ACT No. XVU or 1994 AN ACT furth er 10 amend the Income Tax Act, Cap. J 23. (oivicloddiu)

I assen t,

(L .s.)

Uoo MIFSUD B ONNICI

P resi dent

13th Septembe r, 1994

ACT No. XVU or 1994

AN ACT furth er 10 amend the Income Tax Act, Cap. J 23.

BE IT ENACTED by the President. by and with the advice and

consent of the House of Represeotatives, io this present Parliament

_mbla!, and by the authority of the same, lI!i follows:·

I. (I) This A ct may be cita! as the Income Tu (Arncndrno1t)

(No.2) Act, 1994, and shall he read and coru;trucd as one with !he

Income Tax Act. hereinafter referral to as 'the principal Act '.

(2) This Act shall come into force on such date as the Minister

responsible for finance, may, by notice in the Gazet1e appoinl

OF THIS ACT

Number of parts. sectiO!l5. '''bvcions, paragraphs aDd lub-par1I&r8phs

""""'.

(N1Me: where the SIolbscc:tioll5, pat'lIgraphs or lub-paragruphs have II()l

been renumbered, they do no!: appear in this Schedu1e.)

As renumbettd

Prior to renumbering

by this Act

by this Act

P",I

Port I

o. I

•• I

Pan 11

•• 3

•

Part III

Port "

o. S

••

4(1 )(c)

S(l Xd)

4{ 1)(d)

S(1)(e)

4{ IXe)

5(1)(0

4(1 )(0

S(IJW

4(I JW

S(1)(h)

S

SA

•

•

I.

Pan III

Pan IV

o.

•• 12

12( IXO

l1(1 )(ee)

12(1)(g)

11 ( 1)(0

12(1 Xh)

11 (l)(g)

Jl (l)(b)

12(1 )(i)

A

P'rio!" to renumbcrins

AI renumb ... nd

by this Act

by this Acl

o.

IJ O)(i)

o. 12( 1)(j)

11 (IXi)

12( I)(k)

l1(1)(k)

12(1 )(1)

1l (IX\)

J2{J)(m)

11( I)(m)

12(1 Xn)

IIUXmm)

12( 1)(0)

II{ IXn)

l1(I Xp)

11(1 )(0)

12(1 )(q)

) I(l Xp)

12{I Xr)

12(1 )(1)

•

12(.5)

Pan IV

PonV

I.

n

o.

o.

I'

I'

I'

•

I.

I'

"

I.

Pan VI

PMV

o. 17

•• 27

I.

" "

"

•

l8

•

"

..,

A

Prior 10 rmumberina

.... renumbeu:4

by Ihb Act

by thiJ Aa

•• n

"

<

22A

"

2A

" 26A

" '"

" "

Part VII

.... VI

•• 28

•• S]

" "

3. ,.

PartVlII

....VlI

••

•• )I

56(7)

",<8)

•

"'<')

31(1)

31(8)

56( 10)

3 1(9)

56(11 )

S6(J2)

31 ( 10)

]1(11)

56(13)

]1( 12)

56(14)

31( 1])

",<15)

3 1(14)

.56( 16)

31{l.5)

56(17)

31(16)

56(18)

56(19)

31(17)

Part VIII

Pan VillA

•• )lA

" "

••

)I.

Pon IX

Pan IX

•• 32

"

••

"

.1

•

.2

•

.3

., ..

•

•

•

•

A

63'

Prior to renumberina

Iu mwmbt:ttd

by this Act

by this Ace

o. 67

•

67A

•

"

•

o. 34

7. "

•

,.

•

"

Port X

•

•• 43

•

..

4S

•

•

..

•

•

•

'"

•

" "

" "

•

•

"

•

" "

•

•

" "

•

•

6'

Pan XI

o. 62

6)

•

"

•

..

Part XII

•

o.

•

A

Prior to renumbering

All renumbered

by this Act

by thil .... ct

.. 7.

••

Pan XIII

•• 72

74A

7S

... X1V

PonX

•• 79

•• 74

•

7S

7. "

" 8.

"

84A

90A

"

"

•

9J

•

"

•

Pan XV

•• 86

•

•

A

Mrenumbertd

Prior to ~umbcring

by this ACI

by this Act

•. 90

•

•

Pan XVI

Pan XI

•. 94

•

"

•. 96

(I) The Pans , sections, subsections, par1lgrnpb.s and sub-

paragrnphs of the principal Aet as in fon::e prior to the COOllIImc:ement of

this Act, shall be renumbettd lI!i appears in the First Sc hedule to this

Act.

(2) Any refererEe in the principal Act as in foo:e prior to the

c:omtnerLeliM:nI of this Act. shall be deemed and consuued 10 be a

reference to the Pan, soction or pan thereof as renumbatd by the Act,

and the principal Act is hereby am ended accortlingly.

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

rd'ereoccs in this Act 10 a Part, section, 5ub&eaion. pani&nIph or sub-

paragraph of the prin<:ipal Act an: references to tbe relative Part. section,

'llbsecion. paragraph or sub-paraarapb tbclWf as renumbered in virtue

of subsection (I) of this sectioo.

(4) Notwithstanding the proVISions of subsection (3) of this

section, tile Paris and sections of the principal Act which an: deleted in

lutue of MICtion J of this Act sball be construed as refe,eh"'es to those

Pans and sections of the principal Act 115 in fon:e prior to the

croJrneoccment of this Act.

(Section 36)

Amendment of Indusuial Development Act, Cap. 325

Section IS of the Industrial Development Act, Cap.32S, WJI be

amended by the addition of the following proviso a1 the end the leo!

"Provided that if there is a change in the shardJolding of the

company such thal the new shareholders would nOl have been entitled to

a reduced lliIIe of lax under any anungement as aforesaid or if 50 em;!!...!

the rale applicable in suc h o.mmgemen\ is mo~ than the rale applicable

to the outgoing shareholder. then any profits which have not been

distributed at the end of the last financial year of the company ptCceding

the date of change in sharchoJding less any profit distributions made to

the outgoi ng $harcholdcr in the current financial year shall be taxed at a

nlle being the differmce between the mic of tU which would be

applicable had the new shareholder held the shllre$ when such profil$

we~ eamed. and lhe rate lIClually applied, and such tax shall be a tax

payable by the company in the year of assess ment in which such profits

3l'e distributed·.

Passed by the HOU5e of Re~ntili vcs al Sitting No. 303 of the 2(kh

July. 1994.

LA WREN"CE GONZI

S~aku

RICHARD J. CAVeHI

Clerk IQ IM lIoltU! of Repnsemafi~'t's

lPl"'bbIil., ....... Diportimornll.' l- h,tor,naajo.lI . R ... a;. - hWU/od by ,/o,! 0.".....-, oll~f()f....riotr • K.,rilp>

Milbugn n·J" . mperijl IIHJ ... rn _ PrhrmJ .. 1Iw Go~'-"-IU PrVoliJoI PIT»

The following ParU and sections of the principal ACI shall be

deleted, that is 10 say

<a) Pan D, scctionsJ and 4;

(b) Sections3S,36,37,38and39;

(c) Part X, sections 43 to 6 1, both inclusive;

(d) Pan XI, sa:tions 62, 63, 64 and 6.'5;

(e) Part XII, sectiOn! 66, 67. 68, 69, 70 and 7 1

(0 Part XIII , sections 72. 73, 74, 74A, 1.'5. 76, 77 and 78;

(J) Section 79;

(h) Part XV. sections IKi to 93, both inclusive; and

(i) Pan XVI, sections 94 and 95.

4 . In subsection (I) of section 2 ofibe principal Act

(11,) the following new dcrtnition shall be inserled immediately after

t1x: definition 0( 'clwgeable u,oomc"

• "coIJe<:tive invesLJTIcot scheme" means any scheme or

IIlT8J1gcmtflt which is licensed under the Investment Services Act,

1994;";

(b) in paragrapb (b) of the definition of ·company", the wotds

"whkh proves 10 the satisfaction of the Commissioner thal 001 ~ than

ten per cent of its capital or of its v~ pG'NeI' is owned or controlled,

dira:t.ly or indirectly, by any JlCIWII or penon s resident in Malta" shall

be deleted;

(c) the following new definition shall be inscned immedi8lely aftcr

the definition of "debenture inlctCSt"

" "distribulablc profiu" shall mean the total profits which l\1e

available for distribution by a company resident in Malta under the

laws for the time being in fon::e in Malta, and the distributablc

profits shall. for the purposes of this Act, be allocated to the

following accounts. thal is to say, fomgn income account, Maltese

tued account, and untued account, and for the pwposes of this

definition these accounts shall comprise the distributablc profits as

set out in the respectivc definitions;";

(d) the following new definitions sball be inserted immediate ly after

the definition of "dividend"

" "equity holding" sllall mean a holding of the I}()mina! share

capital in a company wben the shareholding entitles the shareholder

to a right to V()(CS, to profits available for distributioo to

shareholdc:n and to assets available for distribution on a winding up

of that company, and -equity shllTC5", "eq.lity shareholder" and

' equity shareholding" shall be construed accordingly;

"foreign inwule account" sllall, with effcct from the year

immcdlalely picc ..... jng the year of aSS"S'mcnt 1996, mean any of the

following categories of distributable profits arising in that year and

in subsequent years to the extent that ttIey result from taxable

income

(a) profiu resulting from royalties and similar iro:::ome

arising outside Malta and from diyjdnvls, capital gains, interest,

rents and any otha ia:oile derived from investments situated

ouuide Malta. which are liable to tax in Malta and are

ll'Ceivable by a company resident in Malta nol being a company

registered under the Mal ta Financial Services Centre Act, 1994; Cap, lJ(I,

"'"

(b) profits resulting to a company 1;...." ..... as a bank in

Malta DOl being a company registeR>d under the Malta Financial

Services Centre Act, 1994 from investments, assets or liabilities

situated outside Malta: and

(c) all profits or gains of a company resident in Malta,

which are liable 10 IaJI, in Malta and attributable to a pcrmaDCllt

es'ablishment (including a branch) situated outside Malla, and

for these purposes "profits or gains " shall be calculated as if the

permanent establis hment is an independent enterprise operating

in similar condit ions and at arm's length; and

(d) profits resulting from dividends paid oot of the foreign

income 1WX0UnI of another company resident in Malta

Provided that in the case of a company carrying on the busil"lCSs

of inSUi'llllCe, or any other company which is owned and controlled,

directly or indill'Ctly, by such an insurance company, the profits

which would , in accordance with the above provisions, stand 10 be

allocated to the foreign ioc<me account will, for any finaocial year,

not be so allocated

Provided further that in the case of a company which is licensed

as a bank in Malta or which fonns part of a banking group as

derined below. an)' profits which would, in accordance with the

above provisions, slllnd to be allocated to the foreign income account

will . fOf any financial year, not be SO al located unless

(a) more than ninety-five percent (95%) of its average daily

deposits throughout the finaDCial year are taken from persons

who are nOl resident in Malta; and

(b) wb£re!he company forms part of a banking group. such

group mc:cu, on a CONOlidmed basis, tile ~t specified

in paragraph (a) above .

For the purposes of this proviso

(a) "banking group· shal l comprise only Maltese registered

oompanies, 81 lwt onc of which must be a bank licensed in

Malta, IIIId which compmics are membcni of a banking group r:J

companies. Two companies shall be d= . bed 10 be manbers of a

banking group of companies if ODe is the tc:rl per cent affiliate«

!he ... her or both are ten per cent affi liates of a third company.

