listB' ti g; nOlifi kata Jew bl·idejn Jew bil-posta.

Mela tigi nOlifikala bHdej n ikun biUejjed biex tigi ppruvata n·notifika

H jig; ppru vat li t·tahrika thallie! ma ' pe rsuna 'I fuq mill·etil la' 16·il

se na fil·past tar·residenu Jew tan- negozj u tal-persuna mharrka: u jek k

tigi notifikala bil·pasta jkun bizzejjed biex tigi ppruvata n·notifika li

jig; ppruval li Hahrika kie net indiriuat3 u mpostata tajjeb.

(3) Kull penuna mharrka kif intqal qabcl li tirrifjUla , jew

tonqos minghajr raguni xierqa, li tattendi fil ·past u I·hin imsemmija

tlt·tahrika , Jew li tirrifjuta, minghajr mguni xie rq a, li twiegeb jew li

twiegeb b'mod shili u sodisfatenti , mill·ahjar li ta f u li temmen, il-

mistoqsij iet kollha li jsirulha mill· Bard tcW bi qbil mal-Bord, Jew li

tirri!juta Jew tonqos, minghajr ratu ni xicrqa.li tipproduCi xi dokument

li tk un mehtiega li ti pproduCi mill-Bard Jew bi qbil mal -Bard , tkun

hatja ta' reat kontra dan I-An

ltda, bla lisara glia U-generalill tad-d ispoiizzjonijiet tal-

paragrafu (b) taS-$ubartikol u ( I) ta' dan I-artikolu, ebda penuna li

tixhed quddiem il-Bard ma tista' tkun imgiegl'tla twkgeb glial xi

misloqsija meta t-Iwegiba tista' tespaniha glial pro6ess kriminali, u ku ll

persll na bhal dik ikoll h3 , dwar kull xiehda lagflha quddiem il -Bard,

I-istcss privileggi li ghandu ",hud li iillhcd quddicm il-Qorti,

(I) Subject to the provisions of subsection (2) of this sec-

tion. a qualifying oompany or othe r bendiciary aggrieved by any deci -

sion taken in respect of any maller falling under or contemplated by the

provisions of this Act shall have the right to appeal against that decision

before the Board.

(2) Saving the provisions of subsection (6) of sectiun 27 of

this Act. subsection (I) of this section shall not apply to any decision

taken by the President of Malta, the Minister. or th e Corporation, as the

case may be, in the exercise of discretionary power.

The provisions of this section shall be without prejudice

(3)

to the proceed ings contemplated in -

(a)

section 55 to section 58 ofthe Income Tax Act , 1948. and

(b) section 24 to section 21 of the Death and Donation Duty

Act. 1973

Provided that any i>sue decided under this section in respect of

any maller contemplated under Ihis Act shall . saving the provisions of

section 31 of this Act. be final and conclusive.

(4) Appeals to Ihe Board shall be heard in camera unless the

Board, on the application of both oontendi ng parties, otherwise directs.

(5) The Boa rd may order the correction of any arithmetkal

error incurred in any of its decisions on an application filed by ei ther

party within thirty days from the date of service upon it of that decision,

and such application shall be served on the other party.

(I) An appeal from a decision of the Board may be made by

either party, on a question of law only. to the Court of Appeal by an ap-

plication filed within thirty days from the date of service upon it of the

decision of the Board. and such application shall be servcd 011 the other

party.

(2) Unless rules made hereunder provide a longer period.

seven clear days' notice shall be given to the parties of the date fixed for

the Ileari ng of an app.:al made to the Court of Appeal.

(3) All appeals to the Court of Appeal shall be Ileard ill

camera unless the Court. on tile application of both comending parties.

othe rwise directs.

(4) The Board established under section 29 of the Codc of

Organisation and Civil Procedure may make rules concernin g appeals

to the Court of Appeal under this section. and prescribing the fees to be

paid on such appeals.

(5) The Chainnan of the Corporation shall as soon as may be

publish the decisionsdclivered by the Board and by the Court of Appeal

without. however. disclosing the identity of any person.

PART V

General Provisions

Nothing in this Act comained shall affcct the provisions of any Etfeco on mn.r

ot her law whatsoeve r except to the extent solely that th e provisions of lo w •.

this Act replace or supersedc the provisions of that la w. and no incen-

tive , excmption. reduction of taxation or other benefit or privilege pro-

vided for under the provisions of this Act shall modify any obligation to

furnish returns. statemellls. particulars or documents as may be re-

quired by any other law.

