ACT No. IX ~ 1993 AN ACT 10 I1m~"d Ih~ /ndlUlriDl Dt"elop~ru Act. ClJf1. 325.

I assent.

CENsu T ABONE

President

2nd April. 1993

ACT No. IX ~ 1993

AN ACT 10 I1m~"d Ih~ /ndlUlriDl Dt"elop~ru Act. ClJf1. 325.

BE IT ENACI'ED by the Presidenl . by and with the advice and

oon~ "1 of the HOUiC of Rep<esenl3tives, in

this present Parliament

assembled . and by tile authority of the $am.,. as follows:-

I. (I ) This Act may he ci ted as the Industri al Development

(Amendment) Act , ]993, and sllall be read and construed as one wilh

the Industrial Development Act , hereinafter re ferred to as ~the

principal Ac!" ,

The provisions of this Act shall be deemed 10 have come

(2)

Into {orce on the 1st January. 1992.

5«tion 2 of the principal Act sha ll Ix amended as follows

(8) immediately after Ihe definition of ~Corporalion " there

sh.all be added the following new definition

means

~uport sa les~

(a)

tile value of goods nporled by a qualifying

company calculated free on board; or

(b) the iflvoieed value of goods ()<" services sold or

rendered, as the case may bc , by a qualifying com pany 10

aoother qualifying company under a wrillen contract

which clearly stipulates that tne said g(l()d$ Or services arc

10 be exported by the lalle r company whethe r as!lO sold,

or as lubjected 10 further prOttiSing or incorporation in

othe r goods or services, and provided such export has

actually laken place

Provided tltat the said contract shall al50 stipulate

that an officer duly aut horised 10 sign on bckaJ f of the

buying company shan furnish tbe supplying company with

a wrillcn declaration conftnning that the said goods

or $eMces had been exported together with a copy

luthenlil;ated by him of the rel ative e~pon documents

and the grant of any benefit on the basis of the provisions

of this paragraph shall be conditio nal upon the production

by the bene ficiary of such declaration and doo;:umenl$

togetller with a st atement by Ihe audi ton of the buying

company that confirms that the declaration of the said

ofrrial is substantially correct; or

(c)

the value of se rvices rendered and perfonned

by a qualifying company which are c ~porled by the same

company;

(b) in the definition of" Mal tese company. ~ for the words "i n

a distribution; and" there shall be wb$titutcd Ihe wonh "in a

distribution : or";

(c) .fter the definition of a - qualifyingcompanyW there shall

be added the following defini tion

.. Wresearl:h and development programme" means a

progra mme for systemat ic in vestigation or research carried

out in any field of scicnce or technology th rough experimcnt or

analysis. and includes

(.) basic ruearch comprising activities unde naken

for the advana:ment of scientific or technological

kl'lOwledge ;

(b) applied researcb

where

a fi nal

s:pc:cific

application is in view ;

(c) development involving the use of the results of

basic or applied research a!i aforesaid for the purpose of

creat ing new or of improving existing material . devices,

products or processes. but c ~dudes routine or periodic

design , testing and analysis of equipment or products for

the purposes of quality or quantity cont rol. and routine Or

periodic all eratiollli to existi ng products or pr~Ses;w;

,,'

(d) after the definition of "Tcsea~ h and dcvel~pment

programme w there shall be added the follOWing new defin ition

" "sales reVC'nue derived from expon" mcal'l$ "expon

sales";".

1. Section J of the principal Ad shall be amended as fol lows

(a) in paragraph (b) of subset tion ( I) thereof. the words

Mplant , machinery or equ ipment ... shall be substituted by the words

Mplant, machinery or eq uipm ent: or"

(b) immediately after paragraph (b) of subsection (1)

thereof there shall be added the followi ng paragraphs

M(e)

large scale aquacuhure; or

(d)

large scale hon icultu re; or

(e) the rendering of a service by a company to non·

resident persons , whether the service is pcrfonncd or

rendered in Malta Or from Malta. provided such se~ is

prescribed by the Minister to be a qualifying export scrvice : or

(f) the rendering of a qual ifying support scf"ice as may

be prescribed by the Minimr; or

(g) the export of goods Or service, produced or

provided , as the case may be, by other qualifying companies

"'

research and development programmes.~

(h)

(c) subsections (2), (3) , (4) and (5) the reof shall be

respectively renu mbered (S), (6). (7) and (8)

(d) immediately after ~ubsection ( 1) thereof there shall be

inserted the following new subSC'ctions

M(2) Notwithstanding any other provision of this Ad. in

tbe case of activities Or elaS$C$ of activities referred to in

paragraphs (c), (d), (e), (f), (g) and ( h) of subsection (I)

hereof, the intentives and benefits contemplated by this Act

shall only be due to and obtain ed by a oompany subject to the

approval of the project by the Corporation. and in granting its

approval as aforesaid , the Corporation may impose such

conditions as it may deem fit.