For this purpose. a company $hall be d ' med to be a !en per oenI

airiliatc of another company (parent company)

(I) if and so long as mort: than tal per cent of its

ordinary share capital and more than ten per cent of its

voting righll are owned direaly or indirectly by the parent

company; or

(ii) the parent company is beneficially entitled either

directly or indim:tiy to more than ten per cent of any profits

available fOI' distribution to the ordinary shareholdas of the

affiliale company; or

(iil) the parent company would be beneficially entitled

either diltlCtly or indirtaly 10 more than ten per cent of any

assets of the affi liate company available for distribution to

its ordinary $hareholder! on winding up

Provided that OO(withstanding the above proVISions, a

company whlch has been acquired by a bank in satisfaction of a

debt and which ~ nOl: otherwise form part of the bank'.

business shall be deemed not to fonn part of a banking group;

(b) "average daily deposits" slwll be computed by taking the

toW deposits at the end of each day for the financial year and

dividing such amounts by the number of days in that financial

year and average daily deposil5 taken from pcnons who are nOI

resident in Malta shall be computed in like manner, 1ne word

"dqJosits" shall have the meaning assi gned 10 il in lhe Banking

Act, 1994;

(c) the amount of the OOII5Otida!ed average daily deposits of

a banking gTOllp shall include only deposits accepted by

companies forming part of the banking group pI.::ed by persons

other Ihan RICh companies

Proyided finally, that in the case of an "International Trading

Company", the profits which would, in accordance with !he above

provisions, stand to be allocated to the foreign income alXOunl will,

for any financial year, nO( be so allocated;";

(e) the following new definition shall be inserted immediately after

the definition of "incapacitated person'

" "Intemalional Trading Company" means a company registered

in Malla which is engaged tolely in cartying on trading activities,

from Malta but not in Malta, with pel10lU O\Itside Malta woo ~

not resident in Malta and which has its objc:c:ts uPfUSly Iimitallo

such Inkling activities as weD as to such acts and activities lIS are

n«:QWY for the conduct of its operations from Malta. The

following activities shall in so far as they are complementary to the

canying on of the said trading activities be allowable activities of an

International Trading Company

<a) purchases for export of goods manufactured , assembled

or processed in Malta provided that such purchases are not made

from a pel'1Oll who owns dira;tly or indired.ly more than 15% of

!he ordinary share capital of the $aid Intemationa1 Trading

Company;

(b) trading with companies registered in Malta under the

Malta Financial Services Centre Act, 1994; and

(c) tming with other International Trading Companie$;";

(0 the following new definitions shall be ill5erted immediately after

the definition of "Malta"

, ' Maltese !axed accO\lnt" means any of those profits of a

company that are not included in the foreign income account and

<a) which have suffe=i tax: or

(b) which have been exempt from lax under the provisions

of any Maltese law and where the distribution of such profits by

the company is also uempt from tax in the hands of the

shareholders

' participating holding" shall mean a holding wh ich ari$t$ where

(a) a company holds directly at least tell per cent of the

equity shares of a company not resident in Malta whose capital

is wholly or partly divided into sllatc:s

Provided that where the shares held confer different

percentages of entitlement with respect to votes, to profits

available for distribution and 10 assets available for distribution

on a winding up, the lowest pen:cntage figure shall be deemed I(l

be the per ~ntage of equity shares held: or

(b) a oompany is an equity shareholder in a fXIfllpallY nIX

resideTll in Malta and the equity shareholder company is entitled

at its optiOll \0 call for and acquire the entire balance of the

equity shares DOt held by that equity sharebokler company 10 !he

Ule!lt pcnnined by the law of the cOWllry in which the equity

slwes ~ held; or

(c) a company is an equity sharellolder in a company not

resident in Malta and the equity shan:holder company is entitled

to fim refusal in the cveru of the proposed disposal, redemption

or cancelJatiOll of all of the equity ahare/l of that company Dot

held by that equity shareholder com pany; or

(d) a company is an equity shareholder in a company nU

resident in Malta and is entitled 10 either sit on the Board or

appoint a person \0 sit on the Board of that company as a

director, or

(e) a company is an equity shareholder wltich invests a

minimum sum of five ~ thousand Maltese \in (or tbe

equivalent sum in a foreign currency) in a company not resident

in Malta; or

(0 a company is an equity shareholder in a company not

resident in Malta and where tile holding of such $l'uues is for the

funherance of its own bwillC55

Provided that a bokling of shares whether equity shares or

not, in a company not resident in Malta, IIcld as trading stock for

the purpose of a trade shall not cOlUtifUle a "participati ng

holdi ng"; ";

(g) in the definition of "res ident in Mal ta". for the words ' when

applied to a body of persons, means any body of per5OIl5 the control and

management of whose business are exercised in Malta", there shall be

substilUt ed the words ' when applied 10 a body of per5OIls, means any

body of persons the control and management of whose business are

eJten::bed in Malta, provided !hit • c:ompMy incorponlled in Malta on or

after lit July 1994 shall be resklcnt in Mllta and any other CQIlIpany

illCOl'pOraled in Malta shall be resident in Malta from hI January 1995

where the man.agemenl and control of the business of the company is

eJtercised ouuide Malta";

(h) in the definition of "the Special Commiuionen", for the words

"under soctioD 66 of this Act" there lhlll be .ubstituted the wonb "WIder

leClioo 34 of the lu::oine Tu: Manqement Act. 1994";

(i) in the dcfjnitioo of "w", for the wonb "impovd by this Aa"

tbefe shall be p.t.tin.ned the words "imJ)C*d by the I .. (Hne Tu: Aw";

(J) immediately after the definition or "w", there sbalI be inserted

the followina.- definition

" "the Income Tax AcU' lhaIl collectively mean !his Act and the

Income Tax Management Act. 1994;";

(It) the definition of "total income" shall be amended IL'I follow.

0) for the wonls "of Part VI;", there Ih.all be l ubstituted the

words "of Part VI:"; and

(ii) ;rn ....... iatdy .u the end thueof, lbete 5ball be wIded the

fol.lO'oVins; proviso

"Provided that any irt.xt,1t which is not required to be diJc!.wd

and i. not disclo5ed in accordance with the provilions oftbe biCOi lle

Tu: ACLl shall not form part of totaJ income;"; and

(1) the following . - definition shall be insened immediately after

the definition of "tOlal irJ(:ome"

• 'untaxed account " shall consist of those profiLl (or losses as

the cue may be), which le", l-nt the total distributable profits (a

positive amount) or the Iota! accumulated losses (a negative amount)

as the case may be, and deductin, therefrom the total IUffi of the

amounLl alIocaced 10 the fOLel, n irlCOlh1oe MlC(lUIII and the Malle5e

taxed account;".

5, InunedillLdy afleT 5tClion 2 of the principal Act, there shall be

added the following 5tClion

.~

3. The adm inistration of this Act shall be vested

in the Commi$Sioner, and the provisions of sections 3

and 4 of lIIe lncome T IU Management Act, 1994,

shallll.pply to the Commissioner in the exercise of his

powers and functioru under !his Act. ",

Fis·subattikolu (I) la' I·.rtikolu 2 ta' I-An print ipe.li

(a) it·lifslra gdida li selia glIandha tidllol minnufih wva I-tifsinl 1.1'

income la.r.xabbli~

~skema 1.1'

inveslimen l koUettiv" LliHCf kWI ~ jew

..

artVlpmml b1irenljl bllIl I-All ta' 1-1994 dwar Servizzi 11'

In"estimcn l·~·

"

(b) fiI -pInIgnlN (b) 1l1-lifsinl 1.1' ''kumpannijl" iI-kliem , j lippro'"

ghas-todisfaujon IIl.-Kummbsarju li mIlux ilnar minD g/Wu1. fiI-mija

lIl.-kapilli lieghu jew lIS-setgbl ta' \lOt tieghu jkunu proprjcta' la', jew

ikkOllln)l llti minn. diretllmen l jew iodireltan"lcnt, Ili pcrsuna jew pcrsuni

residenti rM.lta~ ghandhom j ilhusru;

(C) it-@int gdida Ii geli. glllndha tidlloI minnufih wva t_ti fsinl ta'

" img.haJt fuq obbligazzjonij iet"

Ii jistillu j itqmmu~ tliHCf il-profitti IOtali li jkunu

~ ~profitti

di sponibbli bicx j ilqlSSlllu minn kumpannijl residcnti fM1I1I skond

il -ligij iet li matul dIlr. it-tmien ikun u 6s-$C1'lII f Mall.l, u I-profitti li

jistgl\u jiUjusmu ghandhom, gball -finij iet 1.1' clan I-Atl, ikunu

allokati fiI -lrontij ict li gcliin, j igi6ai, kOllI ta' income barntni, lr.on l

intaxul fMalta, u konl mIluJ( inll.lt.U.l, u ghal l-finij iet 11' din it-

ti fsin I-kontij iet jinlr.ll.ldu bill il -pro6lti li j i~u jilqusmu lr.i r rnuri

,-

fi t-ti IJmcI ris-ttivi " ·~·

(d) it-li rsiricl £Odd- Ii geliin glllndhom j idl'llu minnufih WUl 1-

ti fsintll' "divid.:nd"

" "sehem b'clrwita' • tfisser sehcm tllhpitaJ ta' i-azzjonijicl

nominali I'kumputni.i- meta dak is-schcm jag.hti I-jcdd 1i\1-a7.7.jonist

Ii jivvota, li jaqsam fiI -profitti li jlrun hcmm ghat-tqusim bejn 1-

azzjonisti u l-attiv li jkun hemm biex jitqassam fiI-kltla' ltoljiment

ta' dik il-lrumpanni;a, u "uzjonijicl b'ckwitll' ", "azzjoniSI b'cltwita'"

u "5clIem fazzjonijicl b'ckwita'" ghandhom jiflidunu r dan is 11:11$;

"11:0 01 ta' inromt: bammi" gl'landlul b'schh mis-SCnl li Iahbal

miMufih qabcl is-sen. ta' stirna 1996, tfisser ku1l wahda mill-

Ic.ategoriji li gcjjin ta' profini li jislgIIu jitqasSffiu li j inqalg,hu fdik is-

sena u fi snin sussegwcnti K1·\imitu li dawn jirritultaw millO income

tnnbbli

(a) profitti 1i jirritu ltaw miM roynties u income ieflor ta'

din ix-xorta I. jinqaJghu barn! minn Malta u minn dividendi,

qligh kapitali, img.l\ax, kera u kill! inrome ichor li jiSi minn

invcstimcnti sitwad barra minn Malta li huma suUctti ghat-

ta.xx& fMa.lta u li j istghu jigu ritcvuti minn kumpannija ~sidenti

r Malta Ii ma tkunx kumpa onija regisll1Ita \JIlIt I·AIl ta' 1-1994 ~. 3JO.

dwar it-Ccntnl ghl5-Scrvim Finamjalji ta' Malll; U

(b) profitti li jirri2uttaw lillrumpannija Ii~e~al.ll. bhata btmk

fMa[ta Ii IIUI tkunx IrnmptlMija regislBllI taht I-A n 1.11.' 1-1994

dwar i~-Ccntru g,hILS-ScrvilZi Finllllzjarji 1.11.' MlIII.11. minn

inveslimcnti, an iv jcw passi ... silwali bamt minn Mall.ll.; U

(t) kull profilli jcw qligb 1.11.' kwnr-nnija rnidtnti fMalta, li

hum. suggelti ghal-1aJtJta fMall.II. u li jkunu altribwibbli gbal

stabbi liment permanenti (inklu.t.a ferg,ha) sitwll.ll. barra minn

Malta, u ghal dawn il -Gnijict profitli jcw qligb ghandhom ihlllu

kkalkolati bha lli kicku I-istabbi liment pcrmanc:nti kien impri.t.a

indi pcndenti Ii taMcm I'lrundizzjonijic l simili u al ann!r h:ngth;

"

(d) profitli li j irritull.ll.w minn dividendi li jithatlJu mill-kont

1.11.' inromc bsrrani ta' kumpannija ohnl residenti fMall.ll.

fil-kat ta ' Irnmpannija li !mew n-negm:ju ta'

Itda

assigurazzjoni, ~w xi kumpannija ohra li lkun proprjew' w' U

kontrollata minn, diretu.mc:nt ~w indirettamcnt, Irum~jI 1.11.' 1-

a.ssigurazzjoni bhaI dik, il-profi lti li kien imisshom ikunu . tlokati

skond id~ispoti17jonij iet w' IuIwn IUq, li ll-kont ta' income bernn1,

m. jkunux heklr. aUokati ghat ri sena finanzjarja

It.dl wko l1 GI-kat tII' kUffipannija Ii tkun li~~ata blIala bank

fMalca jc:w li tkun pari! minn gru pp bankllju kir imfi.uer hawn taht,

lrull profitti Ii kic:n imissbom ilrunu a1 lokati, skond id-

di spot.izzjonijict ta' hawn fuq liII-kOllI la' income barnni, ma jlrunux

hckk aUokali ghal xi sena finanzjarja kemm il-darba

(a) iktar minn I'larru;a u disghin fit -mija (9S%) taI-medja lad-

depotiti ta' Jruljum l.II.gl\ha matul is-seM. finan2jarja j inicbdu

minn pcrsuni li m'humiex moiiknl i rMaIta; u

(b) mela I -kum~j. t1tun puti minn grupp banbr,iu. dak

il-gro pp j ikkwalifika. fuq ba1:i IwnsoUdall., il-lllieS' spetilikata

fiI -panigrsfu (I) \I' hlwn fuq.

