BUSINESS PROMOTION ACT

CHAPTER 325

BUSINESS PROMOTION ACT

To encourage the establishment of new businesses and the expansion of existing ones, and

to make ancillary arrangements in relation thereto.

5th July, 1988

ACT XXI of 1988, as amended by Acts IX of 1993, XVII of 1994, XI and XV of 1997, IV and

VI of 2001, IV and VIII of 2003; Legal Notice 42 of 2004; Acts III of 2004 and XXIII of 2007;

Legal Notices 424 of 2007 and 221 of 2012; and Act XXXII of 2015, XXX of 2021 and XXXV of

2023. ARRANGEMENT OF ACT

Articles

Part I.

Preliminary

1-3

Part II.

Main Income Tax Incentives

4-15

Part III.

Other Incentives

16-24

Part IV.

Guarantee of Incentives

25-31

Part V.

General Provisions

32-37

Part VI.

Offences and Penalties

38-43

Part VII.

Provisions regarding late payment in commercial

transactions

44-56

Part VIII.

State Aid Monitoring Board

57-58

Part IX.

Final Provisions

59-61

PART I

PRELIMINARY

The short title of this Act is the Business Promotion Act.

(1)

In this Act, unless the context or subject otherwise

requires -

"body of persons" means any partnership, fellowship or society

of persons, whether vested with legal personality or not;

"certified public accountant and auditor" means an individual

who holds a warrant to act in this capacity issued under the

Accountancy Profession Act, or a partnership of such individuals

duly registered under the said Act;

"company" means

(a) any partnership constituted under the Commercial

Partnerships Ordinance * or the Companies Act, being

a partnership en nom collectif, en commandite or a

limited liability company;

(b) any body of persons constituted, incorporated or

registered outside Malta, and of a nature similar to the

aforesaid partnerships;

(c) any co-operative society duly registered as such under

the appropriate law for the time being in force in

Malta;

"Corporation" means the Malta Development Corporation

established under the Malta Development Corporation Act, and

where any other authority or person is designated by regulations

prescribed by the Minister to be the competent authority to exercise

any of the functions of the Corporation under this Act, includes any

such other authority or person to the exclusion of the Corporation;

"enterprise" means any individual or body of persons who or which

carries on or exercises a trade, business, profession or vocation;

"export sales" means

(a) the value of goods exported by a qualifying company

calculated free on board; or

(b) the invoiced value of goods or services sold or

rendered, as the case may be, by a qualifying company

to another qualifying company under a written contract

which clearly stipulates that the said goods or services

are to be exported by the latter company whether as so

sold, or as subjected to further processing or

incorporation in other goods or services, and provided

such export has actually taken place

Provided that the said contract shall also stipulate

that an officer duly authorised to sign on behalf of the

*Repealed by Act XXV of 1995 (Cap. 386).

buying company shall furnish the supplying company

with a written declaration confirming that the said

goods or services had been exported together with an

undertaking that the Corporation may examine the

relative export documents and the grant of any benefit

on the basis of the provisions of this paragraph shall be

conditional upon the production by the beneficiary of

such declaration and undertaking together with a

statement by the auditors of the buying company that

confirms that the declaration of the said official is

substantially correct; or

(c) the value of services rendered or performed by a

qualifying company which are exported by the same

company and in the case of a company qualifying in

terms of article 3(1)(e) the value of services rendered

or performed for another qualifying company which

satisfies the provisions of article 4(1)(b);

"hotel" means a hotel licensed as such under the Malta Travel

a n d To u r i s m S e r v i c e s A c t , o r a b u i l d i n g i n t h e c o u r s e o f

construction which is intended to be so licensed upon completion;

"income tax" m eans tax charged or charg eable under the

provisions of the Income Tax Act;

"Maltese company" means a company in which Maltese citizens,

directly or indirectly, either -

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

share capital, excluding any part thereof which, neither

as respects dividends nor as respects capital, carries

any right to participate beyond a specified amount in a

distribution; or

(b) are entitled to more than half its voting power;

"Minister" means the Minister responsible for the Malta Enterprise

and includes, to the extent of the authority given, any person

authorised in that behalf for any purpose of the Act;

"person" includes a body of persons;

"prescribed" means prescribed by regulations under this Act;

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

article 124 of the Constitution of Malta;

"qualifying company" means a company which carries on, or

intends to carry on in Malta, a trade or business consisting solely of

any of the activities referred to in article 3(1)(a) to (l);

"research and development programme" means a programme for

systematic investigation or research carried out in any field of

sci ence or tech nolo gy through experim ent or analysis, and

includes

(a) basic research comprising activities undertaken for the

advancement of scientific or technological knowledge;

(b) applied research where a final specific application is in

view;

(c) development involving the use of the results of basic

or applied research as aforesaid for the purpose of

creating new or of improving existing material,

devices, products or processes, but excludes routine or

periodic design, testing and analysis of equipment or

products for the purposes of quality or quantity

control, and routine or periodic alterations to existing

products or processes;

"sales revenue derived from export" means "export sales";

''State Aid Monitoring Board'' means the State Aid Monitoring

Board constituted under article 57;

" Tr i b u n a l " m e a n s t h e A d m i n i s t r a t i v e R e v i e w Tr i b u n a l

established by article 5 of the Administrative Justice Act;

(2) Enactments referred to in this Act shall include any other

enactments replacing the said laws, and where reference in this Act

is made to specific provisions of any existing enactment, such

reference shall be deemed to comprise also a reference to the

corresponding provisions of any enactment replacing the said law.

(3) Words and expressions used in this Act and in other

enactments referred to in this Act shall, unless defined in this Act,

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

other enactments.

(4) Wherever in this Act reference is made to incentives and

benefits contemplated by this Act, such reference shall be read and

construed to include incentives and benefits prescribed under this

Act.

The provisions of this Act and of any subsidiary legislation

made thereunder shall also apply, in accordance with the provisions of

the 1982 United Nations Convention on the Law of the Sea as ratified

by the Law of the Sea (Ratification) Act, to an exclusive economic

zone area or an environment protection area as defined in the

Exclusive Economic Zone Act. Any artificial island, installation,

structure, equipment or device therein shall, solely for the purposes of

this Act and any subsidiary legislation made thereunder, be treated as

if they were situated in Malta itself.

(1) Unless otherwise provided by or under this Act, the

incentives and benefits contemplated by or under this Act shall be due

to and obtained by any enterprise which carries on or intends to carry

on, in Malta, a trade or business which consists solely of -

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

processing, repair, preservation or maintenance of any

goods, materials, commodities (including computer

software), equipment, plant or machinery; or

(b) the rendering of services of an industrial nature

analogous to the activities referred to in paragraph (a),

including the repair, maintenance, commissioning,

installation, inspection or testing of plant, machinery

or equipment and the recycling or treatment of waste

material; or

(c) fisheries or large scale aquaculture; or

(d) agriculture, stock farming large scale horticulture; or

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

resident persons or to a company which satisfies the

provisions of article 4(1)(b), whether the service is

performed or rendered in Malta or from Malta,

provided such service is prescribed by the Minister to

be a qualifying export service; or

(f)

the rendering of a qualifying support service as may be

prescribed by the Minister; or

(g) the export of goods or services produced or provided,

as the case may be, by other qualifying companies; or

(h) research and development programmes; or

(i)

the activities set out in article 11 of the Malta

Freeports Act and carried on mainly in a freeport as

defined by that Act, by a company licensed under that

Act;

(j)

(i)

the operation of catering establishments,

guesthouses, hostels, hotels and holiday premises

as defined in the Malta Travel and Tourism

Services Act, and falling within such categories

as may be prescribed; or

(ii)

the undertaking of any project beneficial to the

tourism industry as may be prescribed;

(k) the production of feature films, television films,

advertising programmes or commercials, and doc-

umentaries; or

(l)

the provision of services ancillary to the creative

industries, logistics including customs warehousing and

order fulfilment, education and training, architectural and

engineering design and planning (including planning

design and execution for large events), aviation and

maritime industries, services to the energy industry,

medical and health services and life sciences

Provided that where any provision is made by or under this

Act for an incentive or benefit to be obtained by a qualifying company,

any such incentive or benefit shall be due and obtained only by a

company which carries on or intends to carry on in Malta such trade or

business.

(2) Notwithstanding any other provision of this Act, in the case

of activities or classes of activities referred to in subarticle (1)(c) to

(k), the incentives and benefits contemplated by this Act shall only

be due to and obtained by a company subject to the approval of the

project b y the Corporation, and in granting its approval as

aforesaid, the Corporation may impose such conditions as it may

deem fit

Provided that with effect from such date as may be determined

by the Minister by order in the Gazette * , the Corporation shall not

approve any projects falling under subarticle (1)(e).

(3) Notwithstanding any other provision of this Act, the

incentives and benefits granted by article 4 and 5 shall not be due to

or obtained by a trade or business qualifying under subarticle

(1)(g).

(4) A company qualifying under subarticle (1)(h) shall qualify

only for those incentives and benefits contemplated by this Act as

the Minister may prescribe. In addition to such incentives the

Minister may also prescribe other special incentives and benefits,

including cash grants, that may be given to such companies.

(5) A trade or business contemplated in subarticle (1) shall be a

trade or business actually and physically carried on or carried out in

Malta, so however that where the services referred to in paragraph

(b), (f) and (g) thereof are rendered outside Malta, the said services

shall, for the purposes of this article, be deemed to have been

rendered in Malta if the actual services are wholly or mainly

rendered by citizens of Malta.

(6) Subject to the provisions of article 25, the Minister may

from time to time upon a resolution of the House of

Representatives by notice in the Gazette exclude from any or all of

the incentives and benefits contemplated by this Act companies

that would otherwise be qualifying companies but whose trade or

business comprises activities specified in the said notice.

(7) Any notice published in accordance with the provisions of

subarticle (6) may be subsequently revoked or modified by the

Minister upon a resolution of the House of Representatives.

(8) The incentives and benefits contemplated by this Act shall

only be due in respect of activities happening on or after 1st June,

1987, and in respect of gains or profits earned after that date

Provided that, notwithstanding any other provision of this

Act in respect of

(a) projects approved by the Corporation under subarticle

(1)(c), (d), (e), (f), (g) and (h); or

(b) the operation of paragraphs (b) and (d) of the

definition of "export sales" in article 2,

the incentives and benefits contemplated by this Act shall not be

due in respect of activities happening before 1st January, 1992, and

in respect of gains or profits earned before that date

Provided further that notwithstanding any other provision

of this Act in respect of qualifying companies incorporated outside

Malta, the incentives and benefits contemplated by this Act may

only be obtained by qualifying companies registered as an oversea

company in accordance with the Companies Act in respect of their

activities happening on or after 1st January, 1997

Provided

further

that

the

incentives

and

benefits

*1st November, 2000 - see Legal Notice 135 of 2001.

contemplated by article 6(1), article 8(7), article 9, article 15 and

article 24B may only be obtained by a company constituted under

Maltese Law

Provided further that the incentives and benefits contemplated

by or under this Act shall only be available to companies which

qualify under any of the provisions of article 3(1)(i) to (k) as from such

date as may be determined by the Minister by order in the Gazette * .