(3) Notwithuanding any ot her provision of this Act. the

incen ti Ves and benefits granted by section 4 and S oJ th,s Act

shall not be due to Or obtained by a trade or business quali fying

under paragrnph (g) of subsection (1) of this section.

(4) A company qualifying under paragraph (h) of

subsection (I) of this section Shall qualify only for those

incentives and benefits conte mplated by this Ad ;os Ihe

Mi nister may prescribe. In addition to such incen tives the

Minister may al50 prescribe otlle r special incentives and

benefits , including cash grants, that may be given to such

compa nies.~

(e) in subsection (S) thereof as re numbered, tor the words

"the services referred to in paragraph (b) there<.>r there shall be

substilUled the words Mthoe s.ervK:es referred 10 in paragraph (b), (I)

and (g) the reof. M;

(I) in subsect ion (7) thoe rwf as renumbered. for the words

Msubsedion (J)H there shall be subst ituted the words Msubscction

(W;and

(g) in subsed ion (8) the reof as renumbered, after the words

"earned after that date there shall be added thoe following proviso;

M

"Provided that , notwit hstanding any other provision of this

Act in respect of

Ca)

projectS approved by the Corporation under

pa~graphs (c), (d), (e), (I), (g) and (h) of subsedion (I) of this

scctlOll; or

(b) the ope nUion of paragraphs (b) and (d) of the

definition of Mexpo n sales in !lection 2,

M

the inCC'ntives and ben efits contemplated by thi s Act shall not be

d ue in resp«t of activities happening be fore ]st January, 1992, and

in respect of gains or profits earned before that date, M;

(h) immediately after subsection (8) tbere<)f as renumbered

tllere shall be added the fol]owi ng new subsection

M(9) The Minister shall in January of every year publish

in the Gnctte a list of companies that have benefitted under

paragraph (h) of subsection (]) of this sectioo logether with a

gc:neral description orthe activities of the company and of any

cash grants from which Ihe Company benefits under this

Act .

M

,

Section 4 of the principal Act shall be amended IS follow$

(a) paragraph (b) of subsection (I) thereof shall be

substituted by the following

M(b) subject 10 the provisions of subsection (S) of this

section, derives from expon sales r>Ot less than ninety five per

cenl of its t(){al sales revenue, and M;

(b) in subsection (2) thereof fO! the words Mexpons le ss than

ni nety five per cent of its production". there .shall be substituted t~e

words "derives from ex port sa les less than nlllety five per cent of Its

sales revenue,"; and

(e) in subsection (S) thereo(for the words Mi n any particull r

line ot production or manufactu!,(;M there shall be substlluted the

words Min any particular line of production, manufacture or

!lervicc M,

S. Section S orlllc prin,ipal Act shall be ame nded as follows

(a) immediately after paragraph (c)ohubscction (3) the roof

there shall be added the followi ng parBgTaph

"(d) where a oompany ... as not inexi5tence duri ngayear

of assessment comprised in a base period. Ihe company shall

be deemed 10 have had zero profits for that year of

assessmc nl ,~: and

(b) subsection (7) thereof shall be d eleted .

Immediately after subsection (S) of section 7 of the principal

Act there shall be added the following new subsect ion

~(6) A company may qualify for Ihe allowance granted

unde r t his section for a consecutive "",riod of Iwenty five yean

commencing from the year of assessment 1988 in case of companies

registered before 1st June , 1987 and from the first year of

a5SeioSme lll for companies registered on or after 1st June 1987

Provided that the Minister may from time to time by notice in

the Gazette increase the said period hy a further period or periods

oot exceeding twenty five )'('ars. ~.

In subse«ion (I ) of section 11 of the principal Act the words

"onc hundred and twenty per ce nt~ shall be substituted by the words

"one hundred and forty per cent ~ .