Ghal finijiel \.8' dan il-proviso

(a) "gru pp l:anbrju" tinkludi biss lrumpmniji rcgistrati

fMalta, ti ghall-anqu wahda minnhom tkun bank JitenzjAt

fMalIa, u iiema lrumpanniji jkunu membri la' gmpp hILn1wju ta'

Zewa

kumpanniji j itqicsu li hwn.a membri ta' grupp

kumpanniji.

buJlwju la' kumpanniji jckk wahda minnhom tkun affiljate.

b'ghaxra 61-mU. lMl-kumpannija l-ohra jcw jckk i:l:-2cwg

lrumpanniji j kunu .rnlj. li b'g,IIaxra fiI -mijl

ma' terza

lcumpannija. GhaI dan J-g.IIan, lrumpannija titqies 11 lleun

af1iljata ma' kumpennija ol'lra (kumpannija f1I*"nlJ

(i) jekk 11 sakemm iktar minn gbaxra liI-mij. taI-bpital

azzjonarjll ordinarju tJoghha u ikw min g,IIaxra fiI -mij. tal-

jakl. taI -V()( II.ghhl jkunu proprjeta'. dircttamcnt jcw

indirc llamenl, tal· kumpannijll purl/f; jew

(ii) il·kumpannij. JWMI ikollha jedd tibbenefika

dircttamcn t jew lndirc ttament minn iklar minn g.haxra fil-

mija ta' kull proli lti li jkunu disponibbli gIW-tqassim liIJ-

aujonisti ontinarji taJ-kumpannijl affiljata; jew

~lIt

(iii) il.1rumpennij.

ikollha jedd

tibbenefika

direttament jew indirtttamcnl miM iktar minn ghaxn fiJ-

mi';' ta' l .. ttiv taJ-kllmpannija afIi ljata li jkun disponibbli

ghal Iqassim liII -m:jonisti on1inaJji taghha rut ta'

xoljimcnt

IMa minkcija d-dispot.h:zjonijicl ta' hawn fuq, kumplDn ija li

lkun siet akkwistala minn bank hi hla.o; ta ' dcbitu u li xort'ohra

ma tagbmilx parti min -negozju tal -bank ghandha tilqics li ma

Iaghmilx plU"ti minn grupp bankarju;

(b) "il -medja tad-<lcpotiti ta' kuijum" gl'Iandha tinhadem

billi j itlichcd it -total tad-dcpotiti fl-ahhar la' kuU jum ghas-sena

finanzjarja u jkun divit. bin-numru ta' j iem rdik is-sena

finanzjatja, u I-medja tad-dcpot.i ti la' kuljum ]j jsiro minn

persuni Ii m'humiex residenli r Ma ita ghlUldha linhadcm bl-istcs.s

mod_ Il -kclma "dcpot.iti~ g.handha I-istcss ti fsir ki f moghti lilha

bI _At! ta' 1-1994 dwar il -Kummcn: Bankarju;

(t) i-ammonl tal-medja tad«potiti konsolidati la' kulj um

la' grupp bankarju g.handu jinkludi bis.s dcpotiti iK:i:eltati mion

kumpannij i li jaghmlu parti minn grupp bankarju li jsiro rninn

pcrsuni li ma jkunux dawlt jI-kumpannij i

Itda fi -ah/'wnett,

fil-kat. ta' "kumpanniji b'kummen

inlcmaxljooal.i" il-profilti Ii, skond id-dispot.injonijiet ta' bawn fuq

Iden imi ssllom i!tunu allokati till-kont la' incotnc barrani,

m'ghandhomx pal xi sena finanzjarja, ilrunu hekk a11obti;H;

(~) it-1i1Sin pljd. Ii iejja ghandM tidhol minnu6h wm. I-tifsi~ 11'

ftpersunainbJ*jl.ltl";

Inlmw:zjorWi" lfiSWT kumJ-nnija

~ "K.umpInnija b'Ku.mrntrt

I'tjiltrtla !'Malta Ii xogbolha jltun biN Ii '18bmd attivitljitt ta'

kummat mi.nn Malt1 imm& mhux 1'Malta, ma' persuni barn. miM

Malta li m'bumiu P"SMknti fMalla u Ii 1-gtwUjie1 ta&f\ha jkunu

csp· rumenl limitati ahaI dav.rn l ... ttivitlljict 1&' IwiIlk.t kif ukolI

g.haI dale ix-xogbol. u lttivillj ict Ii jIcunu mehtiep biC)[ 'mew 1-

operuzjonijict taghha minn Mal .... L-.tttivitajict 1i tejjin gb,ndbom

.. rcjn ikunu kwnplimc:ntari glIat-tmeuijl ta' l-inHemmija Ittivitfljiet

ta' kummcrt ikunu attivil.ljitl lcjiltimi 1&' Kumpannija b'K.ummc:rt

Intemazzjonali

(a) xiri ghall~portattjoni la' oa:geni manif'tml!lIti.

immuntlti jew p:oCcs.sati I'Malta Mkemm daIr: ix-xiri ma jsirx

minaJand pt:rSUM 1i Ikun propjclalja diR:ttamenl jcw

irw;lircttamenlll.' aktar miM IS% lal.kapital uzjoMlju ordinarju

la' 1·lsle" Kumpannija b'Kummcrt Intcmazzjonali;

(b) kummcrt ma' IounpilMiji rcgistrati fMalta tahl I-All ta'

1-1994 dwar it-Cc:ntru gJ\as.Scrvizzi Finanzjuji la' Malt.; u

(t) kummu t ma' KwnpaMiji b'Kummett Intcmazzjonali

ohra;";

(t) il-ti&iriel jodda li sc1jin aJlandbom j idhlu minnufih w ..... ,.

tifsin. ta' "Malta"

" ''\(onl intu.x.al fMalIa" lfisscr dawlc iJ-profitti ta' lrumpannijl 1i

ma jkunux inkluti m·loon! la' incol1le bImt.ni u;

(I ) Ii jlNnu jc"W intu;uti: jew

a- ",:/!!entad mil _'u", labl id--dispotiujouijirt ....

(b) ikunu

xi tip .... Moll ... u me ... 1-IqISSim .... dan il-prolitti miD-

kumpllUlija jkun u\roll eunlat mil -tana fidc:jn l-uzjonisti ;

"ithem partetipanli" lfisser sc:hem li jinboloq mell

(.) kumpannija jkollha sc:hcm dirett .... ghall-anqu ghaxta

fiI-mija 11' l-azzjonijiel b·dtwi ... • .... kumpIlnnija mhux resicknti

fMal ... ti l-kapilal ... ghhI JKun ghaI \rollox jcw I'parti maqsum

fazzjonij irt

me'

"

It.da

l-uzjonijiet li jlwllhl jaghtu pmm"'W di[fcrenti

11' jedd dwar voti. profitt disponibbli &hal Iqu sim u attiv

disponibbli ghal tqassim ibt ... ' xoljiment, il -ligu." 111-

perscnllU I-iktar I;as.s..a g.handh.I tittiebed bMla l-pcrsc:n ... U ... '

I-m:jon.ijiel b'ekwita' U jkollh.l; jrw

(b) kump&nnija ikun anjoniSI b'dcwill' f'kump&nnija mhux

residcnli fMalta u l-kumpllUlija li tIwn uzjonisl b'ekwi""

jkollha I-jedd li tag.h1x:1 li tag,hme\ sc:jha &hal, u takkwista, i1-

bilane lwIlu la' l-azzjooij~1 b'ekwilll' 1i ma jkunux mibnuma

mill·kumpannija Ii tkun azzjonist b'e1cwita' sal·limitu pcm:etS

bil-lip tal-pajjit rejn ikunu mi1m.wna l-azzjonijiet b'ekwila'; jew

(~)

icumpannija tkun aajonis' b'ckwita' fkumpannija mhux

resident! f'MaIta u l.kumpannija Ii tkun azzjonisl b'ekwita'

jkollha l-jcdd ghall-ewwel rifjut f'kai li jkun proJXlst li 1-

uzjonijiel b'elcwita' kollha li ma jlrunux mitmuma minn dik iJ-

kumpannija li tkun azzjonist b'ckwila' jlrunu dUposti, mifdija

Jew kantellati; jew

(d) kumpannija tkun anjonist b'dtwila' I'kumpannija Ii ma

t1w0Jl rc:sidcuti fMalta u jkoUha ]-jcdd Jew li lOqghod fuq i1.

Bard jew li tahlM persuna btcll tkun din:l1lIr taI -Bord ta' dik il-

KlimpllUlija; Jew

(c) kumpannija I. Ikun azzjoniSI b'ckwiUl' U tinvcsti !IOrnma

minima ta' !lames mitt elf lira Maltin (jew somma eJcwivalenli

f'munita batranija) fkumpannija li ma tkunx residcnti t'MaIta;

J~

(I) kumpannija li tkun azzjonist b'ekwiu' I'kumpannija

mhux residenti f'Malta u mea tkun qed it.tomm <!awk ,.

azzjonijict bicx tmexxi 1 quddiem in-nc:gozju taghha sless

Itda t ·t.amma la' azzjonijiet. sew jekk aujonijiet b'e1cwita'

sew jekk le, I'kumpannija li ma tkunx rcsidcnti I'MalIa,

milmuma bha l. s"*k tan-negozju gh.all -fini ta' kult1JlXrt, nu

titqicsx li hi "sehem paru:eipanti";";

(8) fi l-tifsira ta' "residenti rMalla" minflok i[-klicm "mea applikala

g.haI korp la' pcrsuni, llisser kull korp la' pcrsuni li I·kontroll u l-lre~ ia

tan·negozju tieghu hUmA el:ertilati fMalla", ghandhom j idhlu I·klicm

"m<:laapplikala ghal korp 1.8.' persuni, lli sscr kull korp la' pcrsuni 1i I-

konlroll u t-trcgija lan-negozju tieghu hUmA etertitali fMalla, i1da

kumpItMija inkorporala fMalta 0-1 jew wara I-I ta' Lu lju 1994 tkun

residenl; rMal1.8. u kull kumpannija ohra inkorp:M'lta fMalta tkun

residenti f Malta mi1l -1 ta' Jannar 1995 mela l-kontroU u t-t~~ja tan-

negozju taJ -kumpannija huma e:l;crtillti barra minn Mllta~ ;

(h) lit-lifsifll lI' "il -Kwnmissarji Spctjali", minOok il·k1iem "Wit 1-

artikotu 66 lI' clan I-An" ghandhom j idhlu 1-k1iem "taI'Il l-artikolu 34 IB'

I-An lI' 1-1994 dwat I-Amminisllv2joni IaI-Tl.IU(a"j

(i) lil-lifsira ta' ''ta.u:a'', minOok il -k1 iem "imposta b'dan I-An",

ghandhom jidhJu 1-k1icm "imposti bi -Ani dwar it-Taxxi";

(j) minnufih wara t-ti fsira ta' "lBxxa", g.handha tidho l it-ti fsira gdida

li gejja

" "I-Atli dwar it-Taxxi" llis.ser dan I-An u I-An la' 1-1994 dwar

I-Amministrazzjoni tat-Ta:ua flimkien ;";

(k) il-tifs; ... la' "Jix:onk- totali" ghawlha ligi mibduJa kif gej

(i) ghaodhom j idfllu l-ltlicm "tat-Taqsimll VI:" minfiok il-ltliem

"tat-Taqsimll VI;" u

(ii) minnufih fl·ahhar ta' din it-lifSiB ghandh& lidhol il.proviso li

ge.ii&;

"Jtrla kull income Ii mhux mehtieg Ii jinlweB u li ma jinlwcriel(

skond id-dispotizzjonijiet ta' I-Alii dwar il-TIlJtJti majaghmiJx. pe.rti

milI-inwmrtotali;" u

0) il-lifsiB gdid.a li iejja gIIandha tidlIol minnufih wan!. l-lifSirJI ta'

"liK:otDt: totali";

" "kont mhwt inluul" ikun maghmul minn dawk il-prolilti (jew

telr sIrond il-ltat), li jimlJIIXd.cntaw il-total taI -prolilti Ii jistgbu

jilqassmu (ammanl potittiv) jew il-total tat-lelf .kkllmuiat (ammont

negJttiv) skoI!.d iJ·kat, u li minnu tim.qqas is-iOrruN totali ta' 1-

ammonti a1lokati g.h.aIl-kont ta' income burani u I-kont in l .. :" 't

rMalta;" .

.5. Minnulih wan!. l-artikolu 2 ta' I-All printipali, ghMdu jit.died 1-

artikolu gdid li iej ;

"""mmj_'''_

1. L-amministrazzjoni ta' dan I-All hi moghlij.

lill -Kununisarju, u d-dispotizzjonij iel ta' l-artikoli J

u 4 ta' I-All ta' 1-1 994 dwar I-Amministrazzjoni tat-

Tun, ghandhom japplikaw ghalJ·Kununisarju fil-

q.w W -sctgh.al u taI-funzjonij iet licghu tah l din 1-

All ~.

In parugraph (c) of wbsection ( I) of section 4 of the principal

Act for the words "intcIesl ()£ discounts" !here shall be sub5tituted the

words "prt:miwns.. interest or discounts".

<I> In the definition of "securities" m paragraph (b) of

subs c ;tion ( I ) of section S of the principal Act for the words 'r~ed me

of return." there sball be wbslirutcd the words " fixed ralc of return, and

units in 11. collective investment scheme as defined in section 2 of the

Invewncnt Services Act. 1994.",

(b) Snlwdion (9) of section S of the prirx::ipal Act shall be

deleted and shall be sub5lituled by the following new subsoction

"(9) Where l\J1 asset is transferred from onc company 10 anOther

company and &ueh companies are

(a> dotmed to be a group of companies for the p.itpOSCS of

5eCtion 16 of this Act, or

(b) controlled and bcnefkially owned dircctJy Of indiroct.ly

to the extent of more than fifty peT cent by the same

shareholders,

it shall be dt:ailed that /10 loss or gain has amen from the tramfer.