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

Gazette a list of companies that have benefited under subarticle

(1)(h) together with a general description of the activities of the

company and of any cash grants from which the company benefits

under this Act.

(10) Notwithstanding the provisions of articles 4(6), 5(7), 5A(6)

and 15, with effect from the year of assessment 2004 no company

shall be entitled to the incentives provided by articles 4, 5 and 5A

Provided that a company may qualify for such benefits and

incentives as may be prescribed by the Minister.

(1) Where by means of an extraordinary resolution it is

decided to transfer the trade or business of a company constituted

under Maltese Law, hereinafter referred to as the first company, to

a company which is registered as an oversea company in terms of

the Companies Act, hereinafter referred to as the second company,

and the Corporation is satisfied that the ultimate beneficial

shareholders of the said companies are the same and are not

resident in Malta,

(i)

all rights and obligations of the first company

arising from the provisions of this Act shall be

deemed to be the rights and obligations of the

second company as if such rights and

obligations had always appertained to the

second company;

(ii) the second company shall be entitled to the

incentives and benefits contemplated by this Act

to the same extent as the first company would

have been entitled had the transfer of business

not taken place and this irrespective of whether

the first company was dissolved.

(2) The provisions of subarticle (1) shall apply, mutatis

mutandis, where a company registered as an oversea company in

terms of the Companies Act transfers its business to a company

constituted under Maltese Law and in subarticle (1) "the first

company" shall mean a company registered as an oversea company

in terms of the Companies Act and "the second company" shall

mean a company constituted under Maltese Law.

(3) For the purposes of this article a trade or business shall be

deemed to have been transferred when

(i)

all the tangible assets of the first company are

*1st November, 2000 - see Legal Notice 135 of 2001.

transferred to the second company, which

company uses the said assets in carrying on the

same kind of trade or business as that carried on

by the first company; and

(ii) the customers of the second company are

substantially the same as that of the first

company.

(4) On being satisfied that the provisions of this article have

been complied with, the Corporation may issue a certificate to that

effect, which certificate shall constitute sufficient evidence for the

purpose of the application of this article.

PART II

MAIN INCOME TAX INCENTIVES

(1)

Where a qualifying company -

(a) is a company which

(i)

is constituted under Maltese Law on or after 1st

June, 1987; or

(ii) is a company incorporated outside Malta and has

been registered as an oversea company in terms

of the Companies Act registered on or after 1st

June, 1987 but only in respect of its activities

happening on or after 1st January, 1997; and

(b) subject to the provisions of subarticle (5), derives from

export sales not less than ninety-five per cent of its

total sales revenue; and

(c) carries on or carries out a trade or business which does

not consist solely or mainly in the mere expansion,

duplication or replacement of a trade or business

formerly carried on or carried out in Malta by any

person in any way directly or indirectly connected or

associated with the said company through

shareholding, voting or other ownership or controlling

rights, irrespective of the person in whom such rights

are or may have been vested,

such company shall be exempt from income tax on the gains or

profits from its trade or business made during ten consecutive years

of assessment which years shall be comprised within the company’s

first twelve years of assessment as may be determined by the

company by way of an irrevocable notice in writing to the

Corporation to be given not later than the end of the third year of

assessment

Provided that in the case of a company entitled to obtain the

exemption contemplated in this subarticle, in terms of subarticle

(3)(b), the twelve years of assessment referred to in this subarticle

shall be the company’s twelve years of assessment immediately

following the year in which its shares were acquired, and the ten

consecutive years of assessment in respect of which the exemption

from income tax may apply shall be comprised in these twelve years of

assessment as may be determined by the company by way of an

irrevocable notice in writing to the Corporation, which notice shall be

given by not later than the end of the third year of assessment falling

within the said twelve years of assessment.

(2) If a company in any year immediately preceding a year of

assessment comprised in the ten consecutive years of assessment

referred to in subarticle (1) derives from export sales less than

ninety-five per cent of its sales revenue, the company shall for that

year of assessment forfeit the exemption granted under the

provisions of this article

Provided that such forefeiture for any year as aforesaid shall

not -

(a) affect the company’s right for exemption in any other

year of assessment; or

(b) obtain for the company exemption under this article

for any year not comprised in the original ten

consecutive years of assessment.

(3)

For the purposes of subarticle (1) -

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

formerly carried on or carried out by any person not

connected with the company as set out in paragraph (c)

of the said subarticle shall not qualify the said

company to obtain the exemption from income tax

contemplated by this article;

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

at least as to fifty per cent directly or indirectly by

Government and not less than fifty per cent of the

shares of the company were owned directly or

indirectly by Government, if all such shares are

acquired by any person not under Government control,

such company shall be qualified to obtain the

exemption contemplated in subarticle (1) if the

company is a qualifying company and it satisfies the

condition at paragraph (b) of the said subarticle.

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

respect of which exemption from income tax operates under the

provisions of this article shall be computed in the manner set out in

the Income Tax Act, and in accordance with its provisions

Provided that

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

replaced as may be necessary by the provisions of this

Act;

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

article 12 for any year of assessment in respect of

which exemption under the provisions of this article is

due, shall be deferred to the first year of assessment

next following the ten consecutive years of assessment

referred to in subarticle (1);

(c) any unabsorbed losses or unabsorbed capital

allowances (including the allowances contemplated by

this Act) at the end of any year of assessment exempt

from income tax under the provisions of this article

shall be carried forward strictly in the manner set out

in the Income Tax Act, notwithstanding that such carry

forward is from an exempt year into a year when no

such exemption is operative

Provided further that, if, during any one year falling within

the ten consecutive years of assessment referred to in subarticle (1), a

qualifying company fails to qualify for the incentive under that

subarticle, any entitlement under paragraph (b) may, at the option of

the company, be utilised as a deduction against its chargeable income

of the first or any subsequent years of assessment in respect of which

the company does not so qualify.

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

(1) shall be substituted by the words "substantially the whole" and

subarticle (2) shall be construed accordingly in any particular line

of production, manufacture or service as may be determined by the

Minister by notice published in the Gazette and in that case the

words "substantially the whole" shall mean that percentage higher

than ninety-five per cent as the Minister may mention in the same

notice

Provided that such substitution shall, in respect of any

qualifying company, be applicable only as from its first accounting

period commencing on a day subsequent to that on which notice is

published as aforesaid.

(6) With effect from such date as may be determined by the

Minister by order in the Gazette * , the provisions of this article shall

only be applicable to

(a) qualifying companies which existed on the day

immediately preceding that date and, in the case of

companies incorporated outside Malta and which had

been registered as oversea companies in terms of the

Companies Act, were so registered on the day

immediately preceding such date;

(b) qualifying companies incorporated in Malta or

registered as oversea companies after that date which

carry on or intend to carry on a trade or business which

relates to a project in respect of which the Corporation

has, prior to such date, approved the granting of any

assistance in terms of this Act

Provided that, as from the aforementioned date, no company

shall qualify for the benefit provided by this article in terms of

subarticle (3)(b).

*1st November, 2000 - see Legal Notice 135 of 2001.

(1) Where a qualifying company in any year of assessment

increases its export sales over such sales during a base period by

the percentages specified in subarticle (5), the additional export

profits earned by the company in that year from the export sales

resulting in such increase shall be exempt from income tax.

(2) The additional profits exempt from income tax in

accordance with the provisions of subarticle (1) shall be calculated

in accordance with the following formula

("Y" x "X") - ("B" x "A")

("Z" -

) - ("C" -

)

where

"A" = profits in base period

"B" = export sales during base period

"C" = total sales during base period

"X" = profits earned in year of assessment

"Y" = export sales in year of assessment

"Z" = total sales in year of assessment

For the purposes of computing the additional profits exempt

from income tax in terms of this subarticle or the profits which are

exempt from income tax or taxed at a reduced rate of income tax

for the purposes of article 5A for any year of assessment

(hereinafter in this subarticle referred to as the relevant year of

assessment), where a qualifying company has changed the date on

which its accounting period ends for the purposes of article 11 of

the Income Tax Act and the profits of such accounting period fall to

be charged to tax -

(i)

in any year of assessment comprised in a base period;

or

(ii) in any year relevant of assessment,

the value of the total sales, export sales and profits of the accounting

periods, or where applicable the accounting period, the profits of

which fall to be charged to tax in the years of assessment comprised in

a base period, shall be decreased or increased, as the case may be, by

multiplying the actual value of the said total sales, export sales and

profits by the number of days comprised in the accounting period the

profits of which fall to be charged to tax in the relevant year of

assessment and dividing the product thereof by the number of days

comprised in the said accounting periods or period as the case may be.

(3)

For the purpose of the computation set out at subarticle

(2) -

(a) there shall be excluded any income which does not

accrue to the company from a trade or business and

any sale or other component of its turnover which is

not connected with its trade or business;

(b) "profits" and "income" shall in all cases be taken as

comprised in the company’s chargeable income for

income tax purposes after account has been taken,

where appropriate, of any incentive or benefit obtained

by the company under the provisions of this Act;

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

base period shall be deemed to be zero profits;

(d) where a company was not in existence, or in the case

of a qualifying company incorporated outside Malta,

such company was not registered as an oversea

company in accordance with the Companies Act,

during a year of assessment comprised in a base

period, the company shall be deemed to have had zero

profits for that year of assessment.

(4) For the purposes of this article, profits and export sales

during a base period shall be the average profits and export sales

during a period of two consecutive years of assessment as follows

Year of Assessment

Base Period

1989 to 1993

year of assessment:1987 and 1988

1988 and 1989

1989 and 1990

1990 and 1991

1991 and 1992

1992 and 1993

1993 and 1994

1994 and 1995

1995 and 1996

Provided that the base period for year of assessment 2002

and subsequent years of assessment shall be determined by

increasing the years comprised in the base period for the preceding

year of assessment by one year.

(5) Exemption from income tax under this article shall be due

where the increase in export sales is of -

(a) ten per cent or more over the corresponding base

period in the first year of exemption;

(b) fifteen per cent or more over the corresponding base

period in the second year of exemption; and

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

base period in the third and subsequent years of

exemption

Provided that a qualifying company may benefit from the

provisions of this article for not more than ten years of assessment,

which years need not be consecutive.

(6)

The provisions of this article shall only be applicable to

(a) a qualifying company constituted before 1st June

1987, and to

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

if that company, for any year of assessment, would

have been entitled to benefit from an exemption

contemplated in article 4 but for the provisions of

subarticle (1)(b) thereof.

(7) With effect from such date as may be determined by the

Minister by order in the Gazette * , the provisions of this article shall

only be applicable to

(a) qualifying companies which existed on the day

immediately preceding such date and, in the case of

companies incorporated outside Malta and which had

been registered as oversea companies in terms of the

Companies Act, were so registered on the day

immediately preceding such date;

(b) qualifying companies incorporated in Malta or

registered as oversea companies after that date and

which would have been entitled to benefit from the

provisions of article 4 but for the provisions of

subarticle (1)(b) thereof,

and such companies shall continue to be so entitled to the incentive

contemplated under this article up to and including the year of

assessment 2021 or such other date as may be prescribed by the

Minister.