(I) Save as may be otherwise required for the purposes of

this Act, or in the COUfM' of a prosecution for any offence committed in

relation to this Act. or where the Prime Mi nister otherwise direets -

(a) every person having an official duty or being employed in

the administration of this Act shall regard and deal with all docu·

ments and information relating to matters contemplated by or pur-

suant to the provisions of this Aet as secret and confidential and

shall make and subscribe before a commissioner for oaths a decla·

ration on oath to this effect in the form prescribed which shall be

deposited with the Attorney General

(b) no such person shall be required to produce to or before

any cou rt. tribunal, board. committee of enquiry or any other au-

thority. or to divulge to any court. tribunal. board, committe or

otller authority. any malleror thing coming to hi s notice or being in

hi~ possession in the performance of hi s duties under this Act.

(2) Notwithstanding the provisions of subsection (1) of th is

sectio n. the auditor of the Corpor~tion shall have access to any records

and documents as may be necessary for the perfonnance of his duties.

(I ) A qualifying company or other beneficiary may bt

granted and obtain more than one form of incentive or bendit under

this Act.

(2) A qualifying company or mher bene ficiary may, at any

time, by notice in writing, elect not to be granted or to take any incentive

or benefit otherwise due to it under the provisions of this Act. Such

no tice shall specify the date from which its election shall be operatiVl;!,

which date shall invariably be th e first day of a yea r, or of a year of as-

scssmcnt or of any other financial period, and shaH be irrevocable and

indefinite in respect of the matters on account of which it has been

made.

(I) No incentive or ben efit which may be granted or ob-

tained under this Act shall be so granted or obtained, and no entitle-

men t thereto shall exist notwithstanding anything contained in this Act

unless:-

(a) proper and sufficient record s and accounts , induding ap-

propriate supporting docu mentation. have bee n maintained forthe

relative year , year of assessment or accounting period. as the case

may be, by the qualifying company o therwise entitled to the

incentive or benefit or in relation to which such entitlement arises;

(b) separate acco unts have been kcpt as may be nccessary to

identify and quantify the incentive or benefit;

(c) such computations, returns, statements, particulars or

documenl5 as may be necessary to establish clearly the entitlement

to the incentive or benefit are subm itted to the appropriate

authority.

(2) No stateme nt, account or document whatwcvcr

submitted to the Corporation or to any other authority for the purpose

o f acquiring any mcentive or benefit con templated under the provisions

of this Act, other tban those provided for under subsection (4) of section

24 of this Act , shall be considcred or taken into account unless certificd

by a certified public accountant and auditor to tbe same effect that the

bala nce sbeet and profit and loss account of a company arc to be cer-

tified under the provisions of the Commercial Partnerships Ordinance,

1962 . and for the purpose of this subsection. the provisions of section

140 of that Ordinance shall apply.

( I) A qualifying company in receipt of any of the incentives

and benefits indicated in subsection (4) of this sectIOn shall. at the endof

the accoun ting penod du ring which the incemiveor benefil ,(~ " ds 10 ':"=

accounted for tra nsfe r to and show in its balance sheet as on the saId

date a reserve 'fund in a sum eq ual to th e amounts therei n specified.

(2) For the purposes of subsection (I) of this section, profits

available for transfer to that reserve fund shall be the profits computed

in accordance with the provisions of the Income Tax Act, 1948, and of

this Act, and where at the end of any accou nting period as aforesaid the

profits so computed arc such that the rcserve fund, or the full amount

thereof, cannot be set aside in that period, the obligat ion to transfer

profits to a reserve fund shall be, in part or in full , as the case may be,

carried forward to the subseq uent accounting period and deemed to be

an obligation for that period, and so on for subsequent periods,

(3) A reserve fund created under the provisions of subsec-

tion (1) o f this section shall be retained in the ba lance sheet of the com-

pany indefinitely and shall not be distributable or convertible into share

capita l of t he company. Thc said fund shall also not be reduced to take

accoun t of a ny losses incurred by the company, whethe r such losses be

of an ordinary or extraordinary nature, or capital or revenue in cha rac-

ter.

(4) The incentives and be nefits referred to in subsection (1)

of this sectio n are the following

(a) the net amou nt of th e profits subject to income tax at a re·

duced rale under the provisions of section 6 of this Act;

(b) the antount of any grants given under the following pro-

visions of this Act

(i) section 19 bywayofa trai ning grant;

(ii) section 20 by way of a management services grant;

(Hi) subsections (3) and (4) of section 23 by way of ac-

commodation and tra ining grantS to industry in Gozo , respec-

tively.