In ascertaining the capi!al gain where such an asset is subsequently

transfemd by • COIllpally 10 another COIllpally whic h does not fall

within the: provisions of paragraphs <a) or (b) of this subsection, as

the case may be, the: base cost of the asset that would be comidered

shall be the original cost existing before the firsl transfer took

place.".

Immediately after section 5 of the priocipai Act, there shall be

added the following new section

"tnvestmc>ll

6. (I ) For the purposes of this section, an

Services

"investment services Cllpalria.tC" shall mean any

El.palrial~.

individual who is an employee of, Of provides services

to, an investmcnl services company, 11$ defined in

section 15 ormis Act, and either

<a) is nor. ordinarily

nor.

resident

and

domici led in Malta; or

A '"

(b) was not resident in Malta for a minimwn

period of three ycart immediately preceding the

year in which he a.xnmen:::es lOCh employment

with or provides services 10 any investment

services company as af~ and provKIcd thar

during the said three years $UCh individual has

been engaged 011 a full time basis in • similar

positioo outside Malta.

(2) An investment services expatriate, for the

period from the year preceding the first year of

assessment in which he is firsl liable to laX under the

provisions of this Act up to and including the year

prt<»1ing the tenth year of assessment, shall not be

liable 10 lax on income relating 10 the following

expenditure incurred for the benefit of the investment

services expatriate or his immediate family by the

investment services company of which he il an

employee or to which be provides investtneru .services

(a) removal costs in .CSpccl of relocation 10

or from Malta

(b) acx:ommodarion

expenses

incum!d

in

Malta

(c) travel costs in respect of visits by the

inve5tmeru services expatriate· and his immediate

family to or from Malla;

(d) provision of a car for the use of the

investment services expatriate in Malta

(e) a subvention of not more than two

hundred and fifty tin per calendar month ;

(f) medical expenses and mcdicaI insurance;

"'"

(J) school fees in respect of the chi~n of

the investment services expatriate.

(3) An investment services expatriate shall be

treated as not resident in Malta for !he purposes of

pamgraph (c) of subsection (I) of section 12 of this

Act.".

Subsection (9) of section 7 of the principal Act shall be deleted

and sllal\ be substituted by the ronowing new subsection

"(9) Any ClI.cess remaining after tax I\Q been set off as provided

in subsection (8) of this sc:ctioo shall be refunded in aocordanI;:e with

the provisions of 5e(tioo 48 of the Income Tax Management Act,

1994. "r

In subsection (j) of section 8 of the principal Act, for the wOfds

starting from "NOlWithsumding any other provision of this Ac'" 10 "the

may', ~ shall be substituted the words

Commissi~

"Notwithsunding any other provision of !he Income Tax Acts, other than

section 31 of the IrIWlIlC Tax Management Act, 1994, the CommiWoncf

may',

Subsection (4) of section 9 of the principal Act shall be deleted

and shall be suhWruted by the following new subs=c'ion

"(4) If a person does not elect IU provided in subsection (3) of

this section. tile n:quirtmen!S of section 10 of the lnccme Tu

Management Act, 1994 shall not be enforced in hi5 regard in respoct

of any year of ILSSCS5mcnt on llCCount of which the provisions of

subsection (I) of this &ection apply.".

In section 12 of the principal Act

(a) paragraph (c), including the provisos thereof, of subse<:tiou ( I)

thereof shall be deleted and shaU be substituted by the following new

paragraph

"(c)(i) any interesl or royalties accruing 10 or derived by any

person not resident in Malla

Provided that the exempcion under this subparagraph sllaJl

DOt apply in respect of any year in which the laid person is engaged

in trade or business in Malta through l permanent establishment

situated therein and where the royalties or the debt claim in respect

0( which the interest is paid are effectively connected with such

permanent establishment;

(ii) any gains or profi l5 ao:ruing 10 or derived by any

pcnon not resident in Malta on a disposal of any units in a collective

investment tcheme 8$ dcrmcd in scaion 2 of the Investment Sc:rvlces

Act 1994 and of any sllares or securities in a company (which for

the avoidance of doubt includes redemption. liquidation or

cancellation) which is not a company the assets of which consist

wholly or principallY of immovable property situated in Malta

Provided that such IlOIl-residetl( person is the beneficilll

owner of the interest, royalty, gain or profit as the case may be, and

that such person is not owned and controlled by, directly or

indirectly, nor acts OD behalf of a person who is ordinarily resident

and domiciled in Malta;";

(b) immedia1cly after pamgraph (r) of subsection (1) thereof, there

shall be added the following new paragraph

"Cs) the inoome of acollcctive investment sc~e:" ; and

(c) immediately after subs lion (4) thereof. there shall be added the

following new pb;ectioo

"(5)A oo\k:ctive investmenlscheme (which is not constituted as

a unit tn.Ii'It) may waive iu right to exemption from tu. Such waiver

shall nOl be applicable in respect of any pins or profiu milised on a

disposal (whicb for the avoidance of doubt includes redemption.

liquidation or canccllatioo) of any invest.menll, assell or liabilities

bcId by the aforesaid ICheme. Such waiver shal.I be exercised by

adWDCC notice in writing to the Conunissioncr. The said notice shall

set IIUt the year of 'ssessment in respect of which the waiver shall

becuhe applicable. and &hall be notified to the Commissioner not

Ialer than the first day of the said year of DS5C$smenl.",

1mmedia1ely after sectioo 14 of the principal Act, there shall be

added the following new sections

.....

purposes

of this scctiOll

15, (I) For

"IMMlnenl

the

investment services company shall mean a company

canpwlleJ,

which holds an investment services licence issued

under SOCIion 6 of the Investment Services Act, 1994

and whose activities solely comprise the provision of

management,

administration,

safekeeping,

or

investment advice to collective investment schemes as

defined in the aforesaid Act;

(2) For the purposes of ascertaining the total

income of an investment services company, the

amounts specirled in paragraphs (a) to (e) of this

subsection &hall, at the company's option, be allowed

as deductions in addition to or as a replacement for. as

the case may be, the amounts allOll{ed under

subs ' ion (I) of section 14 of this Act and shall be

subject 10 the conditions stipulated in that section..

For this purpc se

A

".

(a) rental.

CIIagy

costs,

building

maintenance, building insumnce and other

building occupancy costs iDCUl'l'Cd in the period

from Ibe year pi(cd;ng the first year cl

ass-=$'ment in whicb the investment lervica

com~y rust becomes liable 10 laX under IhiJ Act

up 10 and incl·vting !he year .. ""'ling the tenth

year of • .,c ... ment shall be allowed as an

additional onc hundred per cent of such

expendlture;

(b) a one hundred per ccnt deduction shall

replace the deductions provided for under

paragraplls (f) and (j) of subsection (I) of section

14 of this Act in respect of apenditure which is

incuned in the period ~ from the year

preceding the first yearo! a5seS11ment in which the

investment services company first becomes liable

to tu under the provisions of this Act up 10 and

includinj: the year pm:rdjng the fifth year of

a"CS'ment and, in addition, expenditure in

respect of offICe ptelllise!; shall be eligible for

!ruCh deduction as if the said JRmises were

industrial buildings

(c) the amOl.lnts invested by an investment

services company for its own account in a

collective invesunenl scheme managed by that

company shal l be allowed as a c\ed''''tion if such

investment is made during the period commencing

from the year piiXeding the first year 01

aSSCS'ment in which the inVestmenl. services

company finl 1::"';:(Iimes liable to lax under the

provisions of thil Act up to and including the year

pt(("";ng the fifth year of arscssmenl;

Provided that suc h funds so invested are not

disinve$led from suc h collective investment

scheme within two yean of the making of the said

investment

Provided funher thllt this additional dcdnctioo

shall not affect the IlITlOUIIt which is to be taken as

the cost of acquisition of suc h investment for the

JXIrpo5CS of any other prov~iOll of this Act, and

also provided that such deductions shall not be

carried forward as part of a loss to be set off

agailL'it the company'$ liability in re!ipcc1 of a

A

'"

capital pin ariling 00 1Iz disposal ol iu

invesanenu ill the ooI.Iec:dve invtiittbt:l::tl; .51:beme

(d) remuneration

paid by IIIl inwdnll'lll

services IXIIIIplII)' to ill employees who are

resident in Malta shall be allowed u an addiliooal

ODe hmd'lld per cent of that rcmunernlion if such

expenditure iJ inc:urmi during the period

cornrnezring from the year prc«ding the year of

.sV!sment in whk:h the invCStmtol sef'lK:es

company rlnl bocomcs liable to In Imder the

provisions of this Act up to and including the year

.... ecedill8 the IetIlh year of '5'M' menl;

(e) cbere dIall be aJlowoed 115 • dc:doctioo. lID)'

other expenxs and out&OO!p incum:d by tbe

investD'led aervica company wbolly and

exclusiveJy foe the IWPOIIeS of canying on its

busille$$ and which would otherwise not have

been allowed lIS • deduction under tile provisiona

of subsection (I) ol section 14 of this Act

(3) Where an inVCSlmcnt lCI'VK;es company

inc:1Ul expenditure bcr~ it bcginJ to carry on lIS

busin=u, and Ihe expenditure-

(a) is incurred not more than five years

before !hat time; and

(b) i. not deductible in asc:e.tainina the local

income of the investment services company, but

would have been so deductible under sub5cction

(I ) of section 14 Of under paravaph (c) of

1I1bvction (2) of this section had it been iIlCUl'm1

after that time,

such expenditure shall be treatM u incurta:l on !he

day on whk:h the J:wincu is first carried on by lhe

<.)

investment seMces company, and pam&rapbs

(d) of plhsution (2) cl this section ,hall apply in

respect of JU(:h Upend.i11Ue.

(4) The additional decluttions specified in

subsection (2) of this section represent the maxirnwn

deductions allowa1 for the ptllpCleI of that

subsection, and an investment services company !ad

not claim the full amount of such muimwn

deductions in re5pca of any year of assemnent.

(5) The additional deductions provided for in

this section shall !lOt be taken into ao;oont in

determining the amount of loss, if any, available for

surrender under the provisions of sections 16 to 22

(group relief provisions) of this Act.

....

Definition of

For the purposes of this section and c(

sections 17 to 22 of this Act, hereinafter collectively

referm:! to (including this section) as the "group relief

provUioru". two companies resident in Malta but

neither of which la teSldenl for tax purposes in any

other country shall be deemed 10 be members of •

group of companies if one is the rJfty-one percent

5lIb5idiary of the other or both are fifty-ooc: per Cml

sub$idiaries of a third company resident in Malta.

For the purposes of the group relief provisions, •

company shall be deemed to be a fifty-one per cent

subsidiary of another company, hereinafter referred 10

as the "parent tompany "

(a> if and so 1000g as more than fifty pcr cent

of its ordinary share capital and mort: than fifty

per cent of its voting rights are owned dim:tly or

indirectly by the parent company; and

(b) the parent company is beneficially entitled

either directly or indirealy 10 ID()J"e that fifty per

cent of any profits available for distribution to the

....

ordinary shareholders of the subsidiary company;

(c) the parent company would be bcneftcially

entitled either directly or indim:tly 10 more than

fifty per ccnt of any assets of the subsidiary

company availDble for distribution to its ordinary

shareholders OIl a winding up.

Sum:Ddo:rof

( I) Subject to, and in aco:ordance with, the

"""

provisions of this section and of sections 18 to 22 d

--

bet"'UlI

this Act, allowable losses may, in the case set out in

snboecuOll (2) of this section. be sum:ndem:I by a

''''''''

company, hereinafter referred 10 as "the surrendering

company", and. OIl the making of a claim byanothc:r

company, hereinafter referred 10 as "the claimant

company", be allowed to the claimant company as a

deduction cal led "group relief". A claim made by

A '01

virtue of this subs m ion is ba-einafter refam,t 10 as a

"group claim ".

(2) Group relief shall be available where the

5UJTCndcring company and !he claimant C(lmpany are

boIh members of !he same group throughout !he year

prtteding the yc:M of assessment for which the relief

is claimed.

(3) Foe any year of assessment, two oe more

claimam companic3 may make group claims relating

10 the same surreodcring company.

(4) A payment foe group relief-

(a) shall not be taken into account in

computing profil$ oe losses of either company for

the purposes of tu im~ led by thi, Act; and

(b) shall not., for any of the purposes of this

Act, be regarded as a distribution.

For the purposes of thls subsection

payment for group relief' means a payment made by

the claimant company 10 the $UITelIdcring company in

pursuance of an agreement between them in respect of

an amount $UITeIIdcrcd by way of group relief, being a

paymcru IlOI u"""""ing that amouDt.

