ACT No. II of 2007 An Act to amend various laws BE IT ENACTED by the President, by and with the advice andconsent of the House of Representatives, in this present Parliament assembled, and by the authority of the same, as follows:-

I assent.

(L.S.)

E DWARD F ENECH A DAMI

President

16th March, 2007

ACT No. II of 2007

An Act to amend various laws

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

andconsent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same, as follows:-

(1) The short title of this Act is the Various Laws Short title.

(Amendment) Act, 2007.

(2) The provisions of this Act shall be deemed to have come Coming into force

of this Act

into force as folows

(a) The provisions of the following articles and paragraphs

shall be deemed to have come into force as from the year of

assessment 2008

(i) paragraphs (b), (d), (e), (f), (i), (j), (k), and (l) of

article 3;

(ii) articles 4, 5(b), 6, 7, 8, 16, 18(a), 19(a), 20, 21, 23

and 28;

(b) The provisions of the following artticles and paragraphs

shall be deemed to have come into force on the 1 January, 2007

(i)

paragraphs (a), (c), (g) and (h) of article 3;

(ii) articles 5(a), 9, 10, 11, 12, 13, 14, 15, 17, 18(b),

19(b), 24, 25, 26 and 27.

PART I

This Part amends the Income Tax Act, and shall be read and

construed as one with the Income Tax Act, hereinafter in this Part referred

to as “the principal Act”.

Article 2 of the principal Act shall be amended as follows

(a) Immediately before the definition of “body of persons”

there shall be added the following new definition

““a company registered in Malta” shall mean a company

which is resident in Malta or a company which, although not

resident in Malta, carries on any activity in Malta and in the

case of a company which is neither incorporated nor resident

in Malta shall mean a company that is registered for this

purpose with the Commissioner in such manner as may be

prescribed;”;

(b) The definition of “distributable profits” shall be

substituted by the following

““distributable profits” shall mean the total profits which

are available for distribution by a company registered in Malta

under the laws for the time being in force in Malta, and the

distributable profits shall, for the purposes of this Act, be

allocated to the following accounts, that is to say, final tax

account, immovable property account, foreign income

account, Maltese taxed account, and untaxed account, and

for the purposes of this definition these accounts shall

comprise the distributable profits as set out in the respective

definitions

Provided that in the case of a company which is neither

incorporated nor resident in Malta the distributable profits

shall be the profits attributable to the activities of such

company in Malta and in respect of which it has registered

with the Commissioner less any of such profits which the

company has distributed in previous years;”;

(c) In the definition of “equity holding” the word “nominal”

shall be deleted;

(d) Immediately after the definition of “equity holding” there

shall be added the following new definition

““final tax account” shall mean the taxed account to

which an amount of distributable profits which suffered tax,

calculated in such manner and in such amount as may be

prescribed, shall be allocated before any distributable profits

are allocated to any other taxed account;”;

(e)

In the definition of “foreign income account”

(i) The words “a company resident in Malta” wherever

they appear shall be substituted by the words “a company

registered in Malta”;

(ii) In paragraph (a) thereof after the words “interest,

rents” there shall be added the words “, income or gains

derived from a participating holding or from the disposal of

such holding,”;

(iii) In the third proviso thereto for the word “finally”

there shall be substituted the word “further”, and for the words

“be so allocated;” there shall be substituted the words “be so

allocated:”;

(iv) Immediately after the third proviso thereto there

shall be added the following new proviso

“Provided further that notwithstanding anything

contained in this Act or in any rules made thereunder any

profits derived up to the 31 December 2010 by a company

which was resident in Malta prior to the 1 January 2007 (other

than a company which has exercised its option in terms of

paragraph (i) (2) of the proviso to Article 48(4A)(b) of the

Income Tax Management Act) which would have been

allocated to the foreign income account had such profits been

brought to charge to tax in the year of assessment 2007 shall

be allocated to the foreign income account;”;

(f) Immediately after the definition of “foreign income

account” there shall be added the following new definition

“immovable property account” shall mean the taxed

account to which distributable profits which have suffered

tax and which are not allocated to the final tax account

calculated in such manner as may be prescribed, shall be

allocated before any distributable profits are allocated to the

other taxed accounts;”;

(g) In the definition of “international trading company”

(i) Immediately after the words “a company registered

in Malta” there shall be added the words “by not later than 31

December 2006”;

(ii) In the proviso thereto for the words “under any of

the provisions of the Income Tax Acts;””there shall be

substituted the words”“under any of the provisions of the

Income Tax Acts:”;

(iii)

The following provisos shall be added thereto

“Provided that the company has not opted to cease to be

an international trading company pursuant to article

48(4A)(b)(i)(1) of the Income Tax Management Act

Provided further that notwithstanding any other

provisions of this Act or any other law including the provisions

of article 52(8) of this Act no company shall be an international

trading company with effect from 1 January 2011;”;

(h) The definition of “participating holding” shall be

amended as follows

(i) in paragraph (e) thereof after the words “not resident

in Malta” there shall be added the words “and that investment

in the company not resident in Malta is held for an

uninterrupted period of not less than 183 days”;

(ii) in paragraph (f) thereof immediately after the words

“the furtherance of its own business” there shall be added the

words “and the holding is not held as trading stock for the

purpose of a trade”;

(iii) the proviso thereto shall be substituted by the

following

“Provided that a holding of a company in a body of

persons constituted, incorporated or registered outside Malta,

which is not resident in Malta, and is of a nature similar to a

partnership en commandite the capital of which is not divided

into shares constituted under the Companies Act, shall be

deemed to constitute a participating holding if it satisfies the

provisions of any of paragraphs (a) to (f) above which shall

apply mutatis mutandis to such holding. For the purposes of

this proviso, the terms “equity shares” or “shares” shall be

construed as referring to the capital in the said body of persons

which entitles the holder to a right to votes, to profits available

for distribution and to assets available for distribution on a

winding up of the said body of persons, and the term “equity

shareholder” shall be construed accordingly.”;

(i) Immediately after the definition of “participating

holding” there shall be added the following new definition

““passive interest or royalties” shall mean interest or

royalty income which is not derived, directly or indirectly,

from a trade or business, where such interest or royalties have

not suffered or suffered any foreign tax, directly, by way of

withholding, or otherwise, at a rate of tax which is less than

five per cent (5%);”;

(j) Immediately after the definition of “petroleum” there

shall be added the following new definition

““portfolio investment” is an investment in securities

such as shares, bonds, and such like instruments and which is

held as one of many such investments for the purpose of

investment by risk spreading where such an investment is

not a strategic investment and is made with no interest in and

without the intention of influencing the management of the

company invested in and in addition is made only to follow

the share price and dividend policy of the company invested

in to maximise investment returns and to sell the investment

as soon as it appears that the shares may lose value;”;

(k) Immediately after the definition of “tax” there shall be

added the following new definition

““taxed account” and”“taxed accounts” shall mean any

or all of the final tax account, immovable property account,

foreign income account, Maltese taxed account and untaxed

account;”;

(l) The definition of “untaxed account” shall be substituted

by the following

““untaxed account” shall consist of those profits (or

losses as the case may be), which represent the total

distributable profits (a positive amount) or the total

accumulated losses (a negative amount) as the case may be,

and deducting therefrom the total sum of the amounts allocated

to other taxed accounts;”.

Article 5A (10)(d) of the principal Act shall be amended as

(a) for the words “Maltese taxed account” there shall be

substituted the words “final tax account”;

(b) the words commencing from “The said distributable

profits shall” to the words “out of the property transfers reserve”

shall be substituted by the words “The said distributable profits

shall be determined in such manner as may be prescribed”.