For the first paragraph of liubsection (1 ) of section 12 of the

principal Act there shall be substituted the following new introductory

paragrllph

" In the case of a qualifying company, other than a company

contemplated in parllgraph (h) of subsection (1) of section 30f this

Act . the provisions of parngn.plls (h) and (i) of subsection (I ) of

IiCCtion 13 of the Income Tu Act , shall in any year iD which the

company is entitled to a deductioo thereunder as from the yearof

~n tl 988_H .

t . Section 160f the principal Act shall be amended as follows

(a) in subsection ( I) thereof for the words ~fOl" the

acquisition of roew plant, machinery and other rllled llMC!S. but

excluding la nd and buildin~H there shall be substituted the words

Hfor the acquisition of plant . machiroery and other fixed ~1S. but

excluding land and bu i ldi n~"

(b) for paragraph (a) ohubscction (2) thereof lhere shall be

substitu ted the follo"; n,

H(a) arc ncw and are 100uired by the company u n~

H

and not second hand , and

;

(cl after para~raph (c) of subsection (2) thereof there shall

be added the follOWing proviso

MProvided that the Corporalion may grant loons as

provided under subsection (I) of this section for the

aeql,Lisilion of refurbished Or reconditioned used or second

hand plant , mllChincry and equipment in accordance wilh Ihe

te nns and conditions specified in paragraphs (b) and (c) of this

subsection, hul the rate of intcrest charged by the Corporation

on loa ns granted under Ihis provi'iO shall be the muimum

chargeablt on such loans in tenns of di rectives issued from

lime 10 lime by Ihe Minister responsible fo r finance under the

Banking Act." .

for subsection (5) thereof there shall be substituted the

(d)

following

~(5) 1lle repayment of the principal as well as the

payment of interest on any loan granted under ll1is section

shall be liecu red by a g<:neral hypolile<: ove r tne property ohhe

oom pany re(:f!iving the loan in addition 10 any olher securily

whi ch the Corporalion may require

Provided that for the purposes ofTille XX III of Part 1I of

Book Second of the Civil OxIe. the Corporation may allow a

hypotl'lecary debt in respea of a loan or ot her banking facility

panted by a financial institution situated in Malta to rank

Immediately prior 10 tbe general hypolhe<: or other security of

tbe Corporation relaliVi: 10 such loan

Provided fu rthe r that the Corporation may aacept a prime

bank guarantee or OIher similar security in respect of its loan

instead of or in addition to a gene ral hypothec as aforesaid."

(e) for Ihe proviso to subsection (6) the reof there shall be

5ub!;lituted Ih e following

MProvidcd that. unless otherwise stipulated by the

Corporation. for the fint two yeaQ following the first loan

payment the company shall only pay inte rest on the loan."

",d

(f) i" su~ction (10) thereof lhe words M I972~ shall be

dele ted and the marginal note MC.p. 233~ $hall be added thereto.

In paragraph (b) of subsection (I) of section 17 of tbe It.

principal Act. immediately after the words Mfor any of the purposes

referred to in subsect ion (1) of sect ion 3 of thi s Act" there shall be added ~A<l.

the words Mand to be inoorporatcd in products for export ~: and

immediately afte r subsection (I) of se<:tion 17 of the principal Act there

shall be added the following new proviso;

~Provided that w~rcyc ril deems (it in regard loa certain type

of activity the CoI1l'0nuion may i$sue a cenificale of exemption or

reduction in terms of paragraph (b) of Ihis subsection

notwithstanding that It.<: !<lIe is not for export. ~

and the words "Cap_ 265" in the marginal note to subscel;on (4) of

section 17 of the principal Act slla ll be subst ituted by the words "Cap.

Section 18 of the principal Act shall be amended as follows

<a> in paragraph (c) of subsection (2) thereof the words

- 1959- shall be deleted and Ihe marginal nOle - Cap.ISS- shall be

added Iherelo; lOO

(b) immediately afle r subsection (4) thereof there 511all be

added tile foUowing subsection

- (5) With effecl from lstJanuary, 1993 , no dUly shall be

payable under the Dut y on Documents Act in respect of any

d~d or other ;nslrumen! whereby any land is lrans(erred

pursuant \0 the proviiions of this $ection. ~ .