... wbicb

(I) (a) If in the year ptu: .. 1il18 a year cl

I ,

~, ,,

"''''sment!he sumndcring company has incurTed an

-'""'"

allowable loss, !he amount of the loss may be 5CI. ctf

",.."

for the purposes of tax against tbc: total income of the

pnup ",Ucf.

claimant company for the colTCSpooding year of

assessment and. whem applicable, for $\lb$equcnt

yC3n of assessment provided that in the year in which

the surrendering company iocurs the loss both

com panies have accounting periods which begin and

end on the same dates

Provided that wbere the sw=KIcring

company makes up aocounl5 and pays tax in a

curTmCy other than thaJ: of the claimant company any

loss .surrendered shall be 5CI. off against the tou!

i"come of the claimaru company as aforesaid, after

such amount is converted to the CUCTeTlCy in which the

claimant company makes up accounl5 and pays tu .

Such conversion shall be carried out by reference to

A

""

nul: or rates of exchange between such

the mean

cur=Jc:y or cumncics and the Malt_ Lira ruling on

the last day of the .,;:counting period to which such

loss refom as issued by the Central Bank of Malta..

(b) A 5U!1'endering company

may

surrender allowable losses by way of group n:licf in

excess of the total income of the claimant company in

the year prtteding a year of assessment, in which case

the claimant company may cany forward and set off

tbo5e loeses in accordance with the provisiOlll of

paragraph (g) of subscclion (I) of section 14 of this

Act as if they wen: losses of iu own trade.

(cl WlItte the allowable lo&s, had it been

a profit, would have been allocated to the Maltese

LUcd aa;:ount of the sunmdering company, the

claimant company may only deduct such loss from its

total income as would stand to be allocated \0 its

Maltese wed account and such loss may only be

carried forward against the claimant company'. IoW

income Ilrisina in subsequent years as would stand u)

be allocartd to its Maltese taxed accounL

(d) When: the allowable loss, had it been

a profit, would have been allocated to the foreign

iJlCQll1c account of the surrendering company. the

claimant company may only deduct such loss from its

total income as would stand to be aUocalcd \0 its

foreign income IICCounl and such loss may only be

carried forward against tile: claimant company'J 1000al

Ua:UIlC arising in subsequent yCllB as would stand to

romgn

be allocated 10 itS

income account.

(2) Notwithstanding

provisions of

the

lUb5c:ction (I) of this KCtiOll, a company wlUch is

ei!her -

(a) newly incorporated and at all times after

its incorporation satisfies the conditions to be

deemed a member of the same gtoop of

companies as another company in the year

pmwIing a year of asscnmenl and has !he same

aooounting period end date as that other company

in that year preceding the yearof assessment, or

(b) wound up part way through its

accounting period and until il is so wound up

A 00,

satisfies the conditions to be deemed a member of

the same group lIS another company in the year

pia"li"s a year of ass .... ·ment and has the same

IICCOUIllins period start dale as that other

company in that year ~ the year of

will be dce;nod for the purposes of paragnph (a) 01

subsection (I) of thU! section to have an lIIIXountina

period which beginJ and ends on Ibe same date lIS that

of that other company and group relief shall be

available in full for thaI year.

Group relief -

If, apart from thi s soction, a company is a

memb« of a VOUP of compani .... , and artansetnems

~

are in aiste:nce lbe lOIe or main pwpcse of which is

to r .... llce any company's laX liability, and by vinue of

the Y.id arrangements that company would ..... , ... to be

a member of thaI group of companies, then that

company ,haD be trrP!td as not bc:inS I member of

that group of companies for any year pm tdins a year

of assessment in which the said arT1IIIgemenl3 are in

existence.

( I) Relief shall not be given more than once.

whether by giving group relicf and by siving some

other relief (m respect of any year of asv w llent) to

the IlII'm'Idc:ring company, or by givina; group relief

more than once, in respc:ct of the same amount

(2) In accordance with the provisions of

subsection (I) of this section, two or more claimant

companies cannot, in respect of any one loss, obtain in

total more relief than could be obtained by a $ingle

claimant company.

A claim for group relief

Ca) need not be for the fun 1In000t available,

oonsent of the

the

(b) shall

include

surrendering company set OUt in such form as the

Commissioner may require. and

(c) must be made not later than twelve

months following the end of the company's

accounting period which date falls within the year

immediately pn:«ding the year of assessment for

which the claim is made.

Dtfjn;'im'

For the purpose ul the group relief providons

(a). reference to "allowable Iou" or

"allowable losses' 5haIl be construed u a

rdetelx:e to the loss or loues referred to in

partllraph (g) of subsoction (I) of section 14 of

this Act, 10 the extent lha! they are incurred in the

year pn:ceding the year of assClsment and arc DOl

unreLievcd losses carried forward from JRvious

years; and

(b) referax;es to "total incoone" sball have the

meaning _igned 10 it by scctiOll 2 of this Act but

lhaJJ be computed before any deduction is made in

respect of group relief.'.

14. In section 24 of the principal Act

<a) in subsoction (\) thereof, for the words starting from "render to

the Conunissioner" to the words "a statement" which occur in the

paragraph immediately after paragraph (c) of the .md subsection, there

shall be substituted the words "render to the Commissioner, at the same

time lIS be render1 his return of income WIder section 10 of the Income

Tax Management Act, 1994, • statelIlCllt"; and

(b) subsection (6) thereof shall be deleted and shall be substituted by

the following new subsection

"(6) Nothing in subsections (4) and (5) of thi l .section contained

shall ptevent the decision of the ConuniJisionef in tbe exercise of the

power conferred upon him by those subsections from being

questioned in an appeal in accordance with the provi sions of .sections

35 and 37 ohhc Income Tax Management Act, 1994.".

15. Immediately after section 24 of the principal Act there shall be

ackIcd the folJowing new section

"Appl icability

For the purposes of sections 14 10 24, both

ohoclions 14

inclusive, of this Act, ea:penses incum:d in the

-"

prod uction of, and allowable deductions given in

respect of, profi t5 which are a1localed 10 the foreign

income accounl must first be deductt:d agailllit the

income from which suc h profit5 are derived ,".

16. Immediately after section 31 of the principal Act, there shall be

inserted tile following new sections

ro,

A

Notwithstanding anything to the contrary

contained in this Act. sections 33 10 42, both

inclusive, and which together with this section are

~ferred to as "the investment income provisions",

shall apply whe~ver the context so m::juires.

. ,...

Obl.iption 0(

( 1) A payor shall dMucl tax from every

payment to a recipient of investment income,

deduct tu

howllOeVtf made, al a rate of fifteen cents on every

""'

lira of such paymenl.

rnvestmau

" .... "'

(2) A payor shall render an ao::ount to the

Commissioner of all amounts so deducted, but shall

not specify the identity of the recipient and, subject to

the provisions of subsection (3) of this section, every

amount <blllcted shall be a debt due from such payor

to the Commissioner payable not later than the

fourteenth day following the end of the month in

which the payment was made and shall be IttOverable

as .such.

(3) The payor shall upon making a payment

of investment iocome furnish each recipient with a

certificate in a form ao::eptabJe to the Commissioner

setting forth the gross amount paid by the payor, and

the tax dMucted.

(4) Where a payor makes a payment of

investment income to a person not resident in Malta

(and therefo~ not a recipient within the definition

contained in paragraph (c) of section 41 of this Act),

the payor shall be obliged \0 obtain a certificate of

non-residence from the person receiving such payment

in such form as the Commissioner shall requi~.

Payor not to

(I) A payOl" shall not deduct tax under section

ded""t tu

33 of this Act w~ a recipient elects under the

provisions of section 35 of this Act, to be paid

recipient

investment income without .such deduction being

elects to be

m"".

paid gross.

(2) A payor shall, at the request of the

Commissioner, ~nder an account to the

Commissioner of all payments of investment inc:orne

made during any year in respect of which an election

has been made. The account shall be submitted to the

Commissioner by the 31st January following the year

for which the election has been made, or within thirty

days of the ~quest. whichever date is later. Such

account shall include detail! of the rccipicDl'. name,

address and the inoomc lax registration Dumm as

well as the: amount of inveslmml itaxxue paid groN

by the payor to the recipient during that year

Provided that the Commissimer may only

request such an account for acomplccc year which ha

passed in respect of which an electioo has been made

under the provisions of section 35 ofthls Act

Provided further that a payor .ball not be

required to render an aa:ount to the Commiaioncf

mce nine years have c1apvd followin& tbe end of the

year m which the inveWnent /J""""IC "" (M,

n

payable.

Election by

(1) A recipient may ekct to be paid

~dplenllo be

investment iroCOiUC, which does not constitute capital

paid w;tbOlU

gains within the meaning of section 4I(aXv) of this

-~

Act. wilhoul Oeductioo of tax being made and such

~

an dection shall be made in writing and sent to the

payor.

(2) Subject to the provisions of 51'bs lion

(3) of this section, an election will be effective as from

14 days following the ~ipt of such notice of election

by the payor. Such an election may be revoked at the

option of the recipient by notice in writing and such

revocation shall be effective as from 14 days

following the receipt by the pa101"of such notice.

(3) An election made on the opening of a

bank account in respect of which investmenl income is

payable, or on the purchase of bonds, loanslock,

debentures, or any other instrument in respect of

which the inve$UIlenl irlcorrIe is payable, shall have

inunediale dfect.

Ob~prim08

Wbe~ an ek:ction under the proVI$lODS of

-

rodpiellllO

sec::tion 35 of this Act has been made, I llICipient shall

"' ....

-.

decl~ the investment income to which the clc:ction

an ~lectiOll is

on his tax return for the relevant year of

~lates

assessment and where a dociaration is made as

aforesaid any tax due shall be detClTTlined as if the

investment income provisions had not been enacted..

IIJ1

A

31. (I) Wbt;re no election "nrler section 3:5 d

lbi5 Act has been mMe, I recipient who is 11"1

".. ..10

cIoda-e ..... '"

indlviWal IDly dcclll'e investmc:ntloc"me 00 IliI tu

... "',

110 eIeI;tiofi

return and, where I declaration is m ...... aforeuid,

lily tu. due shaD be delt:nnined as if !he inveatmenl

m ....

i ..... lhe poovisionl had not been enacted.

al

ioC:Oiile llN\c ' the in~ 11kJ" italo:nc

IUCb

provisions shall be available as a cmUt llainst the

R:cipiem'. tu lilbiliLy, or for I refund .. the case lTIIy

be, for the relC\llllt year of U,-SS'DC1Jl.

Pt I"mptioa

(I) Meta ffiIl lkun W"Ct cbda ghU.la skond 1-

II"tikolu 3S ta' dan I-A n, ritevitur li jkun individwu

j ista' jiddikjar1 l-iDCOmt' minn investiment fUq il·

prospcu tat·tu.u ticghu, u meta s.sir I.imscmmija

dikjuuzjoni , kull IU~U dovuta tkun atabbilita

daq51ikieku d-dispoti.v:jonijiel dwar il1COmt minn

investimcnt ma 5&!\IX.

(2) Mda ritevitur ikun iddikjan. income minn

investimcnt fuq il-prospctt tal·tana tit'gllu. kull taxg

Ii tkun inOOnmct dwar dak l·iDcomc tabt id·

dispotizzjonijiel dwar income

miM investiment

titti ehed bhlla krcditu konlrl r'R:sponsabbilta' tal·

taxJ[l tar·ritcvitur, jew bhaJa hlas Iura, skood il-kat,

ghu·seoa ta' stima rilcvanti .

E.\cept in respect of I year of assessment for

a( ~ z' oct!c. ,

which an electioo Imder section 3:5 al this Act applies,

it shall be preaumcd. 50 far as thc tu liobilily al the

recipient is c:oneerned. thII I ded' tioulnd p"ymcnt

whicb ouJht to blve been made pnuant to the

provi,iona of JeC(ion 33 al this Ace hive been mD.

Where thc pn:sumption refc:rmI to in section

po .'mplOII

38 al this Act applies

Wit" ..,

"" ....

(I) I recipient who is an iDdiyjl'ual shall DOl

be obliged to dUc10se thc ailLenCe of cbe

investment ;ucuille in any J$U1I mIde pursuant to

the provisionl of Ihil Act, and

(b) JUbjcct to the provisionl of I"bvction (I)

of KClion 37 of this Act, no peQOll shall be

charged to further tu in respoct of thc inVQtmenl

income under thU Act.

"-,,

Wbc:te a paY« fails to dedold Ind pay tu in

poi)u'I

.x:ordInce with the invesunent ir ............ provisions, the

L!abml),.

proviliOOl of subsection (4) of ICICtion 13 of this Act

and IUblcction (I) of ICICtion 40 al the 111001, ... Tu

mutatis

, ball

Manliement

Act,

1994,

apply

mlllandiJ.

.

.-

For the pwpoKI of thc investment illCUnC

1__ ," " .. " ""

provisiOll$. the follO\llinJ pbBses shall have the

meanings given below;

pro'I'iAuIos.