Article 12 of the principal Act shall be amended as follows

(a) the proviso to subarticle (1)(c) shall be substituted by

the following

“Provided that the beneficial owner of the interest, royalty,

gain or profit, as the case may be, is a person not resident in Malta

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

indirectly, nor acts on behalf of an individual or individuals who

are ordinarily resident and domiciled in Malta.”;

(b) immediately after paragraph (t) of subarticle (1) there

shall be added a new paragraph

“(u) any income or gains derived by a company

registered in Malta from a participating holding or from the

disposal of such holding, where the taxpayer has not shown

such income or gain as part of his chargeable income in the

return made pursuant to article 10 of the Income Tax

Management Act

Provided that with respect to a dividend derived from a

participating holding acquired on or after 1 January 2007 the

exemption contemplated by this paragraph shall only apply when

the conditions set out in either paragraph (i) or paragraph (ii) below

are satisfied

(i) where the body of persons in which the participating

holding is held satisfies any one of the following conditions,

that is to say

(1) it is resident or incorporated in a country or

territory which forms part of the European Union;

(2) it is subject to any foreign tax of at least fifteen

per cent (15%);

(3) it does not have more than fifty per cent (50%)

of its income derived from passive interest or royalties;

(ii) where none of the conditions set out in paragraph

(i) are satisfied then both of the following two conditions

must be satisfied

(1) the equity holding by the company registered

in Malta in the body of persons not resident in Malta is

not a portfolio investment and for this purpose the

holding of shares by a company registered in Malta in a

body of persons not resident in Malta which derives more

than fifty per cent of its income from portfolio

investments shall be deemed to be a portfolio investment;

and

(2) the body of persons not resident in Malta or

its passive interest or royalties have been subject to any

foreign tax at a rate which is not less than five per cent

(5%)

Provided further that the provisions of the immediately

preceding proviso shall, with effect from 1 January 2011, also

be applicable to dividends received from a participating

holding acquired before the 1 January 2007.”.

Article 14(1)(g) of the principal Act shall be amended as Amendment of

article 14 of the

principal Act.

(a) In the proviso, for the words “under this Act;” there shall

be substituted the words “under this Act:”;

(b) The following new proviso shall be added

“Provided further that a loss as aforesaid shall not be deducted

against income which stands to be allocated to the final tax account

and any loss resulting from activities or sources the profit derived

from which would have been allocated to the final tax account

shall not be a loss to which this paragraph applies;”.

Paragraph (c) of article 18(1) of the principal Act shall be

substituted by the following

“(c) Where the allowable loss, had it been a profit, would

have been allocated to the immovable property account or the

Maltese taxed account of the surrendering company, the claimant

company may deduct such loss from its income which stands to be

allocated to either its immovable property account or its Maltese

taxed account, and such loss may only be carried forward against

the claimant company’s total income arising in subsequent years

as would stand to be allocated to any of these taxed accounts.”.

Article 25 of the principal Act shall be substituted by the

following

“25. For the purposes of articles 14 to 24 both inclusive,

expenses incurred in the production of, and allowable deductions

given in respect of, income derived from profits which are allocated

to a taxed account must first be deducted against such income.”.

Article 27D(3)(c) of the principal Act shall be amended as

follows

(a) for the words “by such beneficiaries.” there shall be

substituted the words “ by such beneficiaries:;

(b) the following new proviso shall be added

“Provided that the income referred to in this paragraph shall

also include dividends paid out of profits allocated to any of the

taxed accounts.”.

Article 33(1) of the principal Act shall be amended as follows

(a) In the proviso thereto the words “is an individual who”

shall be deleted and for the words “in article 56(6).” there shall be

substituted the words “in article 56(6):”;

(b) The following proviso shall be added after the existing

proviso thereto

“Provided further that in the case of investment income

referred to in article 41(a)(viii) (2),(3) and (4) where the recipient

is not in the actual receipt of that income but is deemed to have

received such income pursuant to the provisions of article 43(6)(a),

(b) or (c) the rate at which tax shall be deducted shall be of thirty

one point five, seven, eight per cent (31.578%) or such other rate

as may be prescribed and rules may also be prescribed on how the

investment income provisions are to be applied in such

circumstances.”.

Article 35(1) of the principal Act shall be substituted by the Amendment to

article 35 of the

principal Act.

“(35) (1) Except in respect of investment income referred to

in article 41(a)(viii) (2), (3) and (4), a recipient may elect to be

paid investment income without deduction of tax being made and

such an election shall be made in writing and sent to the payor.”.

Article 40 of the principal Act shall be amended as follows: Amendment to

article 40 of the

principal Act.

(a) in subarticle (2) for the words “and 41(a)(viii)” there

shall be substituted the words “and 41(a)(viii)(1)”;

(b) immediately after article 40(2) there shall be added the

following new subarticles

“(3) Any person (hereinafter in this subarticle

referred to as the “first person”) who is in a position to

receive or be deemed to have received the income

referred to in sub-paragraphs (2), (3) and (4) of article

41(a) (viii)

(a) shall inform in writing the person who

would be the payor of such income if the first person

were to receive or be deemed to have received such

income, that in such an eventuality the first person would

be the recipient of that income; and

(b) when the first person has received or has

been deemed to have received such income, he shall,

unless the payor has paid the tax in accordance with the

investment income provisions, pay such tax himself

within seven days from the date that the payor should

have paid the tax; and”

(c) without prejudice to any other provisions of

the Income Tax Acts, any such person who does not make

the payment referred to in paragraph (b) above when he

ought to have made it shall, in addition to the payment

of the tax due, be liable to pay additional tax of seven

per cent of the amount of such tax for every month or

part thereof that the tax remains unpaid commencing

from the month in which the tax should have been paid

and any payment made by the said person in respect of

the tax payable by him in terms of this subarticle shall

first be applied against any additional tax due thereon.

(4) The provisions of subarticle (3) shall not be

applicable when the person referred to therein proves to the

satisfaction of the Commissioner that he did not know and

could not reasonably have known that he was a recipient and

for this purpose it shall be presumed that such person was

fully cognisant of the provisions and implications of the

Income Tax Acts.

(5) Where the payor has not deducted or paid the tax

from the income referred to in sub-paragraphs (2), (3) and

(4) of article 41(a)(viii), the provisions of articles 38 and 39

shall not be applicable.”.

Article 41of the principal Act shall be amended as follows

(a) paragraph (a)(viii) shall be substituted by the following

“(viii)(1) profits distributed by a company that is not

resident in Malta (and that is not a collective investment

scheme), and where such profits are paid through the services

of an authorised financial intermediary to an individual who

is resident in Malta, provided that such distributed profits

constitute income in the hands of such individual that is

derived from shares in such company, each share being a

qualifying asset as defined in the provisions of article 9B;

(2) the amount of the net dividend paid by a company

registered in Malta in respect of which the recipient

shareholder is registered for the purpose of article 48(4) or

article 48(4A) of the Income Tax Management Act;

(3) the amount paid pursuant to subarticle 48(4) or

subarticle 48(4A) of the Income Tax Management Act;

(4) the dividend referred to in article 43(6)(a) and

article 43(6)(c).”;

(b) in paragraph (b) thereof after the words “makes a

payment of investment income” there shall be added the words

“and with respect to investment income referred to in paragraph

(a) (viii) (4) of this article shall mean the company which earned

the profits deemed distributed pursuant to article 43(6) (a) and

article 43(6)(c)”;

c) in paragraph (c)(iii)

(i) the words “referred to in sub-paragraph (i).” shall be

substituted by the words “referred to in sub-paragraph (i):”;

(ii) the following new proviso shall be added to the said

paragraph (c)

“Provided that with respect to the income referred to in

sub-paragraphs (2), (3) and (4) of paragraph (viii) a recipient

shall be an individual, who is resident in Malta and in the

circumstances referred to in article 43(6) (e) such individual

must be ordinarily resident and domiciled in Malta.”.

In article 43 of the principal Act there shall be added the Amendment

article 43 of the

following new subarticle (6)

principal Act.