(1) Where a qualifying company incurs expenditure in

acquiring qualifying assets and the aggregate expenditure of the

company on such assets during any relevant year and in the

preceding six accounting periods

(a) is equivalent to or exceeds a percentage (in this

subarticle referred to as "the qualifying percentage")

of the company’s total sales during the same period,

the income derived by such company, from its trade or

business, during the relevant year as is proportionately

attributable to its increased export sales as determined

in terms of subarticle (2) shall be taxed at a reduced

rate of income tax as is determined by reference to the

qualifying percentage as follows

Qualifying percentage

Applicable rate of

reduced income tax

%

%

50

8.75

0.00

Provided that the six accounting periods

preceding the relevant year shall be accounting periods

the profits of which fall to be charged to income tax in

year of assessment 1998 or subsequent years of

assessment and, where the number of such accounting

periods preceding the relevant year are less than six,

the qualifying percentage referred to in this paragraph

shall be determined for the period of time commencing

from the first day of the accounting period the profits

of which fall to be charged to income tax in year of

assessment 1998 and ending on the last day of the

relevant year

Provided further that where a company was not in

*1st November, 2000 - see Legal Notice 135 of 2001.

existence during all of the six years preceding the

relevant year, the qualifying percentage referred to in

this subarticle shall be determined for the period of

time during which such company was in existence;

or

(b) is equal to or exceeds €16,305,613.79, the income

derived by such company from its trade or business

during the relevant year as is proportionately

attributable to its increased export sales as determined

in terms of subarticle (2) shall be exempt from income

tax

Provided that

(i)

if the number of days comprised in the period of

time commencing from the first day of the

accounting period the profits of which fall to be

charged to income tax in year of assessment

1998 and ending on the last day of the relevant

year, is less than two thousand five hundred and

fifty-five; or

(ii) the number of days comprised in the relevant

year and in the preceding six accounting periods

is less or more than two thousand five hundred

and fifty-five,

the amount of €16,305,613.79 shall be increased or

reduced to an amount arrived at by multiplying

€16,305,613.79 by the proportion which the number of

the days comprised in the aforementioned periods

bears to two thousand five hundred and fifty-five days.

(2) The income derived by a qualifying company from its trade

or business during the relevant year and which shall be exempt

from income tax or taxed at the reduced rates of tax in accordance

with the provisions of subarticle (1), shall be calculated in

accordance with the formula set out in article 5(2)

Provided that a qualifying company may not claim a benefit

under this article for any year of assessment in which it has also

claimed a benefit under article 5.

(3) A qualifying company may benefit from the incentive

p r o v i d e d f or by t h i s a r t i c l e f o r n o t m o r e t h an t e n y e ar s o f

assessment which years need not be consecutive.

(4)

For the purposes of this article

(a) there shall be excluded any income which is not

derived by the company from its trade or business;

(b) the amount of total sales and export sales shall be

calculated free on board and where the sale is made

pursuant to a contract of works, it shall include the

uninvoiced value of any materials and components

provided by the customer.

(5)

In this article

"expenditure in acquiring qualifying assets" means expenditure

incurred in acquiring assets in respect of which an investment

allowance can be claimed in terms of article 7, excluding any

expenditure incurred on non-commercial motor vehicles;

"non-commercial motor vehicles" means those vehicles to which

article 14(3) of the Income Tax Act applies;

"relevant year" means any accounting period of a qualifying

company which ends in the year preceding year of assessment 1998

or any subsequent year of assessment as the case may be;

"accounting period" means the accounting period as determined

by reference to article 11 of the Income Tax Act;

"profits" and "income" shall in all cases be taken as comprised in

the company’s chargeable income for income tax purposes after

account has been taken of any incentive or benefit obtained by the

company under the provisions of this Act.

(6) With effect from such date as may be determined by the

Minister by order in the Gazette * , the provisions of this article shall

only be applicable to

(a) qualifying companies which existed on the day

immediately preceding such date and, in the case of

companies incorporated outside Malta and which had

been registered as oversea companies in terms of the

Companies Act, were so registered on the day

immediately preceding such date;

(b) qualifying companies incorporated in Malta or

registered as oversea companies after that date which

carry on or intend to carry on a trade or business which

relates to a project in respect of which the Corporation

has prior to such date approved the granting of any

assistance in terms of this Act,

and such companies shall continue to be so entitled to the incentive

contemplated under this article up to and including the year of

assessment 2021 or such other date as may be prescribed by the

Minister.

6. (1) Subject to the provisions of subarticle (2), where it

appears to the Corporation that the gains or profits or part thereof

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

thereof in the year of assessment commencing on lst January, 1988,

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

exclusive purpose of financing any project as shall have been

approved by the Corporation, and that the gains or profits or part

thereof have in fact been used for the purpose for which they were

set aside, the Corporation shall issue to the qualifying company a

certificate showing compliance and thereupon the rate of income

tax chargeable on the gains or profits or part thereof so used shall

be reduced by seventeen and a half percentage points, and in any

such case the tax chargeable shall be assessed, or reassessed and

*1st November, 2000 - see Legal Notice 135 of 2001.

where necessary refunded, as the case may require

Provided that where the qualifying company is a Maltese

company, the rate of income tax chargeable shall be reduced by

nineteen and a quarter percentage points

Provided further that as from the year of assessment 2001 the

reduction in the rate of income tax shall in all cases be of nineteen and

a quarter percentage points or such other higher percentage as the

Minister may from time to time by regulations prescribe.

(2) The Corporation shall not grant any approval for the

purposes of subarticle (1) -

(a) in respect of any application for the purpose of this

article filed with the Corporation later than twenty-

four months after the end of the year immediately

preceding the year of assessment in which the income

in respect of which approval may be given falls to be

charged to tax; or

(b) in respect of any project requiring for its realisation a

period of more than five years from the date of

approval.

(3) The Minister may by regulations prescribe rules for the

application of the benefit provided by this article. Such rules may be in

addition to or in substitution of the rules and conditions prescribed in

this article.

7. (1) Where a qualifying company after lst June 1987 incurs

or has incurred expenditure in acquiring plant or machinery, or an

industrial building or structure (including a warehouse), for the

purposes of its trade or business, and in consequence of its

incurring such expenditure the plant, machinery, industrial building

or structure is owned by the company, such company shall be

entitled in computing its chargeable income for income tax

purposes in respect of the year of assessment in which the relative

asset is first used by the company in its trade or business, to an

investment allowance which shall be expressed as a percentage of

the cost of the asset as follows

When owned by

When owned by

Maltese companies

other companies

Plant and

33%

30%

machinery

Industrial

building and

16.5%

15%

structure

Provided that with effect from the year of assessment 2001,

the rates applicable to Maltese qualifying companies shown above

shall be applicable to all qualifying companies and the rates shown

under the heading "When owned by other companies" shall cease to

apply

Provided further that with effect from year of assessment

2002, investment allowances shall be calculated at the following

percentages or such other higher percentages as the Minister may

by regulations prescribe

Plant and machinery

50%

Industrial buildings and structures 20%.

(2) No allowance under this article shall be due except in

respect of assets

(a) which are first used in Malta;

(b) in respect of which no allowance has been claimed under

this article by any person who is, directly or indirectly,

connected with the company claiming the allowance

contemplated by this article, through shareholding,

voting or other ownership or controlling rights

Provided that the condition set out in paragraph (a) shall not

apply with respect to industrial buildings or structures.

(3) Where an allowance has been granted to a company under

this article -

(a) the company shall not be entitled to any deduction in

respect of the same asset under the provisions of

article 14(1)(j) of the Income Tax Act;

(b) the provisions of article 24 of the said Act shall not

apply in respect of the relative asset;

(c) nothing contained in the said Act shall operate so as to

prevent the investment allowance and any other

allowance granted under this Act in respect thereof,

when taken together, from exceeding the original cost

of the asset.

(4) The provisions of article 8(5) shall apply in respect of any

investment allowance granted under this article.

(5)

In this article and in article 8

(a) immovable property held by title of emphyteusis; and

(b) any other asset to which this article and article 8 of

this Act applies acquired under a finance lease contract

or a contract of hire which stipulates that ownership of

the asset shall or may pass to the lessee when a

specified sum of money has been paid, which contract

is in each case approved by the Corporation,

shall be deemed to be held in full ownership.

(6) A company may qualify for the allowance granted under

this article for a consecutive period of twenty-five years

commencing from the year of assessment 1988 in case of

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

of assessment for companies registered on or after 1st June 1987

Provided that the Minister may from time to time by notice

in the Gazette increase the said period by a further period or

periods not exceeding twenty-five years.

(7) Saving the provisions of this article, investment allowances

shall, for the purposes of the Income Tax Act be deemed to be

deductions granted under article 14(1)(j) of the said Act and all the

relevant provisions of that Act shall apply accordingly.

(8) The Minister may by regulations prescribe rules for the

application of the benefit provided by this article. Such rules may be in

addition to or in substitution of the rules and conditions prescribed in

this article.

(9) Any person who under contract with the Corporation or the

Government of Malta constructs buildings or structures which are

immovable in nature and rents such buildings or structures to

qualifying companies shall also be entitled to the allowance

contemplated by this article.

8. (1) Where a qualifying company is entitled to an

investment allowance in respect of any asset under the provisions

of article 7, the company shall, in addition, be entitled to a

deduction in respect of wear and tear at the following rates on

account of the same asset for the purpose of computing its

chargeable income for income tax purposes

When owned by

When owned by

Maltese companies

other companies

Plant and

33 1 / 3 %

25%

machinery

per annum

per annum

Industrial

building and

5%

4%

structure

per annum

per annum

Provided that with effect from the year of assessment 2001 the

rates applicable to Maltese qualifying companies shown above shall be

applicable to all qualifying companies and the rates shown under the

heading "When owned by other companies" shall cease to apply.

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

(1) shall be granted as from the year of assessment in respect of

which the relative allowance is first due to be granted and shall be

computed on the straight line method.

(3) The allowances granted in terms of this article shall replace

any allowances otherwise due to the qualifying company for any

year of assessment under the provisions of article 14(1)(f) of the

Income Tax Act.

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

structure is constructed or erected shall, in all cases, be excluded

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

granted under the provisions of this article.

(5) Saving the provisions of this article and of article 7,

investment allowances and accelerated depreciation shall for the

purposes of the Income Tax Act be deemed to be deductions

granted under article 14(1)(f) and (j) of the said Act and all the

relevant provisions of that Act shall accordingly apply.

(6)

No allowance under this article shall be due except in

respect of assets which are first used by the company, having been

acquired unused and not second hand

Provided that this subarticle shall not apply in respect of

industrial buildings or structures acquired from the Government.

(7) For the purposes of articles 59 and 60 of the Income Tax

Act, the tax paid or payable in respect of income distributed by a

company by way of dividend to its members may, at the request of

the company, be calculated as if the company was not entitled to a

deduction under this article, but to the deductions contemplated by

article 14(1)(f) and (j) of the Income Tax Act.

(8) With effect from such year of assessment as may be

determined by the Minister by order in the Gazette, the provisions

of this article shall only be applicable to assets purchased by a

qualifying company during the year preceding the year of

assessment determined by the Minister as aforesaid.