(I) "investment iI'lCOI1'1e" shall mean only the

following categories of income

(i) inluc$l. payable by • pcnon carrying

on !he busillCA of banking ''"''er the Bankin&

Act, 1994, in respect of. RIIII 01 m ..... } in

wbatevcr CW ICUC), depnsilCd with il in My

""(RIIII w_ver (except inlcrat payable in

respccc of any beara"1ID;:OlIf\C);

(li) imeresl, dillCOUntl or tlaniurn.

payable by tile Government of Malta or by

any agency the~;

(ail) interat.

diocoomu

praniums

(11"

pI)'lble by •

eotpu:ill.ioa or aJtborily

: abUsbcd by llw;

(it·) imerest.

or panJums

di"Ct'.IIQ

payable in respect of a publk islUt by •

company resident in Malta; and

(v) capital gains arising on the dbp?'"

of liwes or uniu in • colJedive investmeot

vh .. ".. licenscd l!nder the lnYelllDalt

S .... ica Act. 1994, where the c:oI1ecdve

inYeSUnenl: ICberne m'"cms, liquidal:e:t or

cancels such sbareI Of units u the case may

be - such capital gains 10 be caIcuWed by

td'cn:nce to the price at which the ahlt'Cl or

units W~ alIoncc1 or jlp,", by the coUcctive

invcstmenl: ICheme;

(b) - payor" shall mean the: peilOD 'NI» is

liable 10 make or, if different, who makes a

paymen« of in\UtInem income;

(c) "recipient" a/WI mean

(j) • penon who i. resident in Malta

during the year in whicb invt:5tmciII iDeo .... is

payable to bim or which is payabk (0 •

petsou wider su~par1I&npbs (ii) or (ill) of

this paragraph (Olher than I penon who

duri", Iha. )'eat came<! on banking business

under the Banking Act. 1994, or • pelSOn

carrying on the busillClI3 of insurance or any

Olher company which is owned and

controUed, directly or indirectly, by such

persons or a company which is telisttnd

under sectioo 24 of the Malta FUWlCiaI

Services Centre Aa), O£

(ll) a lllCeivCl", guardian, tutor, curator,

judicial sequestralOf or commiucc acting 00.

behalf of a person referred to in sub-

paragraph (i) of thi!ii paragraph, Of

(iii) I trustEE or fomdation pursuanllO Of

by virtue d which any money or other

ptopeny whal ...... VCl" sball for the time being

be paid Of applied to or for the benefit of I

person referred 10 in sub-paragraph 0) of this

paragraph.

Where, in the opinion of the Commissioner, a

series of uansactions il effecto;l. with the sole O£ main

putp06C ol reducing the amount of laX payable by I

person by reason of the opc:tation of the investment

income provisions, such I person shall be assessable

as if the aforesaid provisions did nOl apply. and any

tax withheld in respect of income m:cived under onc

or more of the aforesaid transactions shall be

available as a credit against the tax liability of the

penon m:civing luch income, or for I refWKI as the

case may be. for the relevant year of a S se55ment.

FO£ the purposes of this section. a "series of

ll'III\SaCtions" shall mean any two Of more

COliesponding or ciraJlar transactions, carried out by

the ~ person. either directly or indirectly, as the

cascmBYbc.".

17. Subsection (5) of section 43 of the principal Act shall be deleted

and sball be substituted by the foUowing new sut-ction

"(5) NodUng oontalned in this sec;tion shall pRVent the decision

of the Conuniuioner in the exercise of the power confemd upon him

by subsection ( I) of this section from being questioned in an appeal

in accordanc;:e with the provisions of se<:tions 35 and 37 of the

Inoome Tu Management ACI, 1994.".

Ig. Subsection (3 ) of section 4g of the principal Act shall be deleted

and shal l be substituted by tbe following new subsection

"(3) NOI:hing oontained in this sec;tion shall be deemed 10 impair

the right of an assessee to appeal against an usessment of laX under

the proviIionI 0( J«tionI35 md 31 o(the ' .... "e Tu MINI&"'-"

Act, 1994.".

19. In p .......... i<In (I) 0( I: .:ion 30 0( the principal Act, imnwliMdy

after:be words "0( lCCtion 4 0( this AcI:" there shall be .u..t the words

"Of 0( panlgnr,ph Cd) 0( the aid ph lion in 10 far as il refers 10 I

pension wlUch is I1ICeivcd in view of pas: employmc:n:".

20. lmrnediatdy after ICCtion 51 of the principal AcI: there thaIl be

addo1 the followina new I«tion.

(I) The CommissioPer Ihall, on the

appOcatioo 0( I company which is I patty 10 any

llarI$adion. notify his ndi", tbaI the proviliORl ~

tedion 51 of this AcI: .haIl 00l apply 10 tbaI

tfanIaCIion provided !h.J,t the CommisskJoet is

Jalllfied that the tnuuaction is 10 be dfCClOd for botttJ

foh commeJt:ia] reasont.

(2) The

Commiuioner shall. on the

applieation oftny penon. notify his nilina that the

provisions of parlI&l'lIpb (O 0( the dcfU\ilion d

"participMinl hoktina" as dc:(mcd in ICCtioa 2 0( this

AcI: in IUpact of. partidpatiol boIdina will apply 10

• particular sbardIoldina or to I slw"eboIdin& whidI is

10 be ~red by the applicant.

(3) The

Commi54loner shall. on the

application of any pel$Oll which iI • company. notify

his ruling 00 the 11)[ treatmcnl of any transaction

which C()IJI;:CfN any financial instrument or Olher

security.

(4) The Commiuiooer shall, 00 the

application of any pel'lOn, notify his nilina on the: tlX

trealmc:rIl of any tranaaction which involves

international busincu. provided lhaI the determination

of what comtirutes international busiOCSl (or the

p.il p< t "t of this P.Ibscctioo shall be at the diJcrelion

of the Commissioocr.

IS) The Commissioner shall. on the

application of any person, notify his ruling as 10

whether I company qualifies III an international

trading company.

(6) The llOliflCllion of a ruUnl specified in

this S«tion may be given in ~ance of any

A

uansaction in respect of which an applica' ion for a

rulill8 is made.

(7) (a) All applications under this sectioo

shall be made in writing and ,ball contain all material

particuIan; of the transactiOIlS to be effected.

(b) Where the Commi&5ioner requires

funher paniculan for the purposes of enabling him to

make a doc::ision on an application under thi$ section,

the Commissioner sball, within thiny days of the

receipt of the application, Of of the receipt of any

funhcr paniculars previously requim:! unda: this

paragraph, by wriuen notice, require the applicant to

fumish such funhcr particulars, and if any such notice

is DO( complied with within thiny days, or such kmgcr

period u the Commissioocr may al.low, the

Commis5ionef need DO( .... d funhcr with !he

E

application.

(cl The Commi.uionc:r sball ootify his

ru1ing to the applicant within thiny days of m:civi.ng

the appl ication or, if be gives a IIOti!z "'vi ....

paragraph (b) of this subsection, within thirty days

after the notice has been complied with.

(d) If any panicuJars furnished under this

section do not fully and accurately disclose all facts

and considerations matcrial for thc ruling of the

Commissioner, any resulting ruling shal l be void.

(g) (a) Subject to the provisions of

paragraph (d) of subsection (7) of this section, a

ruling by the Commissioner will be and shall remain

binding on the Commissioner for a period of two

years from the time of any relevant change in

statutory provisions subsequent to such ruling, or for

a period of five years from the time of M1Ch ruling,

whichever is the les· er.

(b) A ruling by the Commissioner may,

at tbe option of the applicant, be .c.w;wcd for a funher

period of five years. An application for renewal shall

be submitted in writing to the Commissioner, smting

whether or nOl: there have been any material changes

to tbe facts and considerations contained in the

original application and the nature of any such

changcs. Such renewal IhaII not be lIIIf"eaSOIlabIy

withhcld by the Commissioner,-,

21 . In ,ubs .lion (~) oIlC1Ction ~J of the principal Aa. for the

w0rd5 ~In snMo.lioo (6) of thil section- then shall be 1':bMituled the

w0rd5 wln 'l;bsccljoo (4) of this section-.

4jon (2) of section ~S of the principal

22. Paragraph (b) of Ilibl

Act lball be deleted and , hall be substituted by the followina new

paraarapb

"(b) the foon refcucd to in $Id

lion ( I) ol this IOWO ...

ICJSClher with any wpponina documenls thac ~ ~ 10 be

peW.....!. is received by the Commissioner before be ~ the

w for that year of " SCSlmeDI by oulet in writina under the

provisions of lubICction (5) of section JJ of the lnoumc Tax

MlIDagement Act. 1994.".

23. In 5OCIioo 56 of the principal Act

(a) the foUowina new ... "" lions IhalI be inJefted immodi"'ly after

I"'" - rOjoo (6) tt.e,co(

"(7)Tbe tu. , hall be charged at the rate of 2Sc: on every lira cL

the chargeablc income of a coIl«tive investment !iCheme which.

under the provisions of subsection (S) of section 12 of this Act, has

waived its right 10 ellemption from tall,

(g) Notw ithstandina any other provisions of this section. a

person in receipt of a dividaJd from an intemMional trading

company IIhaII be cbarged 10 tu. in respect of weh dividend at a nlIe

of IWmty-scvCII and a half per cent (2705'11» of such amounl as if

such dividend eonstilUlCl scparale eharJeable illcome. where such

person is either

(a) not residelll in Malla and who il, wl\cre applicable, not

owned and controlled. directly Ill" indim:cly by. nor acI$ 00

behalf d . a person or persons ordinarily residenl and dcmiciIed

in Malta: or

(b) a company resident in Malta which is wholly owned by

a person or penonJ not moident in Malla. provided that such

penon or penoD5 are not owned and controlled by, diredly or

indirectly. nor acts on behalf of, a pelSon or persons ordinarily

resident and domiciled in Malta."; and

(b) the third proviso of substttion (12) thereof and pamgraphs (i) to

(iv) immed.ialcly following the said proviJO shall be substituted by the

"Provided abo that where the CORllIli$sioner has senl 10 any

person. notice refehed 10 in subsc : tion (3) of section 12 of the

h.cocue Tu. Managemeol Act, 1994, sucb persoo sball be required

10 pay, in respect of each such notice, an additional tu as may be

speciried in such notice for the year of assessmenl in respect af

which the defaull has 0IXUIl'ed but which shall in 110 case exceed ten

liri. 11lc Commissioner may only remil this additional tu where he

is satisned that owing 10 ab$cnce from Malta, sickness or other

reasonable cause such person was jevented from submillinj; a

te(um in accordance with the provisions of section 10 or 11 of the

luCOiIDe Tax Managemenl Act, 1994

Provided fwther Ihac

(i) the powers confUied upon the Commissioner by

lhis substttion shall be in addition to any right confcrttd

upon him 10 commence proct'C'dinls in respect of an offence

under Part lX of the IlICo me Tax Management Act, 1994;

(il) any person who in daennining his total income, as

disclosed by his te(um, deduct!; or set5 off any amount. the

deduction or Sd-off whereof is noc allowed under the

provisions of the Income Tax Acts, or shows as an

expcodilllre or losl any amount which be has noc in fact

expended or 10$1, shall be doemcd for the purposes of this

subs«tion 10 have omitted such amounl from his rerum;

(ili) any tax charged under the provisions of this

snbsection shall be doeIncd noc to be part 0{ any lax paid or

payable for the purposes of the pm=e1ing 5Ubsa:tioll$ of this

seetion. or of 5CClions 59, 76 and 89 of this Act, or of

JCCtiOll5 51 Ind 52 of the IIlCOme Tax MlWllement Act,

1994;

(iv) where the default or omission has been made in

COfl/lCCuon with. return required by the provisions of the

Income T ax Acts to be furnished by anOl:her person m

behalf of a company, suc h company shall be liable for the

additional tax chargeable under the provisions of this

subsection." .

24. Section 59 of the principal Act sball be amended as folklws

(a) subsection (I) tbeteof shall be deleted and .hall be substiMed by

the foUowina new .ubl. tion

"O )£very company resident in Malta .ball be entitled to dcOlCf

from the amount of any dividend. otbef than I dividend paid out of

distributable profits -'Ioc ....... to the untaxed IICCOUnt and other than

I dividend tcfencd to in panlgnlpb (p) of PlhWtion ( I) at section

12 of this Act, paid to lily shareholder, I w at dlC l1IIe paid or

payable by the eompany, relief 01 double tautioo bei", ~ out 01

II:count. on the kucome out olwhicll such dividmd 11 paid

Provided that whin w. is DOl paid or payabk by the compny

on the whole incooe Out 01 which the dividmd is paid. the dcdKoon

.baIl be reslricted 10 that portion 01 the divicYnd which is paid out of

income on which tu I, paid or payable by the company:;

(b) sub5eccion (5) thereof shall be deleted and sball be substituted by

the foUowina new subs, ,lion

"(5)(1) Every company &haJJ upon piIIymcnl of I dividend,

wbcthcr tu. il dcductcd thefcfrom Of not. furnUh the IharchokIcr

with. dividend ccrtiflC1lllC.