“(6) (a) Where an individual resident in Malta is registered

for the purpose of article 48(4) or article 48(4A) of the Income

Tax Management Act, or is beneficially entitled, directly or

indirectly, to the profits of a company which is so registered, such

individual shall be deemed to have received a dividend or dividends

corresponding to the amount of profits (that is, the profits net of

the tax paid or payable by the company in respect of which he or

the said company are so registered) that he is beneficially entitled

to receive from such company or companies, on the first day of

the accounting period next following that in which such profits

were earned by the said company or companies: provided that such

profits have not been distributed before that date;

(b) An individual who is beneficially entitled, directly

or indirectly, to the profits of an entity which has received, or is

entitled to receive, directly or indirectly, the income referred to in

sub-paragraphs (2) and (3) of article 41(a)(viii), shall be deemed

to have received, at the time that the said entity has received the

said income, so much of that income as corresponds to his, direct

or indirect, entitlement to receive that income by way of dividend

or other means through or from any person or entity in any manner

whatsoever

Provided that in the case of income referred to paragraph

(2) of article 41(a)(viii) the said person shall not be deemed to

have received such income if and to the extent that the distributable

profits resulting in such income have been deemed to be income

referred to in paragraph (4) of the said article 41(a)(viii) paid to a

recipient as defined in the investment income provisions;

(c) Where an individual resident in Malta is beneficially

entitled, directly or indirectly, to the profits of a company which

has applied the provisions of article 12(1)(u) to any of its income

such individual shall be deemed to have received, at the time that

the said company has submitted its tax return in which the said

income would have been charged to tax but for the fact that it

applied the said exemption or the last date on which such a tax

return is due to be submitted, whichever is the earlier, so much of

that income as corresponds to his, direct or indirect, entitlement to

receive that income by way of dividend or other means through or

from any person or entity in any manner whatsoever;

(d) Where an individual becomes beneficially entitled,

directly or indirectly to the profits of an entity or any such

entitlement is increased in any way and such entity has received

but not yet distributed, or is entitled to receive (at the time such

individual became so entitled or had his entitlement so increased),

directly or indirectly, the income referred to in sub-paragraphs (2)

and (3) of article 41(a)(viii), such individual shall be deemed to

have received a dividend chargeable to tax under this Act at the

time that he became so entitled or had his entitlement so increased

as corresponds to his, direct or indirect, entitlement or increased

entitlement to receive that income by way of dividend or other

means through or from any person or entity in any manner

whatsoever and such individual shall be obliged to declare the said

dividend in his return of income

Provided that the provisions of this paragraph shall not be

applicable where the Commissioner is satisfied that the events

referred to in this paragraph were not the result of some arrangement

or scheme the sole or main purpose of which was the avoidance of

or postponement of the payment of tax;

(e) Where the immediate shareholder of the company

referred to in paragraph (a) is not an individual and is not resident

in Malta or where the entity referred to in paragraphs (b) and (c)

which has actually received, or is actually entitled to receive, the

income referred to in sub-paragraphs (2) and (3) of article 41(a)(viii)

is not resident in Malta, the provisions of this subarticle shall only

be applicable when the said individual is ordinarily resident and

domiciled in Malta;

(f) where the direct or indirect beneficial entitlement referred

to above is an entitlement to the profits of a public company or

other entity, and where one or more individuals, ordinarily resident

and domiciled in Malta, do not own or control a substantial part

of such company or entity, or are not beneficially entiled to a

substantial part of the profits or income of such company or entity,

and the shares or other similar security in relation to such company

or entity

(i) are listed on a stock exchange recognised under the

Financial Markets Act, and the Commissioner is satisfied that

the shares or other similar security are widely held and

frequently traded; or

(ii) although not listed on such a recognised stock

exchange and not frequently traded, are widely held;

the Commissioner may, in his absolute discretion, determine that

the provisions of this subarticle are not applicable;

(g) for the purpose of this subarticle the word “entity” means

a person other than an individual and shall include any trust or

body of persons.”.

Article 52 of the principal Act shall be amended as follows: Amendment of

article 52 of the

principal Act.

(a)

In subarticle (5)

(i) for the words “international trading company.” there

shall be substituted the words “international trading

company:”;

(ii) the following new provisos shall be added

Provided that no such ruling shall be notified in respect of a

company which was a company registered in Malta on or after 1

January 2007 but was not resident in Malta before that date.

Provided further that companies registered in Malta

between the 18 April 2006 and 31 December 2006 shall only

be entitled to apply for a ruling in terms of Article 52(5) by

not later than 30 June 2007.”;

(b) Immediately after subarticle (5) there shall be added the

following new subarticle (5A)

“(5A) The Commissioner shall, on the application of

any person, notify his ruling that a company is not precluded

from being a company to which paragraph (b) of article 48(4A)

of the Income Tax Management Act refers to as a consequence

of paragraph (ii) thereof

Provided that where the Commissioner has notified his

ruling as aforesaid, such ruling shall only remain binding and

valid as long as such company together with the filing of its

income tax return also submits the following documents

(a) a declaration, signed by all the directors of the company

or by the company secretary where such declaration is approved

by the board of directors of the company, confirming that

throughout the relevant accounting period the company’s activities

consisted solely of the activities referred to in the company’s

application for the said ruling. Where the declaration is signed by

the company secretary it shall also state

(i) whether all the directors of the company were

present at the meeting approving the declaration and, if not

all the directors were present, whether the meeting was

properly convened as required by the company’s

memorandum and articles;

(ii) whether the declaration was unanimously approved

by all the directors present at the meeting and, if approval

was not unanimous, the number of votes against and the

number of votes for the motion; and

(b) a declaration, signed by the auditor of the company for

the accounting period in question, confirming that, to the best of

his knowledge and belief, the declaration referred to in paragraph

(a) is correct.”;

(c) In subarticle 8 there shall be added the following new

paragraph (c)

“(c) Notwithstanding the provisions of the preceding

paragraphs of this sub-article no ruling pursuant to subarticle

(5) including any renewal of such ruling shall be effective on

or after the 1 January 2011.”.

Article 59(5) of the principal Act shall be amended as follows

(a) In paragraph (a)

(i) for the words “dividend certificate.” there shall be

substituted the words “dividend certificate:”;

(ii) the following proviso shall be added

“Provided that a dividend certificate in respect of a

dividend paid out of profits earned in the accounting period

in which the dividend is paid need not be furnished at the

time of payment of a dividend but shall be so furnished as

soon as practicable after the end of the accounting period in

which the dividend is paid and in any such event shall be

furnished by not later than the tax return date of the year of

assessment relative to that accounting period.”;

(b) Immediately preceding the word “account” in paragraph

(b)(i) and (b)(iii) there shall be added the word”“taxed”;

(c) Sub-paragraph (ix) of paragraph (b) thereof shall be

renumbered as (x) and immediately preceding this paragraph as

renumbered there shall be added the following new sub-paragraph

(ix)

“(ix) an analysis of the profits out of which the dividend

is paid distinguishing between

(1) profits which are chargeable to tax in the year

of assessment 2007 and previous years of assessments;

and

(2) profits which are chargeable to tax in the year

of assessment 2008 and subsequent years of assessment

showing separately the amount of such profits pertaining

to each such year of assessment..”.

Article 67 of the principal Act shall be amended as follows: Amendment

article 67 of the

principal Act.

(a) in subarticle (1) thereof immediately preceding the words

“the Maltese taxed account” there shall be added the words

“immovable property account,”;

(b) in subarticle (4) thereof for the words “who acts on behalf

of a person who” there shall be substituted the words “who acts on

behalf of, an individual who”.

Article 67A of the principal Act shall be amended as follows: Amendment of

article 67A of the

principal Act.

(a) in subarticle (1) thereof after the words “Notwithstanding

the provisions contained in the definition of “foreign income

account” in article 2,” there shall be added the words “but without

prejudice to any obligation to allocate profits to the final tax account

and the immovable property account,”;

(b) subarticle (5) thereof shall be substituted by the

following

“(5) For the purposes of this article a person resident

in Malta shall include a non-resident person (including a non-

resident company) who is owned and controlled by, directly

or indirectly or who acts on behalf of an individual who is

ordinarily resident and domiciled in Malta.”.

Article 68 of the principal Act shall be amended as follows

a) In subarticle (1) the words “paid out of the distributable

profits allocated to the foreign income account or to the Maltese

taxed account” shall be deleted;

b)

There shall be added the following new subarticles

“(3) A dividend paid by a company shall be paid out of

profits allocated to any of the following taxed accounts, that is to say

the final tax account and the immovable property account (including

the amount of profits allocated to these taxed accounts in the accounting

period in which the dividend is paid) before any profits allocated to the

Maltese taxed account are distributed.

(4) A dividend paid by a company which was resident in

Malta before the 1 January 2007 out of profits allocated to the Maltese

taxed account shall be deemed to be paid out of profits earned in

accounting periods commencing prior to the 1 January 2011, and only

when such profits are wholly distributed shall profits earned in

subsequent accounting periods be considered as being distributed for

the purpose of the Income Tax Acts; and for this purpose any dividend

paid on or after the 1 January 2007 which did not involve the actual

payment of a dividend in cash shall be ignored and deemed to never

have been made.