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

qualifying company out of its gains or profits, or part thereof,

which, under the provisions of this Act, have been relieved from

the payment of income tax, and to which the provisions of this

article apply, shall be exempt from income tax in the hands of the

members of the company in receipt of such distribution.

(2) Where a dividend referred to in subarticle (1) is distributed

to a member which is also a company (in this subarticle referred to

as "the second company"), the said dividend shall likewise be

distributable by the second company to its own members in the

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

recipients, and where a member of the second company is again a

company, the preceding provisions of this subarticle shall apply

mutatis mutandis as though references to the first company were

references to the second company and as though references therein

to the second company were references to that member, and the

principle set out in this subarticle shall continue to be applied for as

long as the gains or profits or part thereof to which this article

applies are distributed by way of dividends.

(3) The provisions of this article shall apply to the gains or

profits, or part thereof, of a company which are relieved from

income tax

(a) under the provisions of article 4, being gains or profits

derived in any year by a company in respect of which

it is entitled to a tax holiday;

(b) under the provisions of article 5, being part of the

gains or profits of a company relieved from income tax

for any year under the export incentives scheme;

(c) under the provisions of article 7, being gains or profits

of a company for any year relieved from income tax

through the grant of an investment allowance;

(d) under the provisions of article 5A, being gains or

profits of a company relieved from income tax for any

year under the investment incentive scheme.

(4) Every company shall, upon the distribution of a dividend

exempt in whole or in part from income tax under the provisions of

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

certificate setting out the amount of the dividend paid, the year in

which the gains or profits so distributed were earned by the

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

income tax as provided in this article.

10. (1) Subject to the provisions of subarticle (2), where the

Corporation is satisfied that a training programme approved by it

after the coming into force of this Act can increase the skill and

e x p e r t i s e o f t h e e m p l o y e e s o f a q u a l i f y i n g c o m p a n y, t h e

Corporation shall issue a certificate accordingly and the company

shall be entitled to deduct one hundred and twenty per cent of the

actual expenditure incurred by it in organising the training

programme in the computation of its total income for the purposes

of the Income Tax Act

Provided that where the Corporation is satisfied that any

training programme caters wholly or mainly for handicapped

persons, the deduction shall be one hundred and fifty per cent of the

expenditure.

(2) The total deductions due to a company for any year of

assessment under the provisions of this article shall not exceed one-

twentieth of the total sum paid by the company for that year by way

of wages, salaries and other emoluments.

(3) With effect from such date as may be determined by the

Minister by order in the Gazette * , the Corporation shall no longer

grant approvals under the provisions of this article, provided that

such provisions shall continue to apply to training programmes

approved by the Corporation prior to that date even if the

expenditure to which this article applies is incurred after such date.

11. (1) Subject to the provisions of this article, where a

qualifying company incurs or has incurred export promotion

expenditure after 1st June, 1987 principally for the purpose of

seeking opportunities or creating or increasing demand for the

export of its goods or services, that company shall be entitled, in

computing its total income for income tax purposes, to deduct an

amount equivalent to one hundred and forty per cent of the

expenditure so incurred.

(2) The deduction contemplated in subarticle (1) shall still be

due notwithstanding that the relative expenditure -

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

lines or ventures; or

(b) does not achieve any export sales or increased export

sales.

(3) The total deduction due for any year of assessment to a

company under the provisions of this article shall not exceed

€55,904.96 or a sum equivalent to five per cent of the total export

*1st January, 2002 - see Legal Notice 135 of 2001.

sales of the company for that year, whichever sum is the higher.

(4)

For the purposes of this article -

(a) export sales shall be taken to be the monetary value of

export production calculated "free on board", or of the

services exported;

(b) "export promotion expenditure" shall include, but not

to the exclusion of other appropriate items, expenses

incurred in

(i)

advertising or other means of securing publicity

or soliciting business;

(ii) carrying out market research or obtaining market

information;

(iii) providing free of charge samples or technical

information to a person outside Malta;

(iv) investigating, preparing designs, making

estimates and similar activities connected with

tendering for the supply of goods or services;

(v) research into methods of packaging or

presenting goods for export;

(vi) participation in trade fairs outside Malta;

(vii)

cost of bringing potential buyers to Malta;

(c) "export promotion expenditure" shall not include

salaries, wages and other similar emoluments except

where these are paid to officers or employees of a

company registered in Malta for the period or periods

in any year during which they are required to tender

their services outside Malta.

(5) With effect from such year of assessment as may be

determined by the Minister by order in the Gazette * , the provisions of

this article shall only be applicable to expenditure incurred in the year

preceding that year of assessment and in the basis years in relation to

the following three years of assessment.

12. (1) In the case of a qualifying company, other than a

company contemplated in article 3(1)(h), the provisions of article

14(1)(h) and (i) of the Income Tax Act, shall in any year in which

the company is entitled to a deduction thereunder as from the year

of assessment 1988 -

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

incurred as follows in addition to any other expenses

contemplated in the said paragraphs

(i)

experimental or theoretical work aimed at the

discovery of new knowledge related to its trade

or business;

(ii) searching for applications of such work and

knowledge;

(iii) formulation and design of possible applications

*year of assessment 2002 - see Legal Notice 135 of 2001.

for such work;

(iv)

testing in search for, or evaluation of, product or

process alternatives;

(v)

design, construction and testing of pre-

production prototypes and models;

(vi)

design of product, processes, systems or services

involving new technology or substantially

improving those already produced or installed;

(b) be deemed not to allow as a deduction any expenses

incurred as follows

(i)

routine design, testing and analysis of equipment

or product for the purpose of quality or quantity

control;

(ii) routine or periodic alterations to existing

products or processes;

(iii) operational research;

(iv) legal and administrative work in connection with

patent applications, records and litigation and

the sale or licensing of patents and patent rights;

(v) any activity, including design and construction,

relating to the construction, relocation,

rearrangement or start-up facilities or equipment

other than facilities or equipment whose sole use

is for a specified and particular research or

development project;

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

were omitted.

(2) Deductions due under the provisions of article 14(1)(h) or

(i) of the Income Tax Act, as modified by the provisions of this

article, shall be allowed for the purposes of the said Act at one

hundred and twenty per cent of the actual amount of the

expenditure incurred, but the total deduction granted as aforesaid

shall not, for any year of assessment, exceed five per cent of the

turnover of the company for that year

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

full amount thereof cannot be allowed in the year in which it is

incurred, that part which cannot be so allowed shall be added to any

deduction due in this respect for the following year and be deemed

to be part of that deduction or, if there is no such deduction for that

year, be deemed to be the deduction for that year, and so on for

subsequent years.

(3) Nothing in this article shall be considered to grant an

allowance in respect of research and development which is not

substantially carried out in Malta.

(4) With effect from such year of assessment as may be

determined by the Minister by order in the Gazette * , the provisions of

this article shall cease to have effect.

*year of assessment 2002 - see Legal Notice 135 of 2001.

13. Where an individual who is not domiciled in Malta or who,

if so domiciled, is not ordinarily resident therein, is employed with

a qualifying company, the tax on the chargeable income of such

individual shall, as from the year of assessment commencing on lst

January, 1989, be charged at the rates contemplated by the Income

Tax Act, so however that any rate of tax in excess of thirty cents on

every lira shall be reduced to thirty cents

Provided that the tax payable by any individual as aforesaid

shall not be less than two thousand and three hundred and twenty-

nine euro and thirty-seven cents (€2,329.37) per annum, reduced

however on a pro rata basis when that individual is not so

employed during the whole year

Provided further that the amount of tax payable by any such

individual shall not be increased to more than would have been

payable by him but for the provisions of this article

Provided further that with effect from such year of assessment

as may be determined by the Minister by order in the Gazette * , the

provisions of this article shall only apply to any remuneration paid in

the year preceding that year of assessment and in the basis years in

relation to the following four years of assessment provided that such

remuneration is paid to individuals in respect of whom this article

applied in the year preceding the year of assessment determined by the

Minister as aforesaid.

14. Any expenses and outgoings on feasibility studies incurred

on or after lst June, 1987 by a company constituted on or after that

date shall, when such expenses or outgoings are wholly and

exclusively incurred for the purposes of a trade or business which

entitles or may entitle the company to be a qualifying company for

the purposes of this Act, and to the extent to which such expenses

and outgoings are wholly and exclusively so incurred, be deemed

for the purposes of article 14(1) and of article 26 of the Income Tax

Act, to have been incurred by that company not earlier than the first

day on which the said trade or business is carried on, and, in any

case, as being properly deductible in computing the amount of the

gains or profits arising from the trade or business for the purposes

of the said Act

Provided that with effect from such year of assessment as may

be determined by the Minister by order in the Gazette † , the provisions

of this article shall only be applicable to expenditure incurred in the

year preceding that year of assessment and in the basis year in relation

to the following year of assessment.

15. Where a member of a qualifying company is a resident of a

State or territory with which Malta has made an arrangement under

the provisions of the Income Tax Act for the grant of relief from

double taxation, and under that arrangement a dividend, or part

thereof, distributed by the qualifying company is subject to income

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

*year of assessment 2002 - see Legal Notice 135 of 2001.

†year of assessment 2002 - see Legal Notice 135 of 2001.

of which the dividend is distributed, the company shall be entitled

to require that the gains or profits, or part thereof, derived by it for

the year of assessment 1988 and for subsequent years of assessment

and which are distributable by way of dividend subject to tax at a

reduced amount as aforesaid shall, notwithstanding that the

dividend, or part thereof has not been distributed, be taxed at the

said reduced rate and not at the rate properly chargeable under the

Income Tax Act on the gains or profits of the company

Provided that if there is a change in the shareholding of the

company such that the new shareholders would not have been

entitled to a reduced rate of tax under any arrangement as aforesaid

or if so entitled the rate applicable in such arrangement is more

than the rate applicable to the outgoing shareholder, then any

profits which have not been distributed at the end of the last

financial year of the company preceding the date of change in

shareholding less any profit distributions made to the outgoing

shareholder in the current financial year shall be taxed at a rate

being the difference between the rate of tax which would be

applicable had the new shareholder held the shares when such

profits were earned, and the rate actually applied, and such tax shall

be a tax payable by the company in the year of assessment in which

such profits are distributed

Provided further that where a member of a qualifying

company is also a company incorporated under Maltese Law, the

provisions of this article shall apply to the same extent as if the

members of the latter company had owned the shares directly in the

qualifying company

Provided further that with effect from such date as may be

determined by the Minister by Order in the Gazette * the provisions of

this article shall only be applicable to qualifying companies which

existed on the day immediately preceding that date.

PART III

OTHER INCENTIVES

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

qualifying company it would be consistent with the aims and

o b j e c t i v e s o f t h e i n d u s t r i a l p o l i cy o f t h e G o v e r n m e n t , t h e

Corporation may grant loans to the said company for the

a c qu is iti on of plant , ma c hi ne ry a nd oth e r f ixed a s s et s , b ut

excluding land and buildings, in accordance with the terms and

conditions herein specified.