(b) The dividend certi( ........ lhall be in such form as the

Cornmiwioncr &hall lUflIire and shall 1OOw, in respect of the

dividend disuibuled 10 the particular lharehoidcr, the following

information

(i) the gran amounl of the distributed profill, in respect of

eac h lICcount, bcfOftl deduction of any tu chargeable on the

company in rf:spect of suc h distributed profits;

(u) the total tu chargeable on the company in respect oIthc

distributed profits, sbowing kparatcly

( I) !be Malta w. payable after all reliefs at double

wation have been given: and

(2) lhe foreign lax in respe<1 01 which retid of double

w;aJ.ion has bcm given WIder !be doutHc uuation rf:lid,

relief in respect of CI)fI1Ill(lrlwealth income w , and

unilateral relief provisions; and

(3) !be amounl which has been Sel off &pi nst Mal ta lax

pursuant to I claim for relief of double lIUation WIder the

lla1-ratc foman tu. cn:dil provisions

(iii)tbc amount oftbe disuibuled profit! from each account,

aftCT deducting the tax refem:d to in sub-paragraph (ii) of this

parag.raph;

(iv) the tax payable on distributioo ptll'5Uallt to .sections 62,

67 and 67A which ~l be shown separately from the tax

refem:d to in sub-parqrapb (U) oflhis paragraph;

(v) the net amount of !he dividend paid 10 Ihe shareholder,

(vi) wlMn the tax paid or payable by the company on the

profit! 10 being distributed is affected by relief of double

taXation, the rate, hereinafter in this Act referral to as "the net

Ma.lta rate", of the tax paid or payable by the company after

taking relid of double wation illlo account;

(vii) where the profits being distributed have been exempt

from tax BIld the dislribution of suc h profits by the company is

exempt from tax in the hands of the shareholder, a note quoting

the relevBllI law giving suc h cxemption;

(viii)whcre the profits being disuibutcd by a company (the

fint company) include a divldcnd m:eived from iIJIO(hcr

company (the accond company), in respect of which the fint

company i$ entitled to make a claim for a refund under

sl'hs ... tion (4) of section 48 of the irJ!X)llle Tax Managemml

Act, 1994, in I'C$pect of the tax paid lhcidJIl by the · -nod

company, a statement dec:laring thal the finl company is entitled

to make 511Ch a claim in respect oftho5c di stributed profits;

(ix) such other information as the Commissioner sI\al.I

require. "; and

(c) subsc~tion (9) thereof lhall be deleted and shall be substituted by

the following new .. ~tiOD

"(9) In this section the expression "relief of double taxation"

means any credit or other relief for fomp tax allowable by virtue of

the reliefs stipulated in section 74 of thi s Act.".

25. In sectioo 60 of the principal Act

(a) for the words "Any tax which a com pany has deducted or is

entitled to deduct under the last preceding s ... tion", there shall be

sub$!ilutcd the words "Any lax which a company has deducted or is

entitled to deduct under sec:tion 59 of this Ac'"; and

(b) paragrapb (b) of the last proviso the.eof shall be deleted and

shall be substituted by the: following new paragraph

"(b) any tax charged on any body of persons under subsection

(4) of section 56 of this Act, or under subsections (3) and (4) of

section 27 of the: Income Tu Managemenl Act, 1994.".

26. Inunediatdy after section 60 of the principal Act there shall be

inserted the following new sections

"DefInitions.

For the purposes of sections 62 10 69 of the

Act

(i) a "recipient" shall mean

(a) a person. other than a company,

resident in Malta in the year in which a

dividend is received by him or by any person

on hi.'! behalf; or

(b) a non-resideIU person (including a

non-resident company) who is owned and

controlled by. directly or indirectly, or who

acts on bellalf of. a person who is ordinarily

resident and domiciled in Malta;

(ii) an "untaxed dividend" shall mean a

dividend paid by a company resident in Malta 10

the eXLenl thal it is paid out of distributable

profils allocated 10 its untaxed account.

(I) Every company shall. on payment of

dividend from

untaxed dividend to a recipient. deduct therefrom tax

,,"Ualted

at a rate of fifteen per cent.

~,

(2) Every amount deducted under subsection

( I ) of this section shall be a debt due from such

company 10 the: Commissioner payable nO( later than

the fourteenth day following the end of the month in

which such dividend was paid and shall be

recoverable as such

Provided that the provisions of this soctioo

shall not apply in respect of untaxed dividend

payments 10 persons who are exempt from tax.

A

Prw.unptiOl\

It shall be presumed, so far as the tax liability

of deductiou.

of the recipient of a dividend is concerned, that a

deduction and payment which ought to have been

made pursuanl to the provisions of section 62 of this

Act have been made..

Where the prawnption referred to in section

63 ohhls Act applies

(a) a recipient of a dividend shall not be

obliged 10 disclose the dividend in any return

made pursuant to the provisioru; of this Act; and

(b) subjcctto the provisions of section 65 of

this Act, no person shall be charged to further tax

under thi.o; Act in raped of the dividend.

Option for

A recipient of an untaxed dividend may

recipi.nlS 10

declare such dividend on his tax return and where a

<00 ....

declaration is made as aforesaid any tax (or

repayment) due shall be determined as if section 64 of

this Act did no/. apply, and any tax withheld pursuant

to section 62 of this Act shall be credited against the

recipient's income tax liability and, where applicable,

shal l be available for any refund wllich may be due in

respect of that tax for the relevant year of assessment.

Unta .. d

Where an untaxed dividend is paid to a person,

--

dividend paid

who is not a recipient as defined under section 61 (f

this Act, such dividend shall not. be charged to tax

ret:;pi.n~

under this Act in the hands of such person and where

such person is nO( resident in Malta such person shall

no/. be obliged to disclose the existence of the dividend

in any return made pursuant to lhe provisions of the

Income Tax Acts.

Paymtntof

(I) Where a company pays a dividend to a

divitb:nd !HIt

person raident in Malta out of profits allocated 10 the

o(~'"

Maltese taxed account or the foreign income account

~.~

and which profits have suffered tax at a rate of tax

finign

which is less than the rate of tax chargeable

,~

o<"'<;OIInL

applicable at the time of the distribution, under

subsection (6) of section 56 of this Act, only by

reason of the foct that a different rate of tall was

applicable at the time the profits being distributed

were chargeable 10 tax, the company shall deduct tax

at a rate equivalent to the difference between the

current rate and that acrually suffe~ as aforesaid on

A

the amounl of the divklend before deducting any tax

wb.ich it has suffered on the profits so being

distrih.d M ;

Provided tba! the provisions of this IUbsectiOll

shall 00( apply in respect of 'l.ICb dividend paytnmts

to peisons who are exempt from laX.

(2) Every amount dedl.lCted under SI.lbsection

(I) of thiJ sectiOll shall be • debt due from such

oompany 10 the CornmiMioncr payable not Ia1a than

the fourteenth day foUowing the cnd of the month in

which such dividend was paid and shall be

recoverable as such_

(1) The provisions of acc:tiOIlS 63 10 65 of this

Act s.ball apply mutatis mulandis as they apply to

distributions from !be untaxed accounl and rducuccs

in ....... c sections to &ection 62 shall be con.strucd as

references 10 subsection (I) of this section.

(4) For the purpose$ of this section • person

residml in Malta shall include • noo--resident person

(including a non-resident company) who is owned and

controUed by, directly or indirect.ly or who acts on

behalf of a person who is ordinarily resident and

domiciled in MallL

""""

67A .(1) Where a coUective investment scbcnie,

dillllibll\t4 by

whicb is constituted as a company pays a dividend to

• CoIlccIi""

a pcnon residml in Malta out of profits a1kw;a!ed to

III~Utl1Cal

the foreign income tlCC(lUnI it shall deduct tax ar the

""'~

nue of fifteen per cent on the net amount of the

dividend, that is after dedllCting any tax it Is entiilcd

10 deduct under subsection (I) of section .59 of thiJ

Att

Provided that the provisions of this subsection

00 00( apply in respecl of such dividend payments to

persons wbo are exempt from tax,

(2) Where a collective investment scheme,

which is 00( constituted as a company, disuibuies

profits to persons resident in Malta, there shall be

deducted tax as if, for the purpo5CS of this section,

such a collective investment scheme is constituted as a

company. In this respecl tax shall be dM"cted from

every disuibution of profilS which. had the coUective

A

investn'lenl. odoeuoe been coostifllted lIS a QOfflpany,

would have been aUocaled 10 either the foreign it ..... ,oe

accounlOl' the untaxed account

Provided that the provisions of this Il.Iblcction

do DOt apply in respect of such plyme0t5 10 pcnons

who are elCmpt from laX.

"Mo ....

ed under ~

(3) Every amount

(I ) and (2) of this section shall be a debt due from

IUCb collective inVCltmenl. JCheme 10 the

Commissioner payable not later than the fourteenth

day followina the end of the month in which the

distrit.Jtion Wl.$ made and Iball be rtCOVerab1e as

~h.

(4) Sections 63 to 6' of this Act.dJalI apply

mUlatu IfWtQlldu in the circumstances 1ft out in

subsections ( I) and (2) of thil section as they apply 10

distributions from the untaxed lICCOOnt. References in

those sections 10 section 62 sbalI be construed as

references to subseclion (I) or (2) of thil section, as

thecase may be, and rcfel'CllCQ 10 dividend 01' unlalled

dividend shall be construed as a rcre,e," 10 profits

distributed by a collective investmenl JCheme w~

the contexl SO requires.

(') For tbe purposes of section 61 and of

subsections (I) and (2) of thil section, in the case of •

collective investment lChaue which il exempt from

tax under patl&raph (I) 0{ subsection ( I) of section

12 of thil Act, the profits which would be alIOCllled 10

the MaltC5C wed accounl had such • collective

inVC$lJl'lelll JCheillC DOt been so exempt. sbalI.

notwithstanding any other provis.ion contained in this

Act. be so allocated

Provided that if 5UCh profiu would have been

allocated 10 the foreign income ICCOUnl had the

collective investment scheme not been uempt from

lax and not been excluded from allocating profits 10

iu foteign in::ome account. IUCh profits shall. for the

purposes of this subsection, not be allOCal..... 10 the

Maltese lalIed account but shall be allocated 10 the

untaJled account.

(6) For the putpllSe5 of this JOCtion a pclSOll

resident in Malta shall include a non-residcnt person

(including a non-resident company) who is owned and

<:OfItroUed by, di!U:tly or i ndira;tiy. or who act!; on

behalf of a pelWn who is ordinarily resident and

domiciled in M alta

No obliplion

( I) Ca> Any person who is nO( resident in

10 discl..-.

Malta or any individual who is resident in Malta and

woo il in receipt of a dividl:rui paid oul of the

distributable profits allocated 10 !be foreign inoomc

IlIX:OUrIl Of to the M altese taxM aceu"n' shall DOt be

obliged to disclose the existence of such dividend in

any retum made pursuant to the provisions of !be

Income Tu. Acts.

(b) No person shall be charged \0 further

till[ WIder this Act in respect of the ir'COIllC n:fe~ 10

in paragraph <a> of this subsection.

(2) <a) Any person, oot being a company

resident in Malta, shall no! be obliged to disclose in

any return made pursuant to the provisioru; of the

Income Tax Acts those profits distributed by a

collective investment scheme no! COIlStilUted as a

company, where such profits would !\ave been

allocalcd to the foreign iocomc account or 10 the

Maltese taxed account, had the collective investment

scheme been constituted as a company.

(b) No pcrwn shall be clwBed to further

t.a.r; WIder this Act in respea of the profits referred to

in paragraph (a) of this subsection.

Where any person fails to deduct and pay tax

in accordance with !he provisiOll.'i of sa:tions 62, 67

and 67A of this Act. the provisions of subsection (4)

of section 73 of this Act and the provisions of

subsecti on ( I) of sa:tion 40 of the Income Tax

Management Act, 1994. shall mutatis mUlandis

apply:.