(5) When a company pays any dividends which are

investment income referred to in article 41(a)(viii) (2), (3) and (4) paid

to a recipient, or when such income is deemed to be paid to a recipient

out of profits allocated to more than one taxed account, each person in

receipt of such dividends shall be deemed to have received a dividend

from each such account in an amount that corresponds to his share of

the total dividends so paid. Any provisions in the memorandum and

articles of association of the company or in any agreement which provide

that a shareholder shall be entitled to be paid dividends solely or mainly

from one or more taxed account or accounts in preference to one or

more other taxed account or accounts shall be disregarded for the purpose

of the Income Tax Acts, and for the purpose of this subarticle investment

income referred to in article 41(a)(viii)(4) shall be deemed to have been

a dividend actually paid by the company the profits of which are deemed

distributed by virtue of article 43(6)(a) or article 43(6)(c)

Provided that where profits have been subject to tax at a rate

pursuant to article 15 of the Business Promotion Act or article 56(20)

of this Act, the provisions of this subarticle shall not apply as regards

such profits and unless the shares (including any shares substituting the

original shares resulting from any share exchange or reorganisation)

which gave rise to the entitlement to such profits are no longer in

existence, such profits shall be distributable only to the person in respect

of whom the aforementioned articles were applicable or to any other

person who acquired the shares from such person.”.

Article 82 of the principal Act shall be amended as follows: Amendment

article 82 of the

principal Act.

(a) the words “when applied to a company, hereinafter in

this article referred to as “the Malta company”, and” shall be

deleted;

(b) in paragraph (a) thereof

(i)

the words “not resident in Malta” shall be deleted;

and

(ii) for the words “ by the Malta company” there shall

be substituted the words “ by the person making the claim”.

Article 92 of the principal Act shall be amended as follows: Amendment of

article 92 of the

principal Act.

(a) in paragraph (a) thereof for the words “company resident

in Malta” there shall be substituted the words “company registered

in Malta”;

(b) paragraph (b) thereof shall be substituted by the

following

“(b) which the company is specifically empowered to

receive and fall to be allocated to the foreign income account

as defined in article 2, but excluding profits resulting from

dividends paid out of the foreign income account of another

company resident in Malta: provided in the case of companies

resident in Malta prior to the 1 January 2007 the first condition

of this paragraph (b) shall apply with effect from 1 January

2011; and”.

PART II

This Part amends the Income Tax Management Act, and shall

be read and construed as one with the Income Tax Management Act,

hereinafter in this Part referred to as “the principal Act”.

Article 19(4)(a) of the principal Act shall be amended as

(a) for the words “company resident in Malta” there shall

be substituted the words “company registered in Malta”;

(b) for the words “and 181 of that Act;” there shall be

substituted the words and “and 181 of that Act

(c)

the following proviso shall be added thereto

“Provided that in the case of a company which is not resident

in Malta, such records shall be those which refer to the company’s

activities in Malta.”

Immediately after Article 42A of the principal Act there shall

be added the following new Article

l-artikolu 48 ta’

l-Att prinçipali.

(a)

fis-subartikolu (4)(b)>

(i) minflok “rigward dawk il-profitti.” g[andhom

jid[lu l-kliem “rigward dawk il-profitti>’’<

(ii) il-provisos li ;ejjin g[andhom ji]diedu>

“I]da g[al talba g[al [las lura ta’ taxxa relatata ma’

dividendi miksuba minn sehem parteçipanti akkwistat

fi jew wara l-1 ta’ Jannar 2007, ir-rimbors skond dan il-

paragrafu jkun dovut biss meta l-kundizzjonijiet stabbiliti

fil-paragrafu (i) jew fil-paragrafu (ii) hawn ta[t ikunu

sodisfatti>

(i) meta l-korp ta’ persuni li fih ikun hemm

sehem partiçipanti jissodisfa xi wa[da minn dawn

il-kundizzjonijiet, ji;ifieri>

(1) jkun residenti jew inkorporat

f’pajji] jew territorju li jifforma parti mill-

Unjoni Ewropea<

(2) jkun so;;ett g[al xi taxxa barranija

ta’ mill-anqas [mistax fil-mija (15%)<

(3) ma jkollux aktar minn [amsin fil-mija

(50%) ta’ l-income tieg[u miksub minn

img[ax passiv jew royalties<

(ii) meta ebda wa[da mill-kundizzjonijiet

stabbiliti fil-paragrafu (i) ma tkun sodisfatta

g[andhom ji;u sodisfatti ]-]ew; kundizzjonijiet li

;ejjin>

(1) is-sehem b’ekwità mill-kumpannija

re;istrata f’Malta fil-korp ta’ persuni li mhux

residenti f’Malta mhux investiment ta’

portafoll u g[al dan il-g[an il-pussess ta’

azzjonijiet ta’ kumpannija residenti f’Malta

f‘korp ta’ persuni li mhux residenti f’Malta li

jikseb iktar minn [amsin fil-mija (50%) ta’ l-

income tieg[u minn investiment ta’ portafoll

g[andu jitqies b[ala investiment ta’ portafoll<

u

(2) il-korp ta’ persuni li mhux residenti

f’Malta jew l-img[ax jew royalties passivi

tieg[u kienu so;;etti g[al xi taxxa barranija

b’rata ta’ mhux inqas minn [amsa fil-mija

(5%)>

I]da wkoll illi d-disposizzjonijiet tal-

proviso immedjatament preçedenti g[andhom,

b’se[[ mill-1 ta’ Jannar 2011, japplikaw ukoll

g[al talba ta’ [las lura ta’ taxxa ta’ Malta

m[allsa fuq il-profitti mqassma inklu]i

f’dividendi riçevuti minn sehem parteçipanti

akkwistat qabel l-1 ta’ Jannar 2007.”<

(b) fis-subartikolu (4)(ç)>

(i) minflok il-kliem “skond il-ka].” g[andhom jid[lu

l-kliem “skond il-ka]>”<

(ii) il-proviso li ;ej g[andu ji]died>

“I]da g[al dak li jirrigwarda talbiet mag[mula relatati

mal-pagament ta’ dividendi minn profitti allokati lill-kont ta’

income barrani u intaxxati fis-sena ta’ stima 2008 u s-snin ta’

stima ta’ wara, l-espressjoni “taxxa ta’ Malta

m[allsa” g[andha tfisser it-taxxa li fil-fatt tit[allas mill-

kumpannija lill-Kummissarju fuq il-profitti hekk allokati

flimkien ma’ l-ammont, jekk ikun hemm, li bih din it-taxxa

kienet mnaqqsa permezz ta’ talba g[all-[elsien mit-taxxa

doppja skond l-artikoli msemmija fl-artikolu 74(a), (b) u (c)