Section 190f the principal Act $hall be amended as follows

(a) subsections (2) and (3) thereof shall respectively be

renumbered subsections (6) and (7);

(b) after subsection (I) thereof Ihere shall be inserted the

following ncw subsections

"(2) Where the Corporation is satisrled thal.on or afte r

1st January , 1993, I full'li~ employee who hll$ been

employed in a supervisory or hi,her capacity by the company

for It least thrtt years underJOCs a training programme

leadi ng to a certifica te in instruction or training skills approved

by the Corporation in advance and related 10 the activities of

the company. a training grant may be given by the Corporation

to the company equivalent to one half oflhe aClualtuilion fees;

incurred by the company.

(3) Where the Corporation is satisfied that. on or afler

h t January. 1993. a full lime employee engaged for an

indefinite period by a qualifyin~ company undergoes a lrai nin,

progT1lmme in order to acqulTe new skills required by the

company due to the introduction of new technology or

~thodsofproductioD and such training programme has been

approvtd by Ihe Corporation in advance . a traini ng grant may

be ,iven by Ihe Corporation 10 the company equivale nt to one

half the statutory weekly minimum wage for every week of

actual training unde rgone by such e mployee up to a maximum

of forty eight weeks

Provided that the company shall qualify for such gram

onlyin respect of employees woo have not bene fined from this

so;:heme during the two yean preceding the year in respect of

which such grant shall be paid.

(4) Where the Corporation is utisfied that. on or after

1st January. 1993. a full time management employee who has

bee n so engaged by I qu.llirying company for at least three

years I nd is eit her qualified in I specirlC mana~ment or

technica l area or has not less than three years mlna~rial or

tIXhnical experience:, unde rgoes a CO\Irse in mana~men t

development trai ning or a technial upgrading course which

has been appro~ed by the Corporation in ad vance: . a training

grant may be given by the Corporation to Ihe company

equi~ale ntto one half of the actual tuition fees incurred by the

company,

(5) Where the Corporation is satisfied lhal. on or after

1st January , 1993 •• full time employee employed by a

qualifying company for an indefinite period undergoes a

training programme which is necc:s5ilry in view of a complete

change in his employment within the company. which

programme has been approved by the Corporation in

advance , a training grant may be given by the Corporation 10

the compan y equi~alent to one half of the stalutory wee kly

mi nimum wage for every week of actual trainingundcrgone by

such employee up to a muimum of forty eight w«ks. M;

(c) in subsection (6) thereof IS renumbered , for the words

Mstatutory wee kly minimum wage there shall be substituted the

M

words Mstatu lory wee kly minimum wag.e or of the act ual tuition

fees, as .he case may heM.

IJ ,

In wbsection (1) of s«1ion 20 of the principal Act the words

Moot uceeding LmlSO,OOOM Shall be substituted by the words "not

uceeding Lm600,OOO",

14, Sectioo 23 of the prindpal Act shall be amended 15 follows

(a) for subsection (2) thereof Ihere shall be substituted the

following subsection

M(2) The Corpotation shall giV1: a grnnt 10 a Cow

company to cover Ihe act ual . additional and neecs.sary

transport C0515 ;named by Ihe company in tran sporting

(a) between Mal ta and Gow machinery , plant,

materials , goods or products con nected wilh its activities

in Gow related to export

(b) from Malla to Gow malerial connected wilh its

activities in Gow whether $Ueh activities are .e1, ted 10

export or not. H;

(b) subsection (S) Iherwf shall be deleted; and

(6)

(c) subsection

thereof shall be

renumbered as

51,10seClion (S).

(3) m;nnol; is-subani kolu (2) liegf:u ghlndu jidl"lol dan is-

surn. rl ikolu li gcj

'"(2) II -Korporazzjoni gI'Iandha light; gI\oIja lil

kumpanija G hawd~ ija bin Itopn I-i.pejjet auwali.

addi7.zjOnlli U mchliega ghaH rasport li Ikun hallsel il -

kumpallija bkx littrasporla

(a) bejn Malla u Ghawdex makkinarju, impjsnt ,

materjal, merkanzija Jew prodotti I; gtlandhorn ~ 'jaqs.mu

ma' I·allivi lajiet laghha rGtla,",'dex konnessi ma' I·

esportazzjoni ;

(b) minn Malla ghal Ghawdex malerjal li gl'landu

x"jaq~ ma'l-allivitajiet lagllha rGbawdex kcmm jdk

?awn I:allivitajiel ikollhom x'jaqsmu ma'l-esportazzjoni

Jew le. ;

(b) ;s-subanikolu (5) tiegl'lu ghandu jig; mhassar: u

(~) is-subartikolu (6) ticgbu ghandu jig; enumerat mill·tdid

bhala Hubarti kolu (5).