(2) The Corporation may grant loans as provided under

subarticle (1) when -

(a) the plant, machinery or fixed assets are acquired as

part of an investment programme of not more than

three years duration as may be approved by the

*1st November, 2000 - see Legal Notice 135 of 2001.

Corporation, and

(b) such investment programme is of not less than forty-

eight thousand and nine hundred and sixteen euro and

eighty-four cents (48,916.84).

(3) Loans under the provisions of this article shall in no case

exceed thirty-three per cent of the projected capital investment

approved by the Corporation, but no loan shall exceed -

(a) €2,329,373.40 in the case of companies satisfying the

condition laid down in article 4(1)(b) of the Act, and

(b) €465,874.68 in all other cases.

(4) The rate of interest charged by the Corporation on loans

granted under this article shall be either

(a) the minimum discount rate in terms of directives

issued from time to time by the Central Bank of Malta

under the Central Bank of Malta Act, less

(i)

two and a half percentage points in respect of

loans made under subarticle (3)(a), and

(ii) half a percentage point in respect of other loans

Provided that the provisions of paragraph (a)(i)

shall be applied by the Corporation when the said

minimum discount rate is at an equivalent or higher

level than two and half percentage points, and the

provisions of paragraph (a)(ii) shall only be applied by

the Corporation when the said minimum discount rate

is at an equivalent or higher level than half a

percentage point;

or

(b) such other rate as may be prescribed by the Minister

by notice in the Gazette.

(5) The repayment of the principal as well as the payment of

interest on any loan granted under this article shall be secured by a

general hypothec over the property of the company receiving the

loan in addition to any other security which the Corporation may

require

Provided that for the purposes of Title XXIII of Part II of

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

hypothecary debt in respect of a loan or other banking facility

granted b y a fi nan ci al institu tion situ at ed in Malt a to rank

immediately prior to the general hypothec or other security of the

Corporation relative to such loan

Provided further that the Corporation may accept a prime

bank guarantee or other similar security in respect of its loan

instead of or in addition to a general hypothec as aforesaid.

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

the interest thereon, shall be made within a period and at

instalments as may be agreed with the Corporation, but such period

shall in no case exceed ten years from the date of the first loan

payment received by the company

Provided that, unless otherwise stipulated by the

Corporation, for the first two years following the first loan payment

the company shall only pay interest on the loan.

(7) Any loan made under this article shall be applied by the

company for only such purpose as may be authorised by the

Corporation.

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

company under the provisions of this article it shall -

(a) from time to time make or cause to be made such

examination of books, documents, premises and all

other things and matters of that company whatsoever

as may be necessary to ensure that the loan is being

applied for the purpose for which it had been made;

and

(b) request such financial statements from the company as

it may require, to be submitted quarterly or at shorter

intervals at the discretion of the Corporation.

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

b y i nstalm ent s, an d an y p art of such loan has not yet been

advanced, the Corporation, without prejudice to any other remedy,

may withhold any portion of the loan still outstanding if -

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

respect of any loan under this article, remains unpaid;

or

(b) any prior loan made under this article has not been

applied for the purpose for which it was made or has

not been expended in a careful, timely and economical

manner; or

(c) the company has gone into liquidation or has become

insolvent or has assigned property for the benefit of

creditors; or

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

condition attached to the loan.

(10) The granting of loans made under this article shall not be

subject to the provisions of the External Transactions Act.

(11) With effect from such date as may be determined by the

Minister by order in the Gazette * the provisions of this article and

those of article 24(1)(c) shall only be applicable with respect to loans

granted before the said date.

17. (Ceased to have effect as from 1st May, 2004 - see Legal

Notice 42 of 2004.)

*1st November, 2000 - see Legal Notice 135 of 2001.

(1) Subject to the provisions of subarticle (4), the

Corporation may, consistently with the aims and objectives of the

industrial policy of the Government, procure for a qualifying

company industrial buildings and structures at the following rent

(a) €4.08 per annum per square metre for the first three

years of the lease;

(b) at a rate which shall not exceed €9.32 per square metre

per annum for the next thirteen years of the lease;

(c) thereafter at the rate determined under the preceding

paragraph which rate, however, shall be adjusted

immediately, and subsequently every five years, to

take account of movements in the index of inflation

contemplated in the Schedule to the Housing

(Decontrol) Ordinance between the first year of the

lease and the date on which every such adjustment is

effected.

(2) Subject to the provisions of subarticle (4), the Corporation

may, consistently with the aims and objectives of the industrial

policy of the Government, procure for a qualifying company, land

on the following terms

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

structure, by title of lease and the rent payable shall

be -

(i)

fifty-four cents (0.54) per square metre per

annum for the first sixteen years of the lease;

(ii) thereafter at a rate which shall be adjusted

immediately, and subsequently every five years,

to take account of movements in the aforesaid

index of inflation between the first year of the

lease and the date on which every such

adjustment is effected;

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

Corporation in an undeveloped state, the land shall be

granted by title of temporary emphyteusis for a

minimum consideration of fifty-four cents (0.54) per

square metre per annum which shall be revised every

twenty-five years (whether the concession is

subsequently extended or not) to take account of

movements in the said index of inflation as from the

date of the grant.

(3) The Corporation may in any particular case provide

industrial buildings and structures constructed according to the

requirements of a qualifying company, or make alterations to

existing buildings and structures, on such terms as the Corporation

may agree with the company.

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

Gazette, vary the rates and the method of revision of such rates

established in subarticles (1) and (2).

(5)

With effect from 1st January, 1993, no duty shall be payable

under the Duty on Documents Act * in respect of any deed or other

instrument whereby any land is transferred pursuant to the

provisions of this article.

(6) The Corporation may also procure for a qualifying

company industrial buildings and structures by title of temporary

emphyteusis or undeveloped land by title of lease at such terms and

conditions as may be prescribed by the Minister from time to time.

(7)

Without prejudice to the terms of any agreement then

subsistent, with effect from such date as may be determined by the

Minister by order in the Gazette † , the consideration contemplated in

this article shall no longer apply and the rentals to be charged by the

Corporation for the lease of immovable property as contemplated by

this article, shall be determined by the Corporation.

(1) The Corporation may, consistently with the aims and

objectives of the industrial policy of the Government, grant on

lease to a qualifying company, on its own or jointly with other

qualifying companies, a structure or building to be used as a child

day care centre for the benefit of parent-employees of such a

qualifying company, other qualifying companies or service

providers in government industrial estates as may be approved by

the Corporation in accordance with the terms and conditions herein

specified

(a) no rent shall be charged for the first three years of the

lease;

(b) thereafter an annual rent shall be charged at a rate per

square metre which shall not exceed 25 per centum of

the rent per square metre per annum charged for the

factory allocated in accordance with article 18;

(c) the Corporation may also provide free of charge a

design package which shall include detailed lay-out

plans, lists of furniture and equipment required for the

centre and specifications for air conditioning,

ventilation and sanitary facilities;

(d) the Corporation may also finance the cost of the

setting up of such a centre up to a maximum of 50 per

centum of the total cost, excluding the costs for the air

conditioning and ventilation, which may be financed

by the Corporation up to a maximum rate of 25 per

centum of the total cost.

(2) The Corporation may, consistently with the aims and

objectives of the industrial policy of the Government, allow a

qualifying company to use a portion of an industrial structure or

building procured for such company in accordance with article 18

of this Act, as a child day care centre for the benefit of parent-

employees of such a qualifying company or other qualifying

companies, or parent-employees of service providers in

*Repealed by Act XVII of 1993. See the Duty on Documents and Transfers Act (Cap.

364).

†22nd March, 2001 - see Legal Notice 135 of 2001.

government industrial estates subject to the same terms and

conditions contemplated under subarticle (1)(a), (b), (c) and (d).

(3) A qualifying company which sets up a child day care centre

in a structure or building which is held by such company in full

ownership, on emphyteusis or lease from third parties, may be

granted by the Corporation the same benefits and assistance as

provided in subarticle (1)(c) and (d).

(4) The Corporation may also provide the following assistance

to qualifying companies setting up child day care centres in

accordance with the provisions of subarticle (1), subarticle (2) or

subarticle (3)

(a) the financing of up to a maximum of 50 per centum of

the approved recurrent costs for child care at such a

centre, provided that the parent-employees may not be

charged more than a maximum sum per year as may be

determined by the Corporation;

(b) the financing of approved initial and refresher training

costs of suitably qualified staff.

(5) A qualifying company which sets up a child day care centre

in accordance with subarticle (1), subarticle (2) or subarticle (3),

may be allowed by the Corporation to enter into agreements with

other qualifying companies or with service providers in

government industrial estates regarding vacancies in such a centre.

(6) The Corporation may, in its discretion grant to a qualifying

company operating a child day care centre in accordance with the

provisions of subarticles (1), (2) or (3) relief from customs duty as

provided in article 17 regarding furniture or equipment to be used

in such a centre.

(7) The Corporation may in granting any assistance in

a c c o r d a n c e wi t h t he p r ov i s i o n s o f t h i s a r ti c le , i m p os e a ny

conditions it may deem fit regarding the fees which may be charged

for such child day care service on the parent-employees.

(8) The Minister may from time to time, by regulations, vary the

conditions and rates set out in this article.

(1) Where the Corporation is satisfied that any employee

engaged by a qualifying company on or after 1st June, 1987 is a

full-time employee engaged for an indefinite period, and that such

employee is undergoing training related to the activities of the

company in accordance with a training programme approved by the

Corporation, a training grant may be given by the Corporation to

the company equivalent to one-half of the statutory weekly

minimum wage for every week of actual training undergone by

each such employee up to a maximum of forty-eight weeks.

(2) Where the Corporation is satisfied that, on or after 1st

January, 1993, a full-time employee who has been employed in a

supervisory or higher capacity by the company for at least three

years undergoes a training programme leading to a certificate in

instruction or training skills approved by the Corporation in

advance and related to the activities of the company, a training

grant may be given by the Corporation to the company equivalent

to one-half of the actual tuition fees incurred by the company.

(3) Where the Corporation is satisfied that, on or after 1st

January, 1993, a full-time employee engaged for an indefinite

period by a qualifying company undergoes a training programme in

order to acquire new skills required by the company due to the

introduction of new technology or methods of production and such

training programme has been approved by the Corporation in

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

company equivalent to one-half the statutory weekly minimum

w a g e f o r e v e r y w e e k o f a c t u a l tr a in i ng u nd e rg o ne by su c h

employee up to a maximum of forty-eight weeks

Provided that the company shall qualify for such grant only

in respect of employees who have not benefited from this scheme

during the two years preceding the year in respect of which such

grant shall be paid.

(4) Where the Corporation is satisfied that, on or after 1st

January, 1993, a full-time management employee who has been so

engaged by a qualifying company for at least three years and is

either qualified in a specific management or technical area or has

not less than three years managerial or technical experience,

undergoes a course in management development training or a

technical upgrading course which has been approved by the

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

Corporation to the company equivalent to one-half of the actual

tuition fees incurred by the company.