ta’ l-Att dwar it Taxxa fuq l-Income.”<

(ç) id-disposizzjonijiet li ;ejjin g[andhom ji]diedu mas-

subartikolu (4) ta’ dan l-artikolu>

“I]da li l-provisos li ;ejjin g[andhom japplikaw ukoll g[as-

subartikolu (4) kollu>

(i) mill-1 ta’ Jannar 2011 sal-31 ta’ Diçembru 2014,

fir-rigward ta’ dividendi m[allsa minn kumpannija li kienet

kumpannija b’kummerç internazjonali fil-31 ta’ Diçembru

2010, id-disposizzjonijiet ta’ dan l-artikolu g[andhom

ikomplu japplikaw wara l-31 ta’ Diçembru 2010 fir-rigward

tat-tqassim ta’ profitti li jkunu nqalg[u minn din il-kumpannija

meta kienet kumpannija b’kummerç internazzjonali<

(ii) persuna residenti f’Malta, re;istrata sabiex tag[mel

talba skond dan is-subartikolu hekk kif jista’ ji;i preskritt,

tista’ titlob ukoll [las lura ta’ taxxa kontemplat f’dan is-

subartikolu rigward dividendi m[allsa mill-profitti allokati

lill-kont ta’ l-income barrani meta dan id-dividend ikun

im[allas>

(1) minn kumpannija li kienet kumpannija

rre;istrata f’Malta fi jew wara l-1 ta’ Jannar 2007 i]da

ma kinetx residenti f’Malta qabel dik id-data< u

(2) minn kull kumpannija o[ra re;istrata f’Malta

minn profitti miksuba mill-imsemmija kumpannija fil-

perjodi ta’ kontjar li jibdew fi jew wara l-1 ta’ Jannar

2011.”<

(d) Minnufih wara is-subartikolu (4) ta’ dan l-artikolu

g[andu ji]died dan l-subartikolu ;did li ;ej>

“4A. (a) B’se[[ mill-1 ta’ Jannar 2007, persuna li

tirçievi dividend im[allas lilha minn kumpannija re;istrata

f’Malta minn profitti allokati lill-kont intaxxat f’Malta jew

lill-kont ta’income barrani tag[ha tista’ titlob lura sitta minn

kull seba’ parti (six-sevenths) ta’ l-Advance Company Income

Tax m[allsa mill-kumpannija fuq dawk il-profitti mqassma

lilha b[ala dividend, sakemm dik il-persuna tkun re;istrata

g[al dan il-g[an skond kif ikun preskritt>

I]da meta dividend ikun m[allas minn profitti>

(i) li jkunu mag[mula minn img[ax jew royalties

passivi ir-rata ta’ [las lura ta’ taxxa tkun ta’ [amsa minn

kull seba’ parti (five-sevenths) ta’ Advance Company

Income Tax im[allsa<

(ii) allokati lill-kont ta’ income barrani u li

g[alihom il-kumpannija tkun talbet il-[elsien mit-taxxa

doppja ma jistax ikun hemm talba g[al [las lura ta’ taxxa

ta[t dan is-subartikolu.

(b) Matul il-perjodu mill-1 ta’ Jannar 2007 sal-

31 ta’ Diçembru 2010, kull talba g[al [las lura kontemplata

f’dan is-subartikolu tista’ ssir biss minn persuna li tirçievi

dividend minn kumpannija li kienet kumpannija re;istrata

f’Malta fi jew wara l-ewwel ta’ Jannar 2007 i]da ma kinetx

residenti f’Malta qabel dik id-data>

I]da>

(i) persuna li tirçievi dividend minn kumpannija

msemmija f’wie[ed mis-subparagrafi (1) jew (2), u

m[allas wara li dik il-kumpannija tkun informat lill-

Kummissarju kif kontemplat fis-subparagrafi (1) jew (2)

hawn ta[t, tista’ wkoll titlob il-[las lura ta’ taxxa skond

dan is-subartikolu matul il-perjodu msemmi jekk il-

kondizzjonijiet imsemmija fil-paragrafu (a) ikunu

sodisfatti>

(1) kumpannija li tikkwalifika b[ala

kumpannija b’kummerç internazzjonali u li

tinforma lill-Kummissarju li tkun g[a]let li tieqaf

tkun kumpannija b’kummerç internazzjonali liema

g[a]la g[andha tkun approvata b’ri]oluzzjoni

straordinarja tal-membri ta’ din il-kumpannija<

(2) kumpannija li tkun infurmat lill-

Kummissarju li tkun g[a]let li ti;i trattata b[ala

kumpannija li kienet re;istrata f’Malta fi jew wara

l-1 ta’ Jannar 2007 i]da li ma kinetx residenti

f’Malta qabel dik id-data, fejn dik il-kumpannija

kellha, fit-tliet perijodi ta’ kontjar e]att qabel dak

li fih tkun hekk infurmat lill-Kummissarju, flimkien

aktar minn 50% tal-profitti tag[ha allokati fil-kont

ta’ taxxa barrani jew jikkonsisti minn income li

g[alih l-e]enzjoni provduta bl-artikolu 12(1)(u) ta’

l-Att dwar it-Taxxa fuq l-Income hija applikabbli u

;iet applikata, liema g[a]la g[andha tkun approvata

permezz ta’ ri]oluzzjoni straordinarja tal-membri

ta’ dik il-kumpannija>

I]da>

(aa) meta l-kumpannija ma kinetx

te]isti jew ma kinetx residenti jew registrata

f’Malta matul il-perjodu kollu ta’ tliet snin

imsemmi hawn fuq il-kondizzjoni dwar in-

natura ta’ l-income tag[ha kif dispost fil-

paragrafu (2) hawn fuq g[andha ti;i

determinata b’referenza g[all-perjodu li dik il-

kumpannija kienet te]isti, residenti jew

re;istrata f’Malta skond il-ka]<

(bb) il-Kummissarju jista, fid-

diskrezzjoni tieg[u, jiddetermina li l-paragarfu

(2) ta’ hawn fuq g[andu japplika g[al

kumpannija jekk, fl-opinjoni tieg[u jkun

probabbli li iktar minn nofs il-profitti tal-

kumpannija li jistg[u jitqassmu ji;u allokati

fil-kont ta’ income barrani fil-futur

prevedibbli>

I]da wkoll li kumpannija li g[aliha

japplika l-paragrafu (2) hawn fuq ma tkunx

intitolata li titlob [las lura tat-taxxa m[allsa

Malta fuq profitti allokati g[al kont ta’ taxxa

Maltija fis-snin ta’ stima ta’ qabel is-sena ta’

stima 2008.

(ii) din il-kumpannija ma tkun kisbet ebda mill-

profitti tag[ha, (anki jekk dawn il-profitti ma jkunux

inklu]i fl-imsemmi dividend) direttament jew

indirettament, minn seng[a, negozju jew attività o[ra

(hawnhekk i]jed ’il quddiem imsej[a “l-attività l-;dida”)

li tkun kollha kemm hi jew parzjalment l-istess jew

espansjoni, sostituzzjoni jew duplikazzjoni ta’ seng[a,

negozju jew attività o[ra li kienet titmexxa f’Malta qabel

l-1 ta’ Jannar 2007, minn kwalunkwe persuna (hawn

i]jed ’il quddiem imsej[a “l-attività l-qadima”)< u dan li

ntqal g[andu ji;i interpretat fid-dawl ta’ dan li ;ej>

(1) meta r-ri]orsi umani, tan;ibbli u

intan;ibbli ta’ l-attività l-;dida jkunu

sostanzjalment l-istess b[al dawk u]ati fl-attività

l-qadima, g[andu jkun meqjus, sakemm il-kuntrarju

ma jkunx ippruvat, li l-attività l-;dida hija l-istess

jew espansjoni, sostituzzjoni jew duplikazzjoni ta’

l-attività l-qadima<

(2) meta l-attività l-;dida titmexxa,

direttament jew indirettament, minn xi persuna li

hija b’xi mod, dirett jew indirett, konnessa jew

assoçjata ma’ xi persuna li kienet tmexxi l-attività

l-qadima permezz ta’ azzjonijiet, drittijiet ta’

votazzjoni jew drittijiet ta’ proprjetà jew kontrolli

o[ra, g[andu jkun meqjus, sakemm il-kuntrarju ma

jkunx ippruvat, li l-attività l-;dida hija l-istess jew

espansjoni, sostituzzjoni jew duplikazzjoni ta’ l-

attività l-qadima<

(3) attività ;dida m’g[andhiex titqies li hi l-

istess jew espansjoni, sostituzzjoni jew

duplikazzjoni ta’ l-attività l-qadima biss g[aliex l-

attività l-;dida tixba[ l-attività l-qadima g[ax, inter-

alia, tipprovdi l-istess tip ta’ prodotti jew servizzi

jew g[ax l-attività l-;dida topera fl-istess suq b[al

l-attività l-qadima u tikkompeti ma’ l-attività l-

qadima>

I]da li meta l-attività l-qadima kienet

mag[mula minn kumpannija li g[aliha l-proviso (i)

g[al dan il-paragrafu (b) jista’ ji;i applikat l-attività

l-;dida m’g[andhiex titqies, fl-intier tag[ha jew

parti minnha, li hija l-istess attività jew espansjoni,

sostituzzjoni jew duplikazzjoni ta’ l-attività l-

qadima.

(ç) G[all-finijiet tal-paragrafu (b) (ii) meta l-

Kummissarju jkun ta’ l-opinjoni li kull attività mag[mula

minn kumpannija li tikkonsisti minn xi parti minn xi attività

amministrattiva, mani;erjali jew attività o[ra mmexxija minn

xi persuna b[ala parti minn negozju tieg[u qabel l-ewwel ta’

Jannar 2007, u kull attività li tag[mel parti minn skema li l-

g[an uniku jew prinçipali tag[ha jkun li ji;u evitati d-

disposizzjonijiet tal-paragrafu (b) g[andha tkun seng[a,

negozju jew attività li kienet saret f’Malta, qabel l-1 ta’ Jannar

2007, minn kwalunkwe persuna< u g[al dan il-g[an il-kelma

“skema” g[andu jkollha t-tifsira mog[tija fl-artikolu 51(5)

ta’ l-Att dwar it-Taxxa fuq l-Income.