(5) Distributions made 10 the members of a company in the

course of winding up the compa ny out of any reserve fund created in ac-

cordance wit h the prov isio ns of this section shall not be lia ble to tax

underthe Income Tax Act. 1948

Provided that any tax paid by the companyon the profits refer-

red to in paragraph (a) of subsection (4) of this section Shall not be avail-

able as a credit orsel-off unde r the provisions of the sa id Act to the reci-

pient of the distribution.

~7 , (1) Any qualifying company or other person purporting or ......... uf th<

seeklJlg to obtain or enjoy any incentive or benefit under the provisions ~tion.J>d

0<1><, "",hon,;o.,

of this Act shall

(a) furnish to the Corporation and to any other authority

such information. accourlls, statements and other documents

which the Corporation or that other authority may deem to be

necessary for the purposes of this Act;

(b) a!lend or se nd a represen tative 10 attend before the

Corporation or other authority and answer any question lawfully

made in connection therewith;

(c) provide the Corpora tion orother authority with reasona-

ble access to all premises. places, books and other documents. and

allow copies to be made thereof for the purposes of this Act.

(2) The Corporatio n or other authority may delegate to any

of ils Of(iCCr5. employees and any other person whomsoever any of the

rights and power5 co ntemplaled by this section.

PART VI

Offences a nd Penalt ies

Any person who , e~cept as provided for or allowed under thi~

Act or for the purposes thereof. communicates or anempts to commun i-

cate to any othe r person any maller or thing coming to hi s notice or

being in his possession in the performance of hi s duties under this Act

shall be guilty of an offence and shall on conviction be liable to a fine

(multo) of not less than Lm200 and not more th all Lm2,OOOor to impris-

onment for a period not exceeding six months, or to both such fine and

imprisonment.

Any person who without reasonable excuse prepares any in·

correct statement or gives any incorrect information ill relalioll 10 any

matter or thing falling undcr this Act. shall be guilty of an offence and

shall on conv iction be liable to a fine (mu/tu) of not less than LmJ(X) and

not exceeding Lrn 2.000.

Any person who wilfully with intent to obtain any incen tive or

benefit undcr this Act or to assist any other person to do so -

(a) omils from a retum or any other document or statement

made. prepared or submi ned for the purposes of or under this Act.

any matter which should be included the rein; or

(b) ma kes any false statement or entry in any retu rn or other

document or statement prepared or submitted for the purposes of

or under this Act ; or

(c) gives any false answcr, whether verbally or in writing, to

any question or request for information asked or made in accor-

dance with thc provisions of this Act; or

(d) prepares or ma intains or authorises the preparation or

maintenance 01 any latse Ihloks 01 account or olher records o r lat-

sifies or aUlhorises the falsification of any books of account or re-

cords; or

(e) makes use of any fraud, art or <.'Ont rivance whatever or

aut horises the use of any slIch fraud. art or contrivance.

shall be guilty of an offence, and shall for e~ch such offence be liable on

corwiction to a fine (mu/la) of not less than Lm500 and not exceeding

Lm5,()(X) or to imprisonment for any lerm not exceeding six months, or

10 both such fine and imprisonment .

If any pe rson contravenes or fails to comply with an~ ofthc re· a.: .. ralpen.ally.

.41.

quirememsofth is ACI or of any regulations made thereunder, in respect

of which no special pun ishment is provided, he shall be gu i 1t~ of an of·

fence and shall for each offence be liable, on conviction , to a fine

(mu/la) of not less that LmlOO and not more than Lm500.

The provisions of this Act cMablishing offences and punish· Pm.;>ion who

ments in respect thereof shall nOI affect the operation of any other law ' off<<>;a.

establishing offences and punishments in respect of the same acts or

omissions a nd shall nOL in particular, affect the applicalion of an~

highe r punishmen t under an~ other law,

Procecdings for an offence under this Act may be commenced p, es<ril".,n

at any time within five years from the date of commission of the offence, for pr,,«<d ;nK"

PART VII

tlna l Pro,'isOo:IIlS

Th e C(Jrporation may make regu latio ns to give effect to an ~ """", to m. k.

of the provisions of th is Act and Wilholll prejudice 10 th e ge nerality of .. ,ul","""_

the forego in g such regu latio ns m"y in particular include provisions with

respect to -

(a) !hc fonn of applica tions. re turns. stat ements. reports and

othe r documents for the pu rposes of this Act;