(5) Where the Corporation is satisfied that, on or after 1st

January, 1993, a full-time employee employed by a qualifying

company for an indefinite period undergoes a training programme

which is necessary in view of a complete change in his employment

within the company, which programme has been approved by the

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

Corporation to the company equivalent to one-half of the statutory

weekly minimum wage for every week of actual training undergone

by such employee up to a maximum of forty-eight weeks.

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

respect of whom a grant is paid under the provisions of this article

is a handicapped person, the Corporation may, in its discretion,

increase the grant in respect of the said trainee to three quarters of

the statutory weekly minimum wage or of the actual tuition fees, as

the case may be.

(7) A training grant received by a company under this article

shall not constitute a taxable receipt under the Income Tax Act.

(8) As from such date as may be determined by the Minister by

order in the Gazette * , the provisions of this article shall only be

applicable to training programmes which were approved by the

Corporation prior to that date.

*1st January, 2002 - see Legal Notice 135 of 2001.

(1) Where a qualifying company which is a Maltese

company with an actual or foreseen total sales revenue not

exceeding €1,397,624.04 in its latest or actual financial year

satisfies the Corporation that it may enhance its potential for

de v e l o pm e n t b y e m p l o yi n g qu a li f i e d p e r s o n n e l t o p e r f o r m

administrative, technical, marketing or financial functions, or by

engaging consultants to carry out such functions, in accordance

with a three-year plan submitted for the Corporation’s approval, the

Corporation may reimburse twenty-five per cent of the emoluments

or fees disbursed by the company in any year for such personnel or

consultants for a period of three years, so however that the

reimbursement shall not exceed €11,646.87 in any year.

(2) No reimbursement under the provisions of this article shall

be made in respect of emoluments or fees paid or payable to any

person who is in any way, whether directly or indirectly, closely

connected or related to any member of the qualifying company.

(3) The reimbursement received by the company under this

article shall not constitute a taxable receipt under the Income Tax

Act.

(4) As from such date as may be determined by the Minister by

order in the Gazette * , the provisions of this article shall only be

applicable with respect to grants approved by the Corporation prior to

that date.

(Deleted by: XXIII. 2007.15.).

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

not an exempt person under the Immigration Act would, if granted

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

company, contribute towards the industrial development of Malta

through his technical or managerial knowledge and experience.

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

been issued under subarticle (1) occupies a senior managerial or

technical position or office, if the relative company employs such

individual for an extended period, it shall satisfy the Corporation

that adequate arrangements are concurrently being made by it to

enable another individual of Maltese citizenship to acquire such

knowledge and experience as will enable him in due course to

occupy the said position or office.

(3) Subject to endorsement by the Corporation, where a person

who is not domiciled or ordinarily resident in Malta holds forty per

cent or more of the shares of a qualifying company, such person

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

subject to the provisions of the Immigration Act, be granted a

licence under that Act to be employed by the company in Malta.

*1st January, 2002 - see Legal Notice 135 of 2001.

(1) The provisions of this article shall apply in the case of

any qualifying company where the Corporation is satisfied that all

or part of the activities of the company (hereinafter referred to as

"Gozo company") are being carried on or carried out in Gozo.

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

cover the actual, additional and necessary transport costs incurred

by the company in transporting

(a) between Malta and Gozo machinery, plant, materials,

goods or products connected with its activities in Gozo

related to export;

(b) from Malta to Gozo material connected with its

activities in Gozo whether such activities are related to

export or not.

(3) Where a Gozo company satisfies the condition laid down in

article 4(1)(b), the Corporation shall give a grant to the company to

cover the actual, additional and necessary costs incurred by the

company to accommodate in Gozo persons who are not ordinarily

resident in Gozo and who occupy senior managerial or technical

positions, which grant shall be lim ited to a period of three

consecutive years

Provided that the grant shall not exceed €3,494.06 per

annum in respect of any single employee nor €11,646.87 to the

company in any one year.

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

may be given under the provisions of article 19 shall be extended to

th ree years in th e case of an em ploy ee o f a Gozo com pany

undergoing training if such employee was ordinarily resident in

Gozo for a period of not less than one year immediately before the

commencement of his training.

(5) Grants received by a Gozo company under this article shall

not constitute taxable receipts under the Income Tax Act.

(6) With effect from such date as may be determined by the

Minister by order in the Gazette *

(a) subarticle (2)(a) shall be applicable to all activities

whether or not these are related to export;

(b) subarticle (3) shall apply without the requirement of

the qualifying company to satisfy the conditions of

article 4(1)(b); and

(c) subarticle (4) shall only apply to training programmes

approved by the Corporation prior to that date.

(1) Subject to the provisions of article 16(11) and those of

article 17(5), the Corporation may, at its discretion, grant to a small

enterprise

(a) (Ceased to have effect as from 1st May, 2004 - see

Legal Notice 42 of 2004.);

*1st November, 2000, as regards paragraphs (a) and (b), and 1st January, 2002, as

regards paragraph (c) - see Legal Notice 135 of 2001.

(b) industrial buildings, structures and land on such

conditions as the Corporation may from time to time

determine;

(c) soft loans as provided in article 16; or

(d) any other incentive or benefit as would be consistent

with the aims and objectives of the industrial policy of

the Government, as may be prescribed by the Minister

by notice in the Gazette.

(2) In subarticle (1) "small enterprise" means a person or a

company constituted under Maltese Law which

(a) carries on or carries out a trade or business

contemplated under article 3(1)(a) to (h) or such other

trade or business as the Minister may prescribe by

notice in the Gazette; and

(b) qualifies as a small enterprise in accordance with

regulations prescribed by the Minister in terms of this

Act.

(1) Where the Corporation is satisfied that in the case of a

qualifying company or of a company which carries on or carries

out, in Malta, a trade or business consisting mainly of the operation

or management of a hotel or group of hotels, it would be consistent

with the aims and objectives of the policy of the Government

regarding energy and water conservation, the Corporation may

grant loans to the said company for the acquisition of related plant,

equipment, machinery and other fixed assets, but excluding land,

and for the financing of the necessary civil engineering and

infrastructural works, in accordance with the terms and conditions

herein specified.

(2) The Corporation may grant loans as provided under

subarticle (1) when the plant, equipment, machinery or fixed assets

are acquired as part of an investment programme for the

conservation of energy or water as may be approved by the

Corporation.

(3) Loans under the provisions of this article shall in no case

exceed thirty-three per cent of the projected investment programme

for the conservation of energy or water as approved by the

Corporation, but no loan shall exceed €465,874.68 or such other

amount as may be prescribed.

(4) The rate of interest charged by the Corporation on loans

granted under this article shall be the minimum discount rate in

terms of directives issued from time to time by the Central Bank of

Malta under the Central Bank of Malta Act, less two and a half

percentage points

Provided that the provisions of this subarticle may only be

applied by the Corporation when the said minimum discount rate is

at an equivalent or higher level than two and half percentage points.

(5) The provisions of article 16(4), (5), (6), (7), (8), (9) and

(10) shall apply mutatis mutandis to loans granted by the

Corporation under the provisions of this article.

(6) With effect from such date as may be determined by the

Minister by order in the Gazette * , this article shall apply to all

enterprises.

(1) Where it appears to the Corporation in the case of a

company which carries on or carries out, in Malta, a trade or

business consisting mainly of the operation or management of a

hotel or group of hotels, that the gains or profits or part thereof

derived by that company from its trade or business or part thereof

in the year of assessment commencing on 1st January, 1997, or in

subsequent years of assessment, have been set aside for the

exclusive purpose of financing a project for the upgrading,

refurbishing or renovation of a hotel or hotels owned, operated or

managed by such a company and as shall have been approved by

the Corporation, and that the gains or profits or part thereof have in

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

Corporation shall issue to such company a certificate showing

compliance and thereupon the rate of income tax chargeable on the

gains or profits or part thereof so used shall be reduced by

seventeen and a half percentage points, or such higher percentage

as the Minister may prescribe, and in any such case the tax

chargeable shall be assessed, or reassessed and where necessary

refunded, as the case may require.

(2) The provisions of article 6(2) shall apply mutatis mutandis

to companies qualifying for assistance under the provisions of

subarticle (1).

(3) The Minister may by regulations prescribe rules and

conditions for the application of the benefit provided by this article.

Where the Minister, on the recommendation of the

Corporation, is satisfied that a project to be undertaken by an

enterprise may make a substantial contribution to the development of

the economy as is consistent with the aims and objectives of the

Government, the Minister may, after consultation with the Corporation

as may be necessary, approve that a grant be given by the Corporation

to such an enterprise subject to such conditions as the Corporation or

the Minister may impose.

PART IV

GUARANTEE OF INCENTIVES

(1) Where after the coming into force of this Act a

qualifying company or its members or employees are entitled to an

incentive or benefit under any of the following provisions, there

shall be deemed to have come into existence a contract between the

company or its members or employees and the Government, or the

Corporation, as the case may be, guaranteeing the grant and

enjoyment of the relative incentive or benefit in accordance with

the provisions of this Act as hereunder indicated

*1st November, 2000 - see Legal Notice 135 of 2001.

(a) the incentives and benefits contemplated under articles

4, 5, 7, 8, 11, 12 and 14 when and as soon as the

company becomes entitled to a benefit thereunder for

any year of assessment;

(b) exemption from tax on dividends under article 9;

(c) the rate of tax chargeable in respect of an expatriate

employee under article 13 when and as soon as the

employee becomes so chargeable;

(d) gains or profits contemplated in article 15 for as long

as the relative arrangement is still in force;

(e) exemption from duty under article 21; and

(f)

grants due to a Gozo company in accordance with the

provisions of article 23(2) and (3).

(2) Where any incentive or benefit contemplated under the

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

or other beneficiary but depends on the use of discretion vested in

the Corporation, the use of such discretion in favour of a

beneficiary shall constitute a contract between the beneficiary and

the Government, or the Corporation, as the case may be,

guaranteeing the grant and enjoyment of the incentive or benefit in

accordance with the provisions of this Act.

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

qualifying company, a certificate released by the Corporation to the

effect that a trade or business carried on or carried out, or intended

to be carried on or carried out, by the company does not consist

solely or mainly in the mere expansion, duplication or replacement

of a trade or business formerly carried on or carried out in Malta by

any person directly or indirectly connected with the said company,

shall be conclusive evidence to this effect for the purposes of

article 4(1)(c). A certificate to like effect may also be issued by the

Corporation for the purpose of determining any question arising

under the provisions of subarticle (3)(a) of the said article.

(4) Notwithstanding any other provision of this Act, in

releasing a certificate in accordance with the provisions of

subarticle (3), the Corporation may impose any conditions it may

deem fit including a reduction in the term of the tax holiday

contemplated by article 4.

(5) The Corporation may at its discretion issue a certificate

exempting a qualifying company from the requirements of article

4(1)(c) under such terms and conditions it may deem fit to impose

where

(a) the company is a joint venture between an existing

qualifying Maltese company or companies (in this

subarticle referred to as "the first partner company")

and a company which carries on its trade or business

outside Malta (in this subarticle referred to as "the

second partner company") and which, if it were not for

the said joint venture, would satisfy the conditions

established in article 4(1)(c); and

(b) the second partner company holds at least 20% of the

ordinary and voting share capital of the joint venture

company; and

(c) the Corporation is satisfied that the second partner

company would bring into the joint venture company

innovative technology, new production processes or

access to new foreign markets.