(d) Ming[ajr pre;udizzju g[all-proviso (i) tal-

paragrafu (b) ta’ dan l-artikolu talba g[al [las lura skond id-

disposizzjonijiet tal-paragrafu (a) ta’ dan is-subartikolu fir-

rigward ta’ dividend m[allas minn profitti allokati lill-kont

intaxxat f’Malta minn kumpanniji li kienu residenti f’Malta

qabel l-l ta’ Jannar 2007 tista’ ssir biss fir-rigward tat-taxxa

m[allsa fuq profitti miksuba mill-kumpannija msemmija g[as-

sena ta’ kontjar li tibda fi jew wara l-1 ta’ Jannar 2011.”<

(e) Fis-subartikolu (5), minflok il-kliem “kif intqal

qabel” g[andhom jid[lu l-kliem “skond is-subartikolu (4) jew

is-subartikolu (4A)”<

(f) Is-subartikolu (6) ta’ dan l-artikolu g[andu ji;i

emendat kif ;ej>

(i) wara l-kliem “skond is-subartikolu (4)

g[andhom jid[lu l-kliem “jew is-subartikolu (4A)<

(ii) minflok il-kliem “Dan il-[las lura m’g[andux

ikun taxxabbli” g[andhom jid[lu l-kliem “Dan il-[las

lura, [lief jekk ikun provdut mod ie[or fl-Atti dwar it-

Taxxa, m’g[andux ikun taxxabbli”<

(iii) Il-proviso li ;ej g[andu ji]died>

“I]da li minkejja d-disposizzjonijiet ta’ l-Att dwar

it-Taxxa fuq l-Income, il-Kummissarju m’g[andux

jag[mel dawk il-pagamenti sakemm ma tkunx t[allset

kull taxxa dovuta skond id-disposizzjonijiet ta’ l-income

fuq l-investiment imsemmija fl-artikolu 41 (a)(viii)(2)

jew (4) li jinkludu profitti mqassma li t-taxxa im[allsa

fuqhom hija t-taxxa li g[aliha tkun saret it-talba skond

dan is-subartikolu.”<

(g) Is-subartikolu (7) tieg[u g[andu ji;i emendat skond

dak li ;ej>

(i) Wara l-kliem “is-subartikolu (4)” kull fejn

jidhru g[andhom ji]diedu l-kliem “jew is-subartikolu

(4A)”<

(ii) Fil-paragrafu (ç) tieg[u l-kliem “li dwarha

tkun saret it-talba>” g[andhom jinbidlu bil-kliem “li

dwarha tkun saret it-talba.”<

(iii) G[andu ji]died dan il-paragrafu (d) ;did li

;ej>

“(d) {las lura ta’ taxxa pagabbli skond is-

subartikolu (4) jew is-subartikolu (4A) m’g[andu

fl-ebda ka] jeççedi l-ammont ta’ taxxa li fil-fatt ikun

im[allas mill-kumpannija li t[allas id-dividend fuq

il-profitti mqassma inklu]i f’dak id-dividend li

dwaru ssir it-talba skond dawk is-subartikoli>”<

(iv) fil-proviso g[alih minflok il-kliem

“disposizzjonijiet ta’ dan l-Att” g[andu jid[ol il-kliem

“disposizzjonijiet ta’ dan l-Att>”<

(v) immedjatament wara l-proviso g[alih g[andu

ji]died il-proviso ;did li ;ej>

“I]da wkoll li d-disposizzjonijiet tal-proviso

li ji;i e]att qabel g[andhom, fil-perijodu mill-1 ta’

Jannar 2011 sal-31 ta’ Diçembru 2014, japplikaw

ukoll fil-ka] ta’ kull profitti mqassma minn

kumpannija li kienet kumpannija b’kummerç

internazzjonali fil-31 ta’ Diembru 2010 fejn dawk

il-profitti kienu maqlug[a minn dik il-kumpannija

meta

kienet

kumpannija

b’kummerç

internazzjonali.”.

(h) G[andu ji]died dan is-subartikolu (10) ;did li ;ej

ma’ dan l-artikolu>

“(10) Jekk persuna tag[mel talba g[al [las lura

skond is-subartikolu (4) jew is-subartikolu (4A) meta

din il persuna ma kinitx intitolata g[al dan il-[las lura

din il-persuna jkollha t[allas penali daqs l-ammont ta’

[las lura mitlub u jekk il-[las lura jkun fil-fatt t[allas

lilha, dik il-persuna jkollha wkoll t[allas l-ammont ta’

taxxa m[allas lura kif ukoll taxxa addizzjonali ta’ sebg[a

fil-mija fix-xahar jew parti minnu b’bidu mix-xahar li

fih l-imsemmi [las lura jkun ;ie mag[mul lilu sax-xahar

li fih ikun [allas it-taxxa m[allsa lura u kull pagament

mag[mul minn din il-persuna fir-rigward tat-taxxa li

g[andha ti;i m[allsa lura minnha skond dan il-paragrafu

g[andha tkun applikata kontra kull taxxa addizzjonali

dovuta fuqha>

I]da d-disposizzjonijiet ta’ dan is-subartikolu (9)

m’ghandhomx japplikaw meta l-persuna msemmijja

f’dan is-subartikolu tipprova li ma kinitx taf jew li ma

setg[etx ra;onevolment tkun taf li ma kellhiex jedd g[al

dak il-[las lura ta’ taxxa.”.

L-artikolu 56(8) ta’ l-Att prinçipali g[andu ji;i emendat kif Emenda ta’

l-artikolu 56 ta’

;ej >

l-Att prinçipali.

(a) fil-paragrafu (a) tieg[u flok il-kliem “persuna jew

persuni” g[andu jid[ol il-kliem “individwu jew individwi”<

(b) fil-paragrafu (b) tieg[u minflok il-kliem “persuna jew

persuni” g[andu jid[ol il-kliem “individwu jew individwi”<

(c) fil-paragarafu (b) tieg[u minflok il-kliem “domiçiljati

f’Malta” g[andu jid[ol il-kliem “domiçiljati f’Malta>”<

(d) Il-proviso li ;ej g[andu ji]died mieg[u>

“I]da li b’effett mill-1 ta’ Jannar 2011 u sal-31 ta’ Diçembru

2014, fir-rigward ta’ dividendi m[allsa minn kumpannija li kienet

kumpannija b’kummerç internazzjonali fil-31 ta’ Diçembru 2010,

id-disposizzjonijiet ta’ dan is-subartikolu g[andhom ikomplu

japplikaw wara l-31 ta’ Diçembru 2010 fir-rigward tat-tqassim ta’

profitti maqlug[a minn dik il-kumpannija meta kienet kumpannija

b’kummerç internazzjonali.”.

Fl-artikolu 61 (a) (ii) ta’ l-Att prinçipali, il-kliem “li ta;ixxi Emenda ta’

l-artikolu 61 ta’

f’isem, persuna li” g[andu jinbidel bil-kliem “li ta;ixxi f’isem, individwu l-Att prinçipali.

Fil-proviso g[all-artikolu 81 ta’ l-Att prinçipali e]att qabel Emenda ta’

l-artikolu 81 ta’

il-kliem “ma tkunx residenti f’Malta” g[andu ji]died il-kliem “jew tkun l-Att prinçipali.

kumpannija re;istrata f’Malta.”.

TAQSIMA III

Din it-Taqsima temenda l-Att dwar il-Kunsilli Lokali u Emenda ta’ l-Att

dwar il-Kunsilli

g[andha tinqara u tinftiehem b[ala [a;a wa[da ma’ l-istess Att Lokali, Kap. 363.

hawnhekk i]jed ’il quddiem f’din it-Taqsima msejja[ “l-Att prinçipali”.

Minflok il-paragrafu (1) tar-regolament 103 tar-Regolamenti

ta’ l-1993 dwar l-Elezzjonijiet g[all-Kunsilli Lokali li hemm fit-Tielet

Skeda ma’ l-Att prinçipali g[andu jid[ol dan li ;ej>

“(1) Kull min jag[mel att illegali je[el, meta jinsab [ati,

multa ta’ mhux i]jed minn [ames mitt lira>

I]da l-Ministru jista’, minn ]mien g[al ]mien b’avvi] fil-

Gazzetta jispeçifika pieni o[ra li f’kull ka] ma jkunux aktar minn

multa ta’ tlett elef lira.”.

