ACT No. IX of 2007 AN ACT to amend the Income Tax Act (Cap. 123).

I assent.

E DWARD F ENECH A DAMI

(L.S.)

President

28th June, 2007

ACT No. IX of 2007

AN ACT to amend the Income Tax Act (Cap. 123).

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

consent 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 Income Tax

(Amendment) Act, 2007, and it shall be read and construed as one

with the Income Tax Act, hereinafter referred to as "the principal

Act".

(2) Articles 2, 5 and 6 of this Act shall be deemed to have

come into force as from the year of assessment 2008.

(3) Article 4 and paragraph (b) of article 7 of this Act shall be

deemed to have come into force on 1st January 2007.

Article 2 of the principal Act shall be amended as follows

(a)

in paragraph (e) of the definition of ''foreign income

account'' for the words ''outside Malta:'' there shall be

substituted the words ''outside Malta: Provided that this

provision shall apply exclusively to companies which allocated

profits to the foreign income account on the basis of this

paragraph for any year of assessment up to and including year

of assessment 2007, and such companies shall only be entitled

to continue allocating profits on the basis of this paragraph up to

and including year of assessment 2011:''; and

(b) in paragraph (b) of the definition of ''Maltese taxed

account'' for the words ''of the shareholders;'' there shall be

substituted the words ''of the shareholders: Provided that this

paragraph shall cease to apply with effect from year of

assessment 2008;''.

Article 9B of the principal Act shall be amended as Amendment of

article 9B of the

principal Act.

(a)

in the second proviso to subarticle (4) thereof, for

the words "of such declaration." there shall be substituted the

words "of such declaration:"; and

(b) immediately after the second proviso to subarticle

(4) thereof, there shall be added the following new proviso

"Provided also that in the case of a

qualifying asset that is registered under the

the Special Registration Scheme Regulations,

2007, made under the External Transactions

Act, the references to the dates "31st March,

2005" and "1st January, 2005" in subarticles

(2) and (3) of this article shall be construed as

references to "15th March, 2007" and "1st

January, 2006", respectively.".

In the third proviso to paragraph (h) of subarticle (1) of Amendment of

article 14 of the principal Act, for the words "Provided further that, if article

principal Act.

the scientific research is carried out in Malta, the deduction" there

shall be substituted the words "Provided further that the deduction".

Subarticle (1) of article 68 of the principal Act shall be Amendment of

article 68 of the

amended as follows

principal Act.

(a)

in paragraph (a) thereof immediately after the words

''who is in receipt of a dividend'' there shall be added the words

''paid out of profits allocated to any of the taxed accounts other

than the final tax account''; and

(b) immediately after paragraph (b) thereof there shall

be added the following new paragraph (c)

''(c) Any dividends paid out of profits allocated

to the final tax account shall not be charged to further tax

and shall not form part of the chargeable income of any

person and no person may claim a credit or refund in

respect of any tax directly or indirectly paid on such profits

and for the purpose of this paragraph any dividends

received from a company not registered in Malta from

profits which would have been allocated to the final tax

account had such company been registered in Malta shall

be deemed to be dividends paid out of profits allocated to

the final tax account.''.

The proviso at the end of paragraph (b) of article 92 of the

principal Act shall be substituted by the following new proviso

''Provided that in the case of a company resident in Malta

prior to the 1 January 2007, the first condition of this paragraph

shall apply as from the 1 January 2011, or, where such company

informs the Commissioner as contemplated in article

48(4A)(b)(1) or (2) of the Income Tax Management Act, as

from the date on which such information is effective, whichever

is the earlier; and''.

Article 48 of the Income Tax Management Act shall be

amended as follows

(a)

in subarticle (2F) thereof, for the words ''subarticle

(4) or the proviso to subarticle (7) refers'' there shall be

substituted the words ''subarticles (4) or (4A) or the first proviso

to subarticle (7) refer''; and

(b) in sub-paragraph (i) of the proviso to paragraph (a)

of subarticle (4A) thereof, immediately after the words ''or

royalties'' there shall be added the words ''or of dividends

received from a participating holding in a body of persons

which does not satisfy the conditions referred to in the proviso

to article 12(1)(u) of the Income Tax Act,''.

Passed by the House of Representatives at Sitting No. 542 of the

25th June, 2007.

A NTON T ABONE

Speaker

R ICHARD J. C AUCHI

Clerk to the House of Representatives