".

Min"ok I·artikolu 24 ta' I.AII prinCipali gI'Iandu jidhol dan li

24 . (I ) II· Korporazzjoni tista·. fid·diskrezzjoni tagh·

ha, taghti lil ncgOlju ~gl'lir

<a) helsicn mid·dazju skond I·anikolu 17 ta' dan I·

An:u

(b) bi ni. slrunuri U an induslrijali b'dawk il·

kundiz2jonijietli I·Korporazzjoni tiSla' minn ! mien gIlal

!mien tiddcticdi;

minkejja li dak in·negozju zghi r ma jkunx kumpanija

kwalifikanti.

(l) Fis-subartikolu (l) ta' dan I-arti kolu ~negozju

1:ghi r ~

IfiS$er persuna li mhix kumpanija. Ji tmcui Jew

tdcrtila k u mmcr~;tw ncgo~ju mahsuba fij·paragrafi (a) P

(h) 1B5'5ubart ikolu (I ) ta ' I·anikolu 3 la' dan I-All . ~.

For S«Iion 24 of the principal Act there shall be substituted

the follow;",

L·artikolu 36 ta'l-AII principali ghandu jig; emendat kif gej

(a) minnok i$·subanikoli (I ), (2 ) u (3) tieghu ghandhom

jidhlu dawn is-subanikoli li gejjin

Kumpanija kwalifikanti li Ikun qegl'lda 'irCicvi xi

u( 1)

wHo,~d mill·iDtcntivi u benefittji mscmmija flHubanikolu (4)

ta' dan ]-anikolu &handha. fi Imiem il-perijoou 11' kontcU li

malulu I·intentiv ;tW il-bcncr~u ghandu jitnitZel fi1·k~ba .

tiurasfcri.ui u ,un fil ·karta tal ·bilane taghha fid-data

mscmmija riserva li tiss.cjjah uRiserva dwar Intentivi u

Benerottji ~ rsomma li tkun daqs I·ammonti I; hcmm

jinl",·crcw. D;n ir·riscrvB gl'landha turi kull ammont trasfcri t

tallt il-paragrafu (a) tas·$ubanikolu (4) u kull ammont lrasfcrit

laht il-paragrafu (b) la5-subanikolu (4) ta' dan J-anikolu

scparalamen t.

I-."'''olu.

(2) Ghatl-finijiet las~lIba nik olll (I ) la" dan

il-profitti disponibbli glial truferirMnt 1,1 dil: ir_rUerva

id-

ghandhom

ikunu

l·profini

kkalku\.ali slr.and

dispotiujonijif:\ la 'I-All d""a. it-Tun fuq 1-III/:'DI1N' u la' din

I·A II , u meta fi Imiem la' ~i pcrijodu la ' !:onteU kif inlqa'

qabc l. il-profi uj hctk ild'al kul,,; hum. lal; I; r-risc ...... jc .... l-

ammonl 1:011 .. taghha. ma jislax jilwarrab r da l: il _pc:rijodu. 1_

obbligu I; jigu trasfcri ti l_profil1i I\e-. ,-risc",. gI'Iandu

j intieb 'iJ quddicm, fparli minnujcw 1:01111 kemm hU,skond il -

bt. gl'laJl-pc:rijodu la' !:onleg; susscgwen li u gl'landu jilqies

btlala obbligu glial dal: il-perijodu, u jibqa" 81'1addej b'dan i'-

mod gI'Iall-perijodi la' wara

lida meta kllmpanija linghala rala ta' lun ta' income

mnaqq!;3 mh t l·art iko lu 6 la' da n I-A I! u I-kumpanija rn. listax

littrBdcri ui ghar-Riserva dwa. I- Intenti"i u Beneflttji somma

ek wivalcnl; ghall-a mmonl tOlal; la' profilli approvati wna li

jitnaqqsu I-ammon! ta' tau a b'applikaujoni la'l-artikolu 61i

imicn sentejn li jigu wara I-peri;oou la' inv«li ment rtle"anti,

il-kumpanija minn ufih ikollha obbligu li thalla§ lun luq din

id-diffcrenza skond id-differenza bejn iT-rlla normali la' lana

u r,rata ta' taua mnaqqS-J..