Id-disposizzjonijiet ta’ l-artikolu 27 ta’ dan l-Att g[andhom

japplikaw g[al kull proçedimenti kriminali kemm jekk mibdija qabel

kemm jekk mibdija wara d-d[ul fis-se[[ ta’ din it-Taqsima ta’ dan l-

Att< u ma g[andu jkun hemm l-ebda inkapaçità u ebda post ma g[andu

jsir battal b’konsegwenza tal-paragrafu (1) tar-regolament 103 ta’ l-Att

dwar il-Kunsilli Lokali kif kien fis-se[[ qabel id-d[ul fis-se[[ ta’ din

it-Taqsima u jekk kien hemm xi inkapaçità jew xi post sar battal

b’konsegwenza ta’ l-istess paragrafu ta’ l-istess regolament dik l-

inkapaçità ma g[andhiex tkompli fis-se[[ u l-istess post g[andu jitqies

li qatt ma sar battal anki jekk id-dikjarazzjoni ta’ [tija tar-reat ta[t ir-

regolament 103 imsemmi tkun saret qabel id-d[ul fis-se[[ ta’ din it-

Taqsima ta’ dan l-Att.

Mg[oddi mill-Kamra tad-Deputati fis-Seduta Nru. 504 tas-7 ta’ Marzu, 2007.

A NTON T ABONE

Speaker

R ICHARD J. C AUCHI

Skrivan tal-Kamra tad-Deputati

(1) In addition to the other provisions of this

Part and in particular articles 42 and 43 hereof a company

shall also pay the tax chargeable on its income in the manner

set out in this article.

(2) Upon the payment of a dividend from profits

allocated to the foreign income account or the Maltese taxed

account the tax which a company is entitled to deduct in terms

of article 59 of the Income Tax Act in respect of such dividend

together with any additional tax payable in terms of article

44 (1) (a), after deducting any tax credits relative to the profits

out of which the dividend is paid excluding any tax credits

relative to a claim for relief of double taxation under the

articles referred to in articles 74 (a), (b) and (c) of the Income

Tax Act, shall be referred to as Advance Company Income

Tax.

(3) The amount of Advance Company Income Tax

less any claim for relief of double taxation and any tax that

the company has paid, as at the date of payment contemplated

herein, on the profits out of which the said dividend is paid

shall be paid by the company within sixty days the end of the

month following that in which the dividend is paid.

(4) Where a dividend is paid out of profits earned

in the accounting period in which the dividend is paid the

dividend shall, for the purpose of this article, be deemed to

have been paid on the last day of that accounting period.

(5) Where a payment of Advance Company

Income Tax has been made in accordance with this article,

the amount so paid, excluding any additional tax included

therein, shall be set-off against any other future payments of

tax that the company is required to make on the profits out of

which the dividend is paid.

(6) During the period from 1 January 2007 to the

31 December 2010 the provisions of this article shall only be

applicable to a company which was a company registered in

Malta on or after the 1 January 2007, but was not resident in

Malta before that date and to a company in respect of which

paragraph (i) of the proviso to article 48(4A)(b) has been

applied.”.

25. Article 48 of the principal Act shall be amended as follows: Amendment of

article 42A of the

principal Act

(a)

in subarticle (4)(b)

(i) for the words “in respect of those profits.” there

shall be substituted the words “in respect of those profits:”;

(ii) the following provisos shall be added

“Provided that with respect to a claim for refund

relative to dividends derived from a participating holding

acquired on or after 1 January 2007, the refund

contemplated by this paragraph shall only be due when

the conditions set out in either paragraph (i) or paragraph

(ii) below are satisfied

(i) where the body of persons in which the

participating holding is held satisfies any one of

the following conditions, that is to say

(1) it is resident or incorporated in a

country or territory which forms part of the

European Union;

(2) it is subject to any foreign tax of at

least fifteen per cent (15%);

(3) it does not have more than fifty per

cent (50%) of its income derived from passive

interest or royalties;

(ii) where none of the conditions set out in

paragraph (i) are satisfied then both of the following

two conditions must be satisfied

(1) the equity holding by the company

registered in Malta in the body of persons not

resident in Malta is not a portfolio investment

and for this purpose the holding of shares by a

company resident in Malta in a body of persons

not resident in Malta which derives more than

fifty per cent of its income from portfolio

investments shall be deemed to be a portfolio

investment; and

(2) the body of persons not resident in

Malta or its passive interest or royalties have

been subject to any foreign tax at a rate which

is not less than five per cent (5%)

Provided further that the provisions of the

immediately preceding proviso shall, with

effect from 1 January 2011, also be applicable

to a claim for refund in respect of the Malta

tax paid on distributed profits comprised in

dividends received from a participating

holding acquired before the 1 January 2007.”;

(b) in subarticle 4(c)

(i) for the words “as the case may be.” there shall be

substituted the words “as the case may be:”;

(ii) the following proviso shall be added

“Provided that as regards claims made relative to

the payment of dividends from profits allocated to the

foreign income account and brought to charge to tax in

year of assessment 2008 and subsequent years of

assessment the expression Malta tax paid shall mean the

tax actually paid by the company to the Commissioner

on the profits so allocated plus the amount, if any, by

which such tax has been reduced by a claim of relief of

double taxation under the articles referred to in articles

74 (a), (b) and (c) of the Income Tax Act.”;

(c)

the following provisos shall be added to subarticle (4)

“Provided that the following provisos shall also apply

to the whole of subarticle (4)

(i) with effect from 1 January 2011 and up to 31

December 2014, as regards dividends paid by a company

which was an international trading company as at 31

December 2010, the provisions of this article shall

continue to apply after 31 December 2010 with respect

to the distribution of profits earned by such company

while it was an international trading company;

(ii) a person resident in Malta, registered for the

purpose of making a claim in terms of this subarticle in

such manner as may be prescribed, may also claim a tax

refund contemplated by this subarticle with respect to

dividends paid from profits allocated to the foreign

income account when such dividend is paid

(1) by a company which was a company

registered in Malta on or after 1 January 2007 but

was not resident in Malta before that date; and

(2) by any other company registered in Malta

out of profits derived by the said company in respect

of accounting periods which commenced on or after

1 January 2011.”;

(d) Immediately after subarticle (4) there shall be added the

following new subarticle

“4A. (a) With effect from 1 January 2007 a person,

in receipt of a dividend paid to him by a company registered

in Malta from profits allocated to its Maltese taxed account

or its foreign income account may claim a refund of six-

sevenths of the Advance Company Income Tax pertaining to

those profits distributed to him by way of such dividend,

provided that such person is for such purpose registered in

such manner as may be prescribed

Provided that where the dividend is paid out of profits

(i) consisting of passive interest or royalties the

rate of refund shall be of five-sevenths of the said

Advance Company Income Tax;

(ii) allocated to the foreign income account and

in respect of which profits the company has claimed relief

of double taxation no claim for refund may be made

under this subarticle.

(b) During the period from 1 January 2007 to 31

December 2010, any refund contemplated in this subarticle

may only be claimed by a person in receipt of a dividend

from a company which was a company registered in Malta

on or after 1 January 2007 but was not resident in Malta before

that date

Provided that

(i) a person in receipt of a dividend from a

company referred to in any of sub-paragraphs (1) or (2)

and paid after the said company has informed the

Commissioner as contemplated in the said paragraphs

(1) or (2) below, may also claim a tax refund in terms of

this subarticle during the aforementioned period if the

conditions of paragraph (a) are satisfied

(1) a company which qualifies as an

international trading company and which informs

the Commissioner that it has opted to cease to be

an international trading company which option shall

be approved by an extraordinary resolution of the

members of such company;

(2) a company which has informed the

Commissioner that it has opted to be treated as a

company which was registered in Malta on or after

1 January 2007 but was not resident in Malta before

that date, where such company had, in the three

accounting periods immediately preceding that in

which it has so informed the Commissioner, in the

aggregate more than 50% of its profits allocated to

the foreign income account or consisting of income

in respect of which the exemption provided by

article 12(1)(u) of the Income Tax Act is applicable

and has been applied, which option shall be

approved by an extraordinary resolution of the

members of such company

Provided that

(aa) where the company was not in

existence or was not resident or registered in

Malta during the whole of the above

mentioned three year period the condition

relating to the nature of its income set out in

paragraph (2) above shall be determined by

reference to the period that such company was

in existence, resident or registered in Malta as

the case may be;

(bb) The Commissioner may, in his

discretion, determine that paragraph (2) above

applies to a company if, he is of the opinion

that it is likely that more than half of the

distributable profits of the company will be

allocated to the foreign income account in the

foreseeable future

Provided further that a company to which

paragraph (2) above applies shall not be

entitled to claim a refund in respect of the

Malta tax paid on profits allocated to its

Maltese taxed account in years of assessment

prior to year of assessment 2008.