(6) The guarantees given by this article shall not be nullified by

any retrospective action, whether by legislation or otherwise.

(7) The provisions of this article shall be without prejudice to

the controlling and regulatory provisions laid down in this Act and

to the powers of the President of Malta under article 26.

No incentive or benefit contemplated by this Act shall be

enjoyed by any qualifying company or other beneficiary for any

year or year of assessment if the President of Malta by order in

writing declares that the grant or acquisition or continued grant and

acquisition of such incentive or benefit is or would be against

public policy (ordre public), and where such an order is made it

shall have effect as from the date therein specified but in no case

shall an order have retrospective effect.

(1) Where a qualifying company or other beneficiary fails

to comply or cause compliance with any of the conditions attached

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

this Act, the Corporation may either revoke the incentive or benefit

or by notice in writing require such company or other beneficiary

within thirty days of the receipt of such notice -

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

or

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

failure to comply or cause compliance with such

conditions was due to some cause beyond its control

and that there are actual prospects of complying or

causing compliance with such condition within such

time as the Corporation may consider reasonable.

(2) Where a qualifying company or other beneficiary

establishes to the satisfaction of the Corporation that failure to

comply or cause compliance with any conditions attached to the

grant of any incentive or benefit under this Act was due to some

cause beyond its control, and that there are actual prospects of

complying or causing compliance with such conditions within a

reasonable time, the Corporation may authorise reasonable

postponement for the purpose of compliance with such conditions,

as it thinks fit.

(3)

Where a qualifying company or other beneficiary

(a) having been required so to do by notice under

subarticle (1), fails to establish to the satisfaction of

the Corporation that its failure to comply or cause

compliance with any conditions attached to the grant

of any incentive or benefit was due to some cause

beyond its control and that there are actual prospects

of complying or causing compliance with such

conditions within a reasonable time; or

(b) having been allowed a postponement under subarticle

(2), fails within the period of such postponement to

comply or cause compliance with such conditions,

the Corporation may revoke any incentive or benefit granted to the

company or other beneficiary under this Act, and that revocation

shall be operative from such date as may be determined by the

Corporation.

(4) Where the grant of any incentive or benefit under this Act is

revoked in accordance with the provisions of this article, the

relative company or other beneficiary shall pay or repay to the

Government or to the Corporation, as the case may be, any sums

which it would have paid to the Government or the Corporation but

for the provisions of this Act or which it had received thereunder,

and any sums which the company or other beneficiary is so liable to

pay or repay may be set off against any sums which may be due

from the Government or the Corporation to the company or other

beneficiary for any reason whatsoever, without prejudice to any

right of the Government or the Corporation for the recovery of any

balance remaining due.

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

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

discretion vested in the Corporation.

(6) In all cases of revocation under the provisions of this

article, an appeal shall lie by the aggrieved party to the

Administrative Review Tribunal.

The Administrative Review Tribunal shall have exclusive

jurisdiction to hear and determine appeals in accordance with the

provisions of article 30.

The members of the Tribunal shall not be personally liable for

any acts or defaults of the Tribunal done or omitted to be done in good

faith in the course of the proceedings of the Tribunal.

(1) Subject to the provisions of sub-article (2), a

qualifying company or other beneficiary aggrieved by any decision

taken in respect of any matter falling under or contemplated by the

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

decision before the Tribunal.

(2) Saving the provisions of article 27(6), subarticle (1) shall

not apply to any decision taken by the President of Malta, the

Minister, or the Corporation, as the case may be, in the exercise of

discretionary power.

(3) An appeal from a decision as aforesaid shall be made by

application and shall be filed with the Secretary of the Tribunal

within twenty days from the date on which the said decision has

been notified.

(4)

The provisions of the Administrative Justice Act, in so far

as they apply to the Administrative Review Tribunal, shall apply to

any proceedings before the said Tribunal and the words "public

administration" in the said enactment shall be construed as a

reference to the Corporation.

(5) The provisions of article 25 of the Administrative Justice

Act shall apply to any appeals pending before the Appeals Board

constituted under article 28 of this Act, as the said article stood

prior to the coming into force of this article, and any such appeals

shall be assigned to the Administrative Review Tribunal in terms of

the aforesaid article 25 with effect from 1st July, 2012.

(6) The provisions of this article shall be without prejudice to the

proceedings contemplated in -

(a) article 65 to article 69 of the Income Tax Act; and

(b) article 25 to article 28 of the Death and Donation Duty

Act *

Provided that any issue decided under this article in respect

of any matter contemplated under this Act shall, saving the

provisions of article 31, be final and conclusive.

(7) Appeals to the Tribunal shall be heard in camera unless the

Tribunal, on the application of both contending parties, otherwise

directs.

(8) The Tribunal may order the correction of any arithmetical

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

either party within twenty days from the date of service upon it of

that decision, and such application shall be served on the other

party.

(1) An appeal from a decision of the Tribunal may be

made by either party, on a question of law only, to the Court of

Appeal (Inferior Jurisdiction) by an application filed within twenty

days from the date of service upon it of the decision of the

Tribunal, and such application shall be served on the other party.

(2) All appeals to the Court of Appeal shall be heard in camera

unless the Court, on the application of both contending parties,

otherwise directs.

(3) The decisions of the Tribunal and the Court of Appeal shall

be published without, however, disclosing the identity of any

person.

PART V

GENERAL PROVISIONS

Nothing contained in this Act shall affect the provisions of

any other law whatsoever except to the extent solely that the

provisions of this Act replace or supersede the provisions of that

*Repealed by Act XVI of 1993.

law, and no incentive, exemption, reduction of taxation or other

benefit or privilege provided for under the provisions of this Act

sh all m od ify any obl igati on to f urnish r eturns, statem ents,

particulars or documents as may be required by any other law.

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

th i s A c t , or i n t h e c o u r s e o f a pr o s e c u t io n f or a n y off e nc e

committed in relation to this Act, or where the Prime Minister

otherwise directs -

(a) every person having an official duty or being

employed in the administration of this Act shall regard

and deal with all documents and information relating

to matters contemplated by or pursuant to the

provisions of this Act as secret and confidential and

shall make and subscribe before a Commissioner for

Oaths a declaration on oath to this effect in the form

prescribed which shall be deposited with the Attorney

General;

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

before any court, tribunal, Board, committee of

enquiry or any other authority, or to divulge to any

court, tribunal, Board, committee or other authority,

any matter or thing coming to his notice or being in his

possession in the performance of his duties under this

Act.

(2) Notwithstanding the provisions of subarticle (1), the

auditor of the Corporation shall have access to any records and

documents as may be necessary for the performance of his duties.

(1) A qualifying company or other beneficiary may be

granted and obtain more than one form of incentive or benefit

under this Act.

(2) A qualifying company or other beneficiary may, at any

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

incentive or benefit otherwise due to it under the provisions of this

Act. Such notice shall specify the date from which its election shall

be operative, which date shall invariably be the first day of a year,

or of a year of assessment or of any other financial period, and shall

be irrevocable and indefinite in respect of the matters on account of

which it has been made

Provided that, notwithstanding anything contained in article

61(1), a qualifying company which so elects not to be granted or to

take an y i ncenti ve or ben efit ot herw ise du e to it under th e

provisions of this Act, shall not be precluded from being granted

any incentive or benefit of a similar nature granted under the

provisions of the Aids to Industries Ordinance.

(1) No incentive or benefit which may be granted or

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

entitlement thereto shall exist notwithstanding anything contained

in this Act unless -

(a) proper and sufficient records and accounts, including

appropriate supporting documentation, have been

maintained for the relative year, year of assessment or

accounting period, as the case may be, by the

qualifying company otherwise entitled to the incentive

or benefit or in relation to which such entitlement

arises;

(b) separate accounts have been kept as may be necessary

to identify and quantify the incentive or benefit;

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

documents as may be necessary to establish clearly the

entitlement to the incentive or benefit are submitted to

the appropriate authority.

(2) A qualifying company shall not be entitled to any incentive

or benefit contemplated under the provisions of this Act unless its

annual financial statements, and in the case of a company not

incorporated under Maltese Law the annual financial statements of

its operations in Malta, are audited by a certified public accountant

and auditor in accordance with the provisions of the Commercial

Partnerships Ordinance * or the Companies Act, as applicable,

whether or not such audit is required under the said Ordinance or

Act and unless all other statements, accounts or documents

submitted for the purpose of acquiring any such incentive or benefit

are also certified by a certified public accountant and auditor to the

same effect that the company’s financial statements are to be

certified under the provisions of the said Ordinance or Act as

aforesaid.

(1) A qualifying company in receipt of any of the

incentives and benefits indicated in subarticle (4) shall, at the end

of the accounting period during which the incentive or benefit

stands to be accounted for, transfer to and show in its balance sheet

as on the said date a reserve to be called the "Incentives and

Benefits Reserve" in a sum equal to the amounts therein specified.

This reserve shall show separately any amounts transferred under

subarticle (4)(a) and any amounts transferred under subarticle

(4)(b).

(2) The amounts to be transferred to the Incentives and Benefits

Reserve, as provided for by subarticle (1), shall be so transferred from

profits which, but for the provisions of this article, would otherwise be

available for distribution under the laws for the time being in force in

Malta, and where at the end of any accounting period there are

insufficient distributable profits to enable the transfer to the said

reserve of the full amount which should be transferred in accordance

with subarticle (1), the obligation to transfer any amount which could

not be so transferred shall be carried forward to the subsequent

accounting period and deemed to be an obligation for that period, and

so on for subsequent periods.

(3) A reserve created under the provisions of subarticle (1)

shall, except as otherwise provided for in this article, be retained

separately in the balance sheet of the company and shall not be

*Repealed by Act XXV of 1995 (Cap. 386).

distributable or convertible into share capital of the company. The

said reserve shall also not be reduced to take account of any losses

incurred by the company, whether such losses are of an ordinary or

extraordinary nature, or capital or revenue in character

Provided that, notwithstanding anything in this subarticle,

any amount transferred to the Incentives and Benefits Reserve

under subarticle (4)(a) may, after the lapse of eight years from the

end of the approved investment period, be applied by the company

in paying up unissued shares of the company to be allotted to

m e m b e r s o f t h e co m p a n y a s f u l l y p a i d b o n u s s h a r e s . S u c h

distribution shall not be chargeable to tax.

(4) The incentives and benefits referred to in subarticle (1) are

the following

(a) the net amount of the profits subject to income tax at a

reduced rate under the provisions of article 6 and

article 24B;

(b) the amount of any grants given under the following

provisions of this Act

(i) article 19 by way of a training grant;

(ii) article 20 by way of a management services

grant;

(iii) article 23(3) and (4) by way of accommodation

and training grants to industry in Gozo,

respectively.

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

course of winding up the company out of any reserve created in

accordance with the provisions of this article shall not be liable to

tax under the Income Tax Act

Provided that any tax paid by the company on the profits

referred to in subarticle (4)(a) shall not be available as a credit or

set-off under the provisions of the said Act to the recipient of the

distribution.