(b) the procedure to be fo llowed in matte rs rcla!ing to the

provisions of this Act , including the processin g of applications

made for the purposes of this Act,

45, (I) On the coming in to force of this Act. the provisions of ,~­

the Aids 10 Industri.:s Ordin3n.:.:. 1959 shall cease to ha,'c cffcct in re·

:;peC! of any person carryi ng on or ca rrying out, or int end ing to carry on 10,11<"'' ' '0

o r carry out. any! rade or business comempla tcd in p;lfftgraphs (a) or (b) Otdinaoo<

of subsection (I ) of sectio n 3 or in section 24 of lhis Act, witho ut pre·

judice to an ~th in g do ne or om itlell 10 be done or 5till 10 bedone there un·

der by or in respect of any !Ouch pc~n, and , in particular, to any rel ief

granted to or an)' liability. wn.: tlK'r cri minal or civil. inruned by any

such person unller I hat O rdi nance.

(2) On the comi ng into force of this Act, tile procedure for

granting any rtlief from custOIJl$ duty under section 7 of the Aids to

Industries O rdina nce, 1959, and for regul ating all malleTS relati ng

thereto, shall be that set out in section 17 of this Act and the releva nt

regulatory provisions of this Act, to the exclusion of the provisions of

that Ordinance .

(3) Any refere nce in any law whatsoever to the Aids to In-

dustries Ordinance, 1959, shall be construed to be a reference to that

Ordinance and to this Act .

Passed by the Houseof Representativesat Sitting No. 119 of the nnd June, 1988.

J IMMY F .... R RUO' ....

S~/Jku

1'. M USCA T TEIIIIIIlI LE

ClI:rk 10 Illf~ Ilouse of ReprUe11lfl/ives

iPl"'i>bIib' mi,_ T oq,; .... ,ot_T.,r.ru ""liIja hblidt •• II>~- .... bfonn:oa.- Dopa ........ , _ -"""Jo

~fitbo.'" tJ-hump<rij ... ~ Gn ... _ p,;"tU Of rII. W<"",,"''''' him;"! 1'1 . ."

Pnll l l< _ P"-,, 18 ,

(I) Ma l-bidu fis·schli ta' da n I·AIt. id-dispoi:izzjollijiella' 1-

O rdinan za ta' 1· )959 dwar )·Ghajnuna lill-Industr;ji ma jibqghux

jglioddu dwar xi pe rsuna Ii tmexx i jew tciertita, jew Ii fi lisie blia Imex~i

jew tei:crcit~, xi negozjujcw kummcrtmahsubin fil -paragrafi (a ) jew (b)

las-suhartikolu (I) la' I-artik olu 3 jew fi -;trtikolu 24 l;t' dan I- All, hla

hsara glial kull haga Ii saret jew li naqsct milli ssir jew Ii gliad trid issir bis-

sa hha taghhom minn jew ghar·rigward ta' xi pe rsuna bhal dik. u b'mod

partikolari ghal kull gliajnuna moglili;a jew gli al kull obbligu. se w him-

inali kemm civili, li gl'lali ha tkun sarel responsabbli dik il·pe Tsuna taht

di k I-Ordinanza.

(2)

Mi ll-bidu fis-sehh ta' dan I-Atl, il-proeedura ghall-gholi la'

xi helsien mid-dazi u tad·dw;tna skond I·artikolu 7 ta' I·Ordinanza ta'I-1959

dwar I·Gliajn una lill -Industriji, u biex !igi re~olala ~ull haga Ii.gliandha

x'taqsam ma' dan. ghandha Ikun dlk Imsemm'ja fI-art,kolu 17 la J an I· AII

u d-dispoiizzjonijiel regolatorji relevanti ta' dan I-All. b'esk luijoni ghad-

dispoZizzjonijiet ta' dik I_Ordinanza.

(3) Kull ri fcrenza fxi li!i;i ohm .l(hall-Ordinanza ta' 1-1959

dwar I-Gh ajnuna lill-lndustriji ghandh a tifticliem bhala riferenza gftal

dik I-Ordinanza u ghal dan I-At\.

Mghoddi mill·Kamra tad-Deputati fis-Scdula Nru. 119 tat·22 ta' Gunju . 19&'1.

J tMMY FARR UG1A

Speaker

P. r..1USCAT TERR1lI1 LE

Skri.-u" lal-KlImra (m/·Depu(m;