(ii) such company did not derive any of its profits,

(even if such profits are not comprised in the said

dividend) directly or indirectly, from a trade, business

or other activity (hereinafter referred to as “the new

activity”) which is in whole or in part the same or an

expansion, replacement or duplication of a trade,

business or other activity which was carried on in Malta,

prior to the 1 January 2007, by any person (hereinafter

referred to as the “old activity”); and the foregoing shall

be interpreted in the light of the following

(1) where the human, tangible or intangible

resources of the new activity are substantially the

same as those which were utilised by old activity,

it shall be presumed, unless the contrary is proved,

that the new activity is the same or an expansion,

replacement or duplication of an old activity;

(2) where the new activity is carried on

directly or indirectly by any person in any way

directly or indirectly connected or associated with

the persons which carried on the old activity through

shareholding, voting or other ownership or

controlling rights it shall be presumed, unless the

contrary is proved, that the new activity is the same

or an expansion, replacement or duplication of an

old activity;

(3) a new activity shall not be presumed to

be the same or an expansion, replacement or

duplication of an old activity merely because the

new activity is similar to an old activity because,

inter-alia, it provides the same type of goods or

services or because the new activity operates in the

same market as the old activity and competes with

the old activity

Provided that where the old activity had been

carried by a company to which proviso (i) to this

paragraph (b) may be applied the new activity shall

not be considered in whole or in part the same or

an expansion, replacement or duplication of the old

activity.

(c) For the purpose of paragraph (b) (ii) where the

Commissioner is of the opinion that any activity carried out

by any company which consists of any part of any

administrative, management or other activity carried on by

any person as part of his business activities prior to the 1

January 2007, and any other activity forms part of a scheme

the sole or main purpose of which is the avoidance of the

provisions of paragraph (b) shall be a trade, business or activity

which was carried on in Malta, prior to the 1 January 2007,

by any person; and for this purpose the word “scheme” shall

have the meaning assigned to it by article 51(5) of the Income

Tax Act.

(d) Without prejudice to proviso (i) of paragraph (b)

hereof a claim for refund pursuant to paragraph (a) hereof in

respect of dividends paid from profits allocated to the Maltese

taxed account by companies which were resident in Malta

prior to the 1 January 2007 may only be made in respect of

the tax paid on profits derived by the said company in respect

of accounting periods which commenced on or after 1 January

2011.”;

(e) In subarticle (5) thereof for the words “as aforesaid”

there shall be substituted the words “pursuant to subarticle (4) or

subarticle (4A)”;

(f)

Subarticle (6) thereof shall be amended as follows

(i) after the words “under subarticle (4)” there shall be

added the words “or subarticle (4A)”;

(ii) for the words “Such refund shall not be taxable.”

there shall be substituted the words “Such refund, unless

otherwise provided for in the Income Tax Acts, shall not be

taxable:”;

(iii)

The following proviso shall be added thereto

“Provided that notwithstanding anything contained in

the Income Tax Acts the Commissioner shall not make such

payment unless any tax due under the investment income

provisions in respect of investment income referred to in

article 41 (a)(viii)(2) or (4) comprising the distributed profits

the tax paid on which is the tax in respect of which the claim

pursuant to this subarticle is made, has been paid.”;

(g) Subarticle (7) thereof shall be amended as follows

(i) after the words “subarticle (4)” wherever they

appear there shall be added the words “or subarticle (4A)”;

(ii) in paragraph (c) thereof for the words “said claim

has been made:” there shall be substituted the words “said

claim has been made.”;

(iii)

there shall be added the following new paragraph

(d)

“(d) A tax refund payable in terms of subarticle

(4) or subarticle (4A) shall in no case exceed the amount

of tax actually paid by the company paying the dividend

on the distributed profits comprised in that dividend in

respect of which the claim pursuant to those subarticles

is made:”;

(iv) in the proviso thereto for the words “provisions of

this Act.” there shall be substituted the words “provisions of

this Act:”;

(v) immediately after the proviso thereto there shall

be added the following new proviso

“Provided further that the provisions of the

immediately preceding proviso shall during the period

1 January 2011 to 31 December 2014 also apply in the

case of any profits distributed by a company which was

an international trading company as at 31 December 2010

where such profits were earned by such company while

it was an international trading company.”.

(h) the following new subarticle (10) shall be added thereto

“(10) If any person claims a refund in terms of

subarticle (4) or subarticle (4A) when that person was not

entitled to the said refund such person shall be liable to pay a

penalty equal to the amount of the refund claimed and if the

refund was in fact paid to him that person shall in addition be

liable to repay the tax so refunded and to additional tax of

seven per cent per month or part thereof commencing from

the month in which the said refund was paid to him up to the

month in which he repaid the tax refunded and any payment

made by the said person in respect of the tax repayable by

him in terms of this paragraph shall first be applied against

any additional tax due thereon

Provided that the provisions of this subarticle (9) shall

not be applicable when the person referred to therein proves

that he did not know and could not reasonably have known

that he was not entitled to such a tax refund.”.

26. Article 56(8) of the principal Act shall be amended as follows: Amendment of

article 56 of the

principal Act.

(a) in paragraph (a) thereof for the words “a person or

persons” there shall be substituted the words “an individual or

individuals”;

(b) in paragraph (b) thereof for the words “person or

persons” there shall be substituted the words “individual or

individuals”;

(c) in paragraph (b) thereof for the words “domiciled in

Malta.” there shall be substituted the words “domiciled in Malta:”;

(d) the following proviso shall be added thereto

“Provided that with effect from 1 January 2011 and up

to 31 December 2014, as regards dividends paid by a company

which was an international trading company as at 31

December 2010, the provisions of this subarticle shall continue

to apply after 31 December 2010 with respect to the

distribution of profits earned by such company while it was

an international trading company.”.

27. In article 61(a)(ii) of the principal Act for the words “who Amendment of

article 61 of the

acts on behalf of, a person who” there shall be substituted the words principal Act.

“who acts on behalf of, an individual who”.

28. In the proviso to article 81 of the principal Act immediately Amendment

article 81 of the

after the words “is resident in Malta” there shall be added the words “or principal Act.

is a company registered in Malta”.

PART III

29. This Part amends the Local Councils Act and shall be read Amendment of the

Local Councils Act,

and construed as one with the same Act, hereinafter in this Part referred Cap. 363.

to as “the principal Act”.

30. Paragraph (1) of regulation 103 of the Local Councils Amendment of the

Third Schedule to

(Elections) Regulations, 1993 shall be substituted by the following

the principal Act.

“(1) Any person committing an illegal practice shall, on

conviction, be liable to a fine (multa) not exceeding five hundred

liri.

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

in the Gazette specify higher penalties which in no case shall exceed

a fine (multa) not exceeding three thousand liri.”.

31. The provisions of article 27 of this Act shall apply to any

criminal proceedings whether instituted before or instituted after the

coming into force of this Part of this Act; and no incapacity shall arise

and no election shall be vacated in virtue of paragraph (1) of regulation

103 of the Local Councils Act as in force before the coming into force

of this Part and if any incapacity had arisen or any election had been

vacated in virtue of the same paragraph of the same regulation such

incapacity shall cease and the said election shall be deemed to have

never been vacated even if the conviction for the offence under the said

regulation 103 preceded the date of the coming into force of this Part of

this Act.”.

Passed by the House of Representatives at Sitting No. 504 of 7th March, 2007.

A NTON T ABONE

Speaker

R ICHARD J. C AUCHI

Clerk to the House of Representatives

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press

Lm1.20 (€2.80)