(6) Where a qualifying company is a company incorporated

outside Malta, such company shall show the Incentive and Benefits

Reserve on its balance sheet in respect of its business activities in

Malta until the company’s place of business in Malta, in respect of

which the reserve is required, ceases to exist.

(7) The provisions of subarticles (2), (3) and (5) shall only

apply to companies constituted under Maltese Law.

(1) Any qualifying company or other person purporting or

seeking to obtain or enjoy any incentive or benefit under the

provisions of this Act shall -

(a) furnish to the Corporation and to any other authority

such information, accounts, statements and other

documents which the Corporation or that other

authority may deem to be necessary for the purposes of

this Act;

(b) attend or send a representative to attend before the

Corporation or other authority and answer any

question lawfully made in connection therewith;

(c) provide the Corporation or other authority with

reasonable access to all premises, places, books and

other documents, and allow copies to be made thereof

for the purposes of this Act.

(2) The Corporation or other authority may delegate to any of

its officers, employees and any other person whomsoever any of the

rights and powers contemplated by this article.

PART VI

OFFENCES AND PENALTIES

Any person who, except as provided for or allowed under

this Act or for the purposes thereof, communicates or attempts to

communicate to any other person any matter or thing coming to his

notice or being in his possession in the performance of his duties

under this Act shall be guilty of an offence and shall, on conviction,

be liable to a fine (multa) of not less than four hundred and sixty-

five euro and eighty-seven cents (465.87) and not more than four

thousand and six hundred and fifty-eight euro and seventy-five

cents (4,658.75) or to imprisonment for a period not exceeding six

months, or to both such fine and imprisonment

Provided that a person shall not be precluded from

providing such information and access to the Corporation’s records

as may be required by the State Aid Monitoring Board in the

discharge of its functions and duties under this Act

Provided further that a person referred to in article 33(1)(a)

shall have the duty to provide such information and access to the

Corporation’s records as may be required by the Minister for the

execution of the Minister ’s responsibilities in terms of the

provisions of this Act and of the Malta Development Corporation

Act.

Any person who without reasonable excuse prepares any

incorrect statement or gives any incorrect information in relation to

any matter or thing falling under this Act, shall be guilty of an

offence and shall, on conviction, be liable to a fine (multa) of not

less than six hundred and ninety-eight euro and eighty-one cents

(698.81) and not exceeding four thousand and six hundred and

fifty-eight euro and seventy-five cents (4,658.75).

Any person who wilfully with intent to obtain any

incentive or benefit under this Act or to assist any other person to

do so -

(a) omits from a return or any other document or

statement made, prepared or submitted for the

purposes of or under this Act, any matter which should

be included therein; or

(b) makes any false statement or entry in any return or

other document or statement prepared or submitted for

the purposes of or under this Act; or

(c) gives any false answer, whether verbally or in writing,

to any question or request for information asked or

made in accordance with the provisions of this Act; or

(d) prepares or maintains or authorises the preparation or

maintenance of any false books of account or other

records or falsifies or authorises the falsification of

any books of account or records; or

(e) makes use of any fraud, art or contrivance whatever or

authorises the use of any such fraud, art or

contrivance,

shall be guilty of an offence, and shall for each such offence be

liable on conviction to a fine (multa) of not less than one thousand

and one hundred and sixty-four euro and sixty-nine cents

(1,164.69) and not exceeding eleven thousand and six hundred and

forty-six euro and eighty-seven cents (11,646.87) or to

imprisonment for any term not exceeding six months, or to both

such fine and imprisonment.

If any person contravenes or fails to comply with any of

the requirements of this Act or of any regulations made thereunder,

in respect of which no special punishment is provided, he shall be

guilty of an offence and shall for each offence be liable, on

conviction, to a fine (multa) of not less than two hundred and

thirty-two euro and ninety-four cents (232.94) and not more than

one thousand and one hundred and sixty-four euro and sixty-nine

cents (1,164.69).

The provisions of this Act establishing offences and

punishments in respect thereof shall not affect the operation of any

other law establishing offences and punishments in respect of the

same acts or omissions and shall not, in particular, affect the

application of any higher punishment under any other law.

Proceedings for an offence under this Act may be

c o m m e nc e d a t a n y t i m e w i t h i n f i v e y e a r s f r o m t h e d a t e o f

commission of the offence.

Articles 44 to 56 - Deleted by: XXIII. 2007.15.

PART VII

STATE AID MONITORING BOARD

(1) There is hereby established a board to be known as the

State Aid Monitoring Board, hereinafter referred to as "the Board".

(2) The Board shall consist of five members to be appointed by

the Minister, who shall designate one of the members to be the

Chairman, and another member to be the Deputy Chairman of the

Board.

(3) Members of the Board shall, subject to subarticles (4) and (5),

be appointed for a term of three years, and may be re-appointed for a

further period or further periods of three years.

(4) A member of the Board may resign his office at any time by

giving notice in writing to the Minister.

(5) The Minister may at any time remove a member of the Board

on grounds of disability to perform his functions, bankruptcy or

neglect of duty.

(6) The quorum necessary for meetings of the Board shall be the

chairman or, in his absence, the deputy chairman and two other

members.

(7) The Minister shall designate a public officer to act as the

secretary to the Board.

(8) The members of the Board and the Secretary shall be paid

such honorarium as the Minister may determine.

(9) Subject to the other provisions of this Act, the Board may

regulate its own procedures and meetings in such manner as it

deems proper.

(1) The functions of the Board shall be to -

(a) establish and update a comprehensive state aid

inventory;

(b) review and assess existing and new state aid, and provide

advice about their compatibility with the principles

contained in the relative present and future acts of the

European Union;

(c) establish and implement appropriate rules of procedure

and methodological systems which lead to an effective

state aid monitoring and reporting system;

(d) provide expert opinions, positions and proposals for the

formulation and implementation of state aid policy;

(e) prepare an annual report on state aid in Malta, on the

basis of the established methodology used in the

European Union;

(f)

assist in the identification and implementation of

appropriate capacity building concerning state aids;

(g) act as the pertinent body concerning state aid in Malta;

and

(h) exercise such other functions and duties as may be

prescribed.

(2)

In its deliberations on specific cases or issues, the Board

may require the input of persons engaged in the public sector and,

or, entities; the Board may also request appropriate expertise from,

or collaboration with, third parties, as it may deem necessary.

(3) In the exercise of its powers and functions under this Act, the

Board shall have the right of access to all relevant information, and

may seek the clarifications and explanations that it may deem

necessary for its deliberations and conclusions.

(4) Every member of the Board shall regard and deal with all

documents and information relating to matters contemplated by or

pursuant to the provisions of this Part of this Act as secret and

confidential and shall make and subscribe before a Commissioner

for Oaths a declaration on oath to this effect in the form prescribed

which shall be deposited with the Attorney General.

(5) Any person who, except as provided for or allowed under

this Act or for the purposes thereof, communicates or attempts to

communicate to any other person any matter or thing coming to his

notice or being in his possession in the performance of his duties as

a member of the Board shall be guilty of an offence and shall, on

conviction, be liable to a fine (multa) of not less than four hundred

and sixty-five euro and eighty-seven cents (465.87) and not more

than four thousand and six hundred and fifty-eight euro and

seventy-five cents (4,658.75) or to imprisonment for a period not

exceeding six months, or to both such fine and imprisonment.

The Minister may make regulations to give effect to any of

the provisions of this Part.

PART VIII

FINAL PROVISIONS

(1) The Minister may make regulations to give effect to

any of the provisions of this Act, other than the provisions under

Part VIII, and, without prejudice to the generality of the foregoing,

such regulations may in particular include provision with respect

to -

(a) the form of applications, returns, statements, reports

and other documents for the purposes of this Act;

(b) the procedure to be followed in matters relating to the

provisions of this Act, including the processing of

applications made for the purposes of this Act;

(c) such other promotional measures as he may deem

appropriate and subject to such conditions as he may

deem fit, which measures may include, but shall not be

limited to -

(i)

measures of a fiscal nature whereby the tax

payable by an enterprise may be reduced or

absorbed by tax credits or by exempting or

taxing at reduced rates of income tax the profits,

or part thereof, derived by an enterprise from a

trade, business, profession or vocation;

(ii) the provision of financial assistance in the form

of grants, subsidies, loans and loan guarantees;

(iii) measures directed at encouraging employment

and training;

(iv) measures directed at encouraging investment in

research and development;

(v) measures directed at encouraging investment for

the protection of the environment;

(vi) measures directed at assisting firms in difficulty

and assisting them in restructuring;

(d) special provision with respect to such micro, small or

medium sized enterprises as may from time to time be

prescribed;

(e) the designation of any authority or person to exercise any

of the functions of the Corporation under this Act.

(2) The power of the Minister under subarticle (1) shall be

exercised with the concurrence of the Minister responsible for

Tourism where the measures relate to operations in the tourism

sector and with the concurrence of the Minister responsible for

Agriculture and Fisheries where the measures relate to operations

in the agricultural or fisheries sector.

(3) Where the Minister proposes to make regulations in

accordance with the provisions of this Act and those regulations

provide that an enterprise may be wholly or partly exempted from

being liable to income tax which, but for the provisions of such

regulations, would have been payable, the power of the Minister to

make such regulations shall be exercised with the concurrence of

the Minister responsible for Finance.

(4) Where the Minister proposes to make regulations in

accordance with the provisions of this Act and those regulations

provide for the granting of any assistance, a copy of such proposed

regulations shall be forwarded to the State Aid Monitoring Board

which shall communicate its comments to the Minister on the

proposed assistance to be granted within thirty days of receiving a

copy of the proposed regulations.

Without prejudice to any provision of this Act granting the

Minister the power to make regulations, the Minister may, subject to

the provisions of the Exclusive Economic Zone Act, from time to

time, make, amend, substitute or repeal regulations for the purpose of

regulating, prescribing or otherwise providing for any matters

regulated by or under this Act or by or under any subsidiary legislation

made thereunder, in respect of an exclusive economic zone area or an

environment protection area as defined in the Exclusive Economic

Zone Act or any activities therein including, but not limited, to the

applicability or otherwise of this Act and, or of any subsidiary

legislation made thereunder.

The Corporation may, with the approval of the Minister,

exercise its functions and powers under this Act through the agency

of other persons

Provided that any decision taken as result of any delegation

of powers or functions made in accordance with the provisions of

this article will not be effective unless definitely approved by the

Corporation.

(1) On the coming into force of this Act, the provisions of

the Aids to Industries Ordinance shall cease to have effect in

respect of any person carrying on or carrying out, or intending to

carry on or carry out, any trade or business contemplated in article

3(1) or in article 24, without prejudice to anything done or omitted

to be done or still to be done thereunder by or in respect of any such

person, and, in particular, to any relief granted to or any liability,

whether criminal or civil, incurred by any such person under that

Ordinance.

(2) On the coming into force of this Act, the procedure for

granting any relief from customs duty under article 8 of the Aids to

Industries Ordinance, and for regulating all matters relating thereto,

shall be that set out in article 17 and the relevant regulatory

provisions of this Act, to the exclusion of the provisions of that

Ordinance.