IMa wkolll-ammont shih la' ~i di ffcrenu bhal di n fil_

Irasfcrimcnti ghar-ru.erva dWJ.r 1000nlivi u Bencflttji u 1-

wnlingcllI /jDbiliry la' tun rclani"a , ghanodoom jinlwcrcw

sepal'lltame nl b'nota liI-karta lal-bilaoc $lIkcmm jd-dispotiz-

zjonijict la' dan I-arti kol u jig\! osservati,

(J) Riserva maghmula skood id-dispotiujonij icl las-

subartikolu ( I) la' dan I-artikol u ghandha, sa kcm m mhUI

provdul mod ichor fdan I- anikolu, tintamm scpara la mcn l fiI-

karta lal-bilan-i: tal-kumpanija u mB gha ndhicx tigi dislribwita

jcw konvcnila fazzjonijic! lal-kumpanija, Anqas ma ghandha

r-riserva msemmij a tigi ridolla bicI issi r lpatij. ma' telf lal-

kumpanija , kem m jekk dan il-Iel f ikun IB' nalu rBordinarjajcw

la' nal ura slraordinarja , jtw je kk dan it-telf ikun la' Iona

kapi tali jew ta' Iorta la' dftul ;

Itda minkejja dak kollu li jinghad f dan il-subanikolu ,

kull ammon l .. asferit fir-Riserva dwar Inttnl ivi u Ikneflttji

laM il-paragrafu (a) las-subanikolu (4) la' dan l-artikolu jista' ,

wal'll I; jghaddu tmicn §nin miU ... ghluq lal-pcrijodu ta'

inv«timenl approval , jigi applikal mill-kumpanija bin

jithallsu aujonijiel mhu~ mahruga bin jinhargu bhala bonus

$hQr<'$ imhallsa ghal kollox , Din id-distribuujoni ma IkunI

tu.ubbli , M; u

(b) minflak 1--c_-cl paragrafu las-subartikolu (S) tieghu

ghandu jidttol dan li gcj

"(5) Tqsssim maghmul lill-membri la' Ir:u mpanija fil-

kor.; la' I-islralcjar lal- kumpanija minn xi riserva mwaqqfa

skond id-dispoti:a:jonijiel la' dan I-anikolu ma ghandUlt ikun

suggetl gl'lal l a:<~a laln]-AII dwar il-Tana fuq ]-Income:",

17,

L- artikolu 4S la' I-A 11 prinCipali gl'landu jig; eme ndal ki f !ej

(a)

mi nflo k il-Ir:liem "Ordinanza la' 1-1959 dwar l-Gl'I ajnuna

]ill- l ndu~lriji ",

kull fejn jidhru, ghandhom jidhlu l_kliem

"Ordinanza dwar l..(Jhajnuna lill-Industriji" u l- kliem " Kap_ 159"

glIandhom jidhlu fil_margin i bi~wi l f~jn jilU3bu ]-kJ;" m "O rdinanza

dwar l-Ghajnuna lill-Industrija" glIall-e_ 'el darba ; u

(b) fis-subartikotu ( I) tieghu minflok il-kl;"m "fil-paragrali

(a) Jew (b) IBS-subartikolu (I )" glIandhom jidl'llu l-Ir:liem Hfis_

subani kol u (I)".

Mgl'l oddi mi ll- Kamra lad-Depulati rOS-Sedula Nru. 1191BS-17 la' Manu. 1993.

L,t,. WRENCE GoNZI

S~k"r

R IC II A RD J . CAVCI II

Skril'lln IOI-KIIIMIl/Ild-[hpu/llli

(I) The Corporation may, &1 iudi5(:relion .grant

10 I small nosiness

(a)

rclicffrom customs du ty as provided in RctioA

17 of this ACI;and

(b) industria l buildings. structures and land on

such roodi!;ons as the Corpollltion may from lime 10

time determine;

r>Otwithsu nding that that small business is not a qualifying

company.

(2) In subs«tion (I) of this section M$IT1 all

btJsinc!)S" means a person o ther Ihan a rompany, who ca rries

On Or carries 01,11 a trade or bu$iness oonlemplaled under

pa ragraphs <a) 10 (h) of subs«tion (I) of seetion 3 of this

Act ....