27. In section 73 of the principal Act

(a) subsection (I) thereof shall be substituted by the following new

subsection

·(I)Wbe~ any person pays 10 a person not resident in Malla , or

to a person resident in Malta 00 behalf of a /K)!l·res.ident person, any

inoome chargeable to tax under the provisions of this Act. he shall

UpoII payinj; RJCb income, unless he: is himself liable 10 pay tu.

thCieolll under the provisions of section 5 of the Ir ........ he Tu

Management Act , 1994, deduct tax therefrom

(.) a1 the nue oftwenly-fivc cents in the lina whe:~ paymenl

Is mW 10 or on brbalf of any oon-ruidcnt penon other than a

company; and

(b) at the rate chargeable under subs tion (6) of'section 56

of this Act where pay.OCDt is made 10 or on bcbalf of' I DOO-

resident company

Provided that the Commissioocr may, by notice in writing given

to any person who is required 10 eff«:t a deduction of tax in

accordance with the foregoing provisions of this section, luthor'i$e

such person 10

deduct tu. at I rate lower than thal hefeinbefore

rnenliooed, orlO pay such income without any deduclion of' tax

Provided further that the provisions of this subsection slWl not

apply 10 income from which laX has been deducted under the

provWoru olKlClion 59 of this Aa Of under the pmviliOll$ of 5CCtioo

23 of the Income Tu. Management Act. 1994.";

(b) sub5oction (3) thereof "'all be deleted and slWl be substilUled by

the followina new subsection

"(3) Dcduc:tions of tu made 11",,"" the provisions of lUh5cc:tion

(I) of' this scaion shall, wbc:n paid to the Commissioner as provided

in subsection (2) of this section, be Set off for the purposes of'

c:olkction. aaainst the tu. charged on the non-residcni pel$Oll in

R:SpcCI of the ~Iarivc income. Any UCCS5 shall be ~funded in

IICCOIdancc with the provisions of seclion 48 of the Ir ...... "e Tu

Management ACI, 1994."; and

(cl parngraph (f) of subsection (4) Ihcrcof shall be deleted and shall

be subsiituled by the foUowing new paragraph

"(f) additional tu charged under the provisions of thiJ

subsection shall not be deemed 10 be part of any w: paid or payable

for the: purposes of sections 59, 76 and 89 of this Act and sec:tioos

42, 51 and 52 of the Income Tu Management Act, 1994.".

18. In Pat! X (Refunds) oltbc principal Act the title ~RcrundsM sllall

be substituted by the following words: " Relief of Double TUalion", and

immedillfely before section 76, ihcre shall be inscned the following two

new sections

The~ sbalI be fow types of n:licfs of doble

1U1lion. namely

<a> c!.oOOIe ranlion rrlid, IS provided III

sections 76 to 78, both inclusive, ohms Act;

(b) unilalenU n:lid, IS prDY1dcd in sections

79 to 88, bulb inclusive, oflhU Aa;

(c) idld

in

respect of Common .... eaIth

i",XXlle w. as provided in scctioo 89 of this Act;

"'"

(d) • flat-rate fomgn tax crulit, as provided

in sections 92 10 95, both inclU$ive. of this Act.

In respect of lIIIy claim fOf relief of double

wation.

(a> the provisions concerning unilateral relief

"'all be applied in calculating a pefJOll" lax

liability in those cues where. subject to the

or

provisions of sub$eclion (2) of section 82 this

Act, double taxlllion relief and rdid in respect of

Commonwealth jllOOlllc W are not available 10

the person makinj the daim; and

(b) the provisions conceming the flal-lllle

foreign tu credil shall be applied in cak:ulating a

person'. tu liability only in thole casei where

double tar.lllion n:lief, relief in ltSpocl of

Commonwealth illOlW,1e tall and unilateral relief.

as governed by sections 79 to 88 of th.iI Act. are

not available to the person making the claim.",

29. Subsection (1) of $I:Clion 76 of the principal Ad shall be

amended by the addition of the followin& further provilO AI the end of the

proviso !hereto

"Provided further that no anangement shall have effo;! insofar

as it applies to a roIkrtive investme:nI SChcme which is exempt rrom

tall under the provisK:Jns of paragraph (s) or subsection (I) or 5«tion

12 of" th is Act and which oolla;tive investment scheme has not

exercised its right or waiver or exemption under the provisions 0(

sub- lion (S)of"section 12orthil Act.~.

30. Section n of the principal Act shall be amended as foUows

(a) in the proviso to subsc:ctioo (2 ) thereof, for the words ·in Malta

for thlll year" there shall be substituted the wortb · in Malta for the year

immediately preceding the year of ...... sment·; and

(b) in sub5e<:tion (4) tIlereof, for the words swting from · less any

tax payable" to the words ·of this Act ", there shall be substituted the

words · Iess any tU payable by him under the provisions of sections 40,

69 and 73 of this Act".

31. In subsection ( I) of section 78 of the principal Act, for the

words "or to be repaid under section 79 of this Act. in respect of the tll);

deductible from any dividend paid by the company" there shall be

substituted the words · or 10 be repaid under section 48 of the Income

Tu Management Act. 1994. in respect of the tax deductible from any

dividend paid by the company".

32. lnunediately aftCl' section 78 of the principal Act there shall be

adc\t:d the foUowing new IeCtiotu

· Unilaw.l

In this Act the phrase "unilateral relief"

reUef.

means the relief given pursuant to the provisions I:i

sections 80 to 88 of this ACI, and in those soctions the

phrase "income tax · shlll have the meanill8 attributed

to it in subsection ( I ) of section n of this Act.

AnllAbility ....

SO. Unilatellll n:lief may be available in respect

uniwenI

of a claim for relief of do"ble taxllLion where tax

reU.r.

under this Act is computed by n:fercnce to ir.o:: .... UIe

which;

(a) arises outside Malta; and

(b) is subject to any tax of a simi lar character

to that impc sd under the 1r ........ IC Tax Acts under

the laws of a territOf}' outside Malta.

For the PUrpose! of panigrapb (b) of this section,

a tax shall 001 be prevenred from being of • similar

character by ro=asoo only that it is payable under the

law of a province. Slate or other part of a country, or

is levied by or on behalf of a municipality or OIlier

local body.

T he amount of the tIU ro=ferred to in

Relief by .. ay

.... credil

paragraph (bl of section 80 of this Act whkh is

payable in a territory other than Malta is to be

A

allowed as a (:R:dit agaill$! the income tax chargeable

in Malta in respcd oftbe income under section 80 of

this Act, and the amount of the income tall: so

chargeable shaIJ be reduced by the amount of the

credit

Provided always that the credit shall not be

allowed against income tax for any year of assessment

unless the person entitled to the income is l'Qidcnt in

Malla for the year imm...-JiateJy preceding the year of

assessment.

Credit fQC~

(I) The provisions concerning unilateral

ullderlyin,

relief shall, wllen applied in respect of a company as

w.

dc$c. ibed in wbsection (2) of this section and where

the income under section 80 of this Act includes a

dividend. have effect 50 that tax not cllargeable

directly or by deduction in respect of the dividend

shall be deemed to fall under the provisions of

paragl'1l.ph (b) of section 80 of this Act and shall be

laken into ac(:ount in computing [hoc: credit to be given

against income uu: in respect of the dividend.

(2) The provisions of this section shall apply

to a company if it controls, dil'elClly or indil'elCtly, not

less than tcn per cent of the voting power in the

company paying the dividend and where credit for

underlying tax is !lOt othelWise available under the

provisions of so;:tion 77 of this Act.

Limitalion on

The credit given WKk:r section 81 vf this

~=diL

Act shall not exceed the amount which would be

produced by computing the iocome of a person in

accordance with the provisions of this Act and then

charging it to income tax at a rate ascertained by

dividing the income lax chargeable (before allowance

of credit pursuant to section 81 of this Act) on the

total income of the person entilled to it, by his total

i~

Amwntol

Without prejudice to the provisions of section

Iotal credit

87 of this Act. the total credit to be allowed pursuant

to section 81 of tltis Act 10 a pcTSOl1 for any year cl

assessment shall not cxc...... the total income laX

payable by him for that year of assessment. less any

lu payable by him for that year of as·,sment under

the provisions of so;:tions 40, 69 and 73 of tltis Act .

A

In computing the amount of the income for

purposes of unilateral relief

(a) no deduction shall be allowed in respect

of lax paid and referred to in paragraph (b) of

section 80 of this ACI, whether in respect of the

same or any other income;

(b) where the income chargeable depends 00

the amount received in Malta the said amount

shall be increaYLl by the appropriate amounl of

the tax paid and referred 10 in paragraph (b) of

section 80 of this Act in respect of the income;

(c) where the income includes a dividend and,

in detennining the amount of credit to be given

under section 81 of this Act, credit is given for lax

which is not chargeable directly or by deduction

under section 82 of this Act, the amount of the

i~ shall be increased by the amounl of that

credit.

The provisions of paragraphs (a) and (b) of

Ajlp&abiliIy

• n.

section 85 shall apply to the comput.atlon of total

ICCIiCII

income for the purposes of determining the rate of tax

referred 10 in section 83 of this Act.

The provisions of subsections (8), (9) and

(10) of se<:tion 77 and of section 78 of this Act sball

apply mUlalis mutandis in relation to unilateral relief

as they apply to double taxation relief.

Unilateral reLier shall not be available to a

pel'$Ofl unless that penon has proo.'Cd 10 the

satisfaction of the Commissioner that the bLOllle

referred to in the provisiOfl.'l of paragraph (a) of

section 80 of this Act has borne tax WIder the

provisions of paragraph (b) of section 80 of this Act

and has proved the amoum of that tax.·.

33. Immediately after section 91 of the principal Act there shall be

Addi ...... ofroow

..aims 92 . 91. 90<

added the following new sections

..... 95 10 Ihr

po ilKipol AL1..

For the purposes of the Income Tax Acts. the

flat ·rate foreign I!U credit shall be a credit given in

respect of income or gains

A

(a) whJch are receivable by I company

resident in Malta; and

(b) which fall to be allocated to the foreign

income account as defined in section 2 of this Act,

but excluding profits resulting from dividends

paid out of the foreign incttnc account of anOlher

company resident in Malta; and

(c) in respect of which doaunenlaf)' evidence

is available whJch iooicates to the IIlisfaction cL

the Commwione£ lhal such ir ... olIle Of gaim, as

the case may be, fall to be allocated to the foreign

income account.

For the purposes of this

a certifICate iSliucd by a certified

~n:ment,

public

and

auditor

lhall

acc::ountant

be

satisfactory documentary evidence.

(\) The flal-nue foreign tax credit shall be

Amoun~ af

tlal-n!e

twenty-five PCI' cent of the income or gains rt:ttivable

f!ni", IaJ.

by the company within the p!'OvUiiOD$ of sa:tion 92 of

cndiL

this Act, before any ........ lIctiO!\ll or pra,yments

whatsoever are made from the said income or gains.

(2) I n the case of income comprising

dividends, capital gains, interest, royaltiea. rents and

other income which are re«ivable by I ccmpany

resident in Maha and derived, where applicable, from

investments sillwcd outside Malta, the nat-rate

foreign tax credit shall be computed on the amount

receivable. after deducting any foreign tax (charged

directly or by way of withbol.ding) but before any

other deductions Of payments whatsoever art made.

..

( I) Where ttIe flat-rate foreign tal; credi t is

Opetalion af

due in re$pect of the ilLOtne or gains refelTCd to in

n aHlLe

section 92 of this Act, it shall be fIrIded to the said

ford""

income or gains.. TIle aggregate sum 50 obtained shall

IaJ. c:rediL

be the amount mal i$ chargeable to tal.

(2) For a year of asscssment in respect of the

income computed in accordance with the provisiolll of

subsection ( I) of this section. the amount of tax

payable under thi s Act shall be reduced by the amount

of the flaHlIte forei gn \all credit due in respect of t/t.at

income

Provided that whc:rt the W11OU1lt of the flat-

rate foreign tax credi t exceeds eighty-five per cent of

the tax payable computed by taking the tax payable

on those profits which are to be allocated to the

foreign income IICCOUlIt and deducting tbuefrom any

foreign tax sa-otr under the cbWlc taxation relief,

Commonwealth iocome tu. I1!lief and unilateral relief

provisions, the amount of such W'e!iS shall not be

available for sd.-off 01' I1!fund fOl' any purposes of the

Income Tax Aas.

(3) The provisions of subsections (8), (9) and

(10) of section 77 and of section 78 of this Act shaU

apply nwtaJis mutandis in relation 10 the filii-rate

foreign tax credit as they apply to double taxation

relief.

Wba-e, in the opinion of the Commissioner, a

~ of uansactions is eff«:1ed with the sole or main

purpose of rMlcing the amOllnt of tax payable by any

person by reasoo of the operation of the filii-rate

fOl1!ign tax credit provisions as contained in soctions

921094 of this ACI, such a penon shall be assessable

as if the provisions did not apply.

For the JlWlKlses of thj5 section, a serit$ of

transactions shall mean any two or more

UM.aponding or circular Il'arlSaCtions canic:d OIIt by

the same person, eitbet' dirtttly or indim;tly. as the

case may be.".

34. [n Part XI (Power to make roles) of the principal Act. there shall

be inserted the following new sc:ction

11Ie Minister responsible for finance may

mab rulu.

from time to time make rules gcnaally foe carrying

out the provisions of this Act and for such manen 115

are authorised by thU Act to be prescobed. •.

35. In the title of the principal Act, there shall be deleted the words

"and to Regulate the Collection thereof".

36. The Industrial Development Act. shall have effec;t subject 10 the

amendment set out in the Second Schedule 10 this ACI.

FlRSTSCHEDULE