Venture Capital Fund (Tax Credit) Regulations, 2006

L.N. 50 of 2006

INCOME TAX ACT

(CAP. 123)

Venture Capital Fund (Tax Credit) Regulations, 2006

IN exercise of the powers conferred by articles 14(2) and 96 of the

Income Tax Act, the Prime Minister and Minister of Finance has made

the following regulations>-

The title of these regulations is the Venture Capital Fund (Tax Title.

Credit) Regulations, 2006.

In these regulations, unless the context otherwise requires –

Definitions.

“the Act” means the Income tax Act<

“the Corporation” means the Malta Enterprise Corporation<

“designated venture capital fund” means a collective

investment scheme –

(a) which is a prescribed fund in terms of article 41A(b)

of the Act< and

(b) where the securities issued by such scheme are

securities listed on a stock exchange recognised under the

Financial Markets Act< and

(c) which is named as such by the Corporation by

means of a designation that has not been revoked< and

(d)

in which the Corporation holds securities< and

(e) which was set up with the purpose of increasing

the amount of private investment capital available for Malta-

based companies in the seed or early stage of business

development as well as to provide finance for innovative

processes, ideas and techniques< and

(f) concerning which the Corporation has informed the

Commissioner of the relevant details referred to in paragraphs

(a), (b), (c), (d) and (e) hereof<

“replacement certificate” means a certificate issued by the

Commissioner in accordance with regulation 4<

“tax credit certificate” means a certificate issued by the

Commissioner in accordance with regulation 3, or a replacement

certificate as the case may be.

(1) Notwithstanding any obligation to secrecy or

confidentiality, or any other restriction relating to the disclosure of

information imposed by any enactment –

(a) when a designated venture capital fund issues securities

to investors, it shall inform the Commissioner of such issue< and

(b) a designated venture capital fund shall, upon any request,

give the Commissioner all the information necessary for the

purpose of the requirements of these regulations.

(2) When the Commissioner receives a notice by a

designated venture capital fund of purchase of securities by investors,

and he is satisfied that such securities have been actually fully paid for,

he shall issue and deliver a tax credit certificate to each person acquiring

the securities.

(3) Each tax credit certificate shall be dated and

consecutively numbered and shall indicate>

(a)

the name of the designated venture capital fund<

(b) details identifying the securities purchased<

(c)

the total nominal value of the securities purchased<

(d) a declaration that the certificate gives the right to a tax

credit as provided for in these regulations<

(e) the name of the person to whom the tax credit certificated

is issued and, if he is an individual, his identity card or passport

number or, if it is a company incorporated in Malta, its company

registration number or, in any other case, such details as the

Commissioner may consider sufficient to properly identify that

person or company.

(1) When a person declares in writing that he is the lawful

owner of a tax credit certificate and notifies the Commissioner in writing

that such certificate has been lost, stolen, destroyed or defaced, he may

apply to the Commissioner for a replacement certificate.

(2) When the application for a replacement certificate is

made to replace a defaced certificate, the original certificate shall be

surrendered to the Commissioner at the same time that the application

is made.

(3) The Commissioner may issue and deliver to the applicant

a replacement certificate if he is satisfied that the application is made

bona fide> provided that the Commissioner may disallow the application

without assigning any reason therefor.

(4) Before allowing an application under this regulation the

Commissioner may request the applicant to give such undertaking,

security and indemnity as it considers appropriate.

(5) A replacement certificate shall comply with sub-

regulation (3) of regulation 3 and it shall also indicate that it is a

replacement certificate.

(6) The Commissioner shall note and keep record of every

original and replacement certificate.

(1) Subject to the provisions of regulation 6, the person Claim for a tax

credit.

identified on a tax credit certificate may claim a tax credit equivalent to

thirty percent (30%) of the total nominal value shown on the said

certificate following the surrendering of the said certificate to the

Commissioner>

Provided that such certificate may only be surrendered after the

lapse of the third year from the date when the person holding the

certificate had acquired the securities which gave him the right to apply

for the certificate>

Provided further that the person surrendering the certificate has

continuously held the securities referred to in the previous proviso during

the said three years>

Provided also that the maximum amount of tax credit claimed by

any person for all the relevant years of assessment taken together may

not be greater than Lm150,000.

(2) Subject to the provisions of sub-regulation (3), the tax

credit shall be allowable as a deduction from the tax chargeable on the

income of the person identified on the certificate for the year of

assessment commencing on the 1st January of the year immediately

following that in which the certificate is surrendered as aforesaid, and

any amount that remains unabsorbed for that year of assessment shall

be carried forward and treated as a tax credit, to be deducted from the

tax chargeable on gains or profits derived by that person in subsequent

years> provided that the maximum amount of tax credit that may be

claimed which is referred to in the third proviso to sub-regulation (1) is

not exceeded.

(3) A tax credit allowed in accordance with this regulation

may only give rise to a valid claim for refund of tax where it results

that, after taking into account the said tax credit, such tax had been paid

in excess for any applicable year of assessment, whether such tax was

paid by deduction or otherwise.

(4) When a tax credit certificate has been surrendered as

aforesaid it may not be delivered back to the surrendering person or

delivered or transferred to any other person.

No claim for a tax credit shall be allowable if a claim has

already been made with respect to the surrender of an original certificate

or of a replacement certificate issued to replace the said original

certificate.

The Commissioner and any person acting on his behalf are

indemnified against any claim whatsoever arising from the issue,

delivery or replacement of any certificate or the granting of any tax

credit under these regulations.

(1) The Commissioner shall deem that the designation of a

designated venture capital fund has been revoked on the date when the

Corporation expressly revokes such a designation or on the date that

the relevant entity fails to conform to the definition of designated venture

capital fund as provided in regulation 2, whichever date is the earlier.

(2) Where the Commissioner deems that such a designation

has been revoked as aforesaid, he shall consider the relevant tax credit

certificates which had not been surrendered by the date of such

revocation to be surrendered on the date of such revocation>

Provided that such certificates could be surrendered in

accordance with the provisions of sub-regulation (1) of regulation 5>

Provided further that the holder of the certificate surrenders

the said certificate not later than six months from the date of such

revocation.

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