Section 36 of the principal ACI shaU be amended as follows

16. (a) for sub5ections ( I), (2) and (3) thereof. there shan be

substituted the following subsections

M(I ) A qualifying company in receipt of any of lhe

incentives and benefits indiated in 5Ub5ecIion (4) of lhis

section $hall, alIne end oflhe account;n, period durin, which

the incentive or benefit stands 10 be aa;ounted for, transfe r to

and show in its balance sheet as on the $lid dale a re5('rve 10 be

called the " Ina:nlives and iknefits Re5('rve in asum equal to

M

the amounts therein specirted. This reserve shall show

separately any amounts lransfened unde r paragraph (a) of

5Ubsection (4) and any amounts transferred under paragraph

(b) of subsection (4) of this ""etion.

(2) For the purposes of subsection (I) of this $«lion.

profits available for Iransfer 10 that reserve shall be Ihe profits

computed in acconIana: with the provi!iions ohlle fncame Tu

Act. and of Ihis Act. and where at the end of any accounting

period as afore$lid Ihe profits so computed arc such thatlhe

re""rve. or the full amounlt hereof, canno! be sel aside in that

period. the obligation 10 transfer profils 10 a re""rve shall bc,

in part or in full, as the case may bc, carried forward \0 the

subsequent acrounting period and deemed 10 be an obligation

for that period , and so on for subsequent periods;

Provided Ihal where a oompan~ has been allowed reduced

rales of lax in accordance with section 6 of this Act and the

company is unable 10 trall$fer \0 tt~ lnoenlives and Benefits

Reserve a sum equal 10 the lotal approved profits less tile

amount of tax paid upon application of S«Iion 6 within two

yean following lhc relevan t in\'e$lmcnl period, tile company

shall be immediately liable \0 lax on Ihis shortfall al the

difference between Ihe standard rate and Ihe reduced rate of

'0.

Provided funhu that the full amount of any such IihortfaH

of transfen to the Incentives and Benefits Reserve and the

relative contingent uu: liabil ities. shan be shown $epar3tely by

way of noIe \0 the balance sheet until such time as Ihe

provWonsof this 5eCtion hayc been complied with.

(3) A reserve created under the provisions of subsection

(1) of thiuection shall, ucept in otherwise provided for in thili

section, be retained ICparately in the balance sheet of the

company and shan not be distributable or convcniblc into

share capital of the OOftlpany , The ",id rCKTVC shall also not he

redlll:ed to take account of any Ios.!.es incurred by the

company, whether such losses are of an ordinary or

ulTaordinary nature. or capital or revenue in cha racter

Provided Iha!. notwithstanding anything in this

$ubsection, any amount transferred 10 the Mlncentives and

M

Benefits Reserve under palllgraph (a) of subsection (4) of

this 5Cd.ion may , after tbe lapseof eight )'('a~ from the end of

the approved investment period, be applied by the company in

paying up unissued shartS of the company ID be allotted to

members of Ihe compan y as fully paid bonus shares. Such

distribu tion shall not be cha rgeable 10 lax."; and

(b) for the first paragraph of subsection (5) thereof there

shall be substituted the following

M(5) Distributions made to the members of a company

in Ihe course of winding up the company OUI of any reserve

created in accordarn:e with the provisions of this section shall

nOI be liable 10 tax under the Income T ax Act:" .

17. Section 45 of the principal Act shan be amended as follows

<a) for tl'lc words " Aids 10 Industries Ordinance , 1959"

wherever they OCCUr therein thel"<' ~haU be substi tuted the words

MAids 10 InduSliie5 Ordinance" and the marginal OOIC "Cap. 159"

shall be inserted .... here the words "Aids 10 Industries Ordinance"

finl occur; and

in subs«tioo (I) thereof for the words "paragraptlS <a) o r

(b)

(b) of subsection (I)M there shall be: substitu ted the words

"$I.lbse<;:ti!)n ( I )".

PllMed by the House of Rcpl"QCnlalivesalSillingNo. 1190fthc 17th March. 1993.

LAWRENC'J; GOSZI

SPflIk.«

R ICHARD J. CAUCHl

Clerk. 10 the House of Rt:p~$t:m(Jlj,'u

l"""bbM" " ;,j·Ili,,,,"im. n' "·,·I"kK"' ..... joo._ K" ,,'j._ r.~by'''' rH".n-..'.,,~_ .:""ll,.

"'''''''JII n·h'omp<,ijo ,.,.()""'" - "".on., rII< Gov","""" /'ri""". -..