Regulations, 2009

L.N. 168 of 2009

MALTA ENTERPRISE ACT

(CAP. 463)

Assistance for Research and Development and Innovation

Regulations, 2009

IN exercise of the powers conferred by article 5 of the

Malta Enterprise Act, the Minister of Finance, the Economy and

Investment has made the following regulations

(1) The title of these regulations is the Assistance for Title and

Research and Development and Innovation Regulations, 2009.

(2) These regulations shall be deemed to have come

into force on the 1st January 2009.

(Regulation 5)

Maximum Aid Intensity in respect of eligible costs

Small

Medium

Large

Undertaking

Undertaking

Undertaking

70%

60%

50%

Industrial Research

Industrial Research subject to

80%

75%

65%

collaboration between undertakings;

-

for large undertakings: cross border

or with at least one SME

or

collaboration of an undertaking with

-

a research organisation

45%

35%

25%

Experimental Development

Experimental Development subject to

60%

50%

40%

collaboration between undertakings;

-

for large undertakings: cross border

or with at least one SME

or

collaboration of an undertaking with

-

a research organisation

75%

75%

65%

Technical Feasibility Studies

Industrial Research

50%

50%

40%

Technical Feasibility Studies

Experimental Development

50%

40%

30%

Innovative Clusters and Collaborations

Investment Aid

50%

50%

50%

Innovative Clusters and Collaborations

Operation Aid (non - digressive)

€0.75

In these regulations, unless the context otherwise Interpretation.

“the Act” means the Malta Enterprise Act;

“aid intensity” means the maximum level of aid,

expressed as a percentage of the project’s eligible costs;

“the Corporation” means the Malta Enterprise

Corporation established under the Malta Enterprise Act;

“eligible costs” means expenses incurred by an

undertaking

(a) to carry out industrial research or experimental

development;

(b) to carry out technical feasibility studies

preparatory to industrial research or experimental

development;

(c) to obtain and validate patents and other

industrial property rights;

(d) to obtain the services of highly qualified

personnel on secondment from a research organisation

or a large organisation for a small or medium-sized

undertaking to work on specific research, development

and innovation projects; or

(e)

to set up, expand and animate an innovation

cluster;

“experimental development” means the acquiring,

combining, shaping and using of existing scientific,

technological, business and other relevant knowledge and

skills for the purpose of producing plans and arrangements

or designs for new, altered or improved products, processes

or services but shall not include the routine or periodic

changes made to products, production lines, manufacturing

processes, existing services and other operations in progress,

even if such changes may represent improvements. The

experimental production and testing of products, processes

and services are also eligible, provided that these cannot be

used or transformed to be used in industrial applications or

commercially;

“the Guidelines” means such guidelines as may be

published by the Corporation from time to time in terms of

the Act;

“highly qualified personnel” means researchers,

engineers, designers and marketing managers holding a

tertiary education degree and at least five years of relevant

professional experience;

“industrial research” means the planned research

or critical investigation aimed at the acquisition of new

knowledge and skills for developing new products, processes

or services or for bringing about a significant improvement in

existing products, processes and services;

“innovation clusters” means groupings of independent

undertakings (innovative start-ups, small, medium and large

undertakings as well as research organisations) operating

in a particular sector and region, and designed to stimulate

innovative activity by promoting intensive interactions,

sharing of facilities and exchange of knowledge and expertise

and by contributing effectively to technology transfer,

networking and information dissemination among the

undertakings in the cluster;

“large undertaking”, “medium-sized undertaking”,

“small undertaking” and “micro undertaking” shall have

the meaning attributed to them by Annex I of Commission

Regulation (EC) No 800/2008 of the 6th August, 2008

declaring certain categories of aid compatible with the

common market in application of Articles 87 and 88 of the

Treaty (General block exemption Regulation);

“research organisation” means an entity, such as

university or research institute, irrespective of its legal status

(organised under public or private law) or way of financing,

whose primary goal is to conduct fundamental research,

industrial research or experimental development and to

disseminate their results by way of teaching, publication

or technology transfer; all profits are reinvested in these

activities, the dissemination of their results or teaching;

undertakings that can exert influence upon such an entity, in

the quality of, for example, shareholders or members, shall

enjoy no preferential access to the research capacities of such

an entity or to the research results generated by it;

“secondment” means the temporary engagement of

personnel by a beneficiary undertaking for a definite period

of time, after which such personnel shall have the right to

resume their permanent employment;

“undertaking” means an undertaking as defined in the

Act except for the purposes of tax credits granted under

regulation 3 where undertaking shall mean

(a) a partnership constituted under the Companies

Act, being a partnership en nom collectif, en commandite

or a limited liability company; or

(b) a body of persons constituted, incorporated

or registered outside Malta, and of a nature similar to

the aforesaid partnerships and registered as an oversea

company in accordance with the Companies Act; or

(c) a co-operative society duly registered as such

under the Co-operative Societies Act.

(1) Where the Corporation is satisfied that an

undertaking requires assistance to carry out research and

development and innovation activities for developing new

products, processes or services or for bringing about a significant

improvement in existing products, processes and services, the

Corporation may assist such an undertaking by means of a tax

credit or a cash grant as a percentage of the eligible costs incurred

by such undertaking in the development of the said products,

services or processes in accordance with the terms and conditions

set out in the Guidelines.

(2) The tax credit that may be claimed under

this regulation shall be due for each year of assessment that

immediately follows a year in which the eligible expenditure

giving rise to the right to the tax credit is incurred.

(3) The assistance referred to in sub-regulation

(1) hereof may be provided only if the research, development

and innovation project together with the relative services and

costs involved have been approved a priori in writing by the

Corporation

Provided that such assistance may be approved by the

Corporation only if the undertaking shall increase its level of

research, development and innovation activities and shall carry out

research, development and innovation projects or activities which

would otherwise not have been carried out or would have been

carried out in a more restricted manner.

Where the Corporation is satisfied that a research project

based on industrial research or experimental development may

contribute to the economic development of Malta, the Corporation

may provide such an undertaking with the forms of assistance

referred to in regulation 3 hereof in accordance with the terms and

conditions set out in the Guidelines.

Where the Corporation is satisfied that a research project

referred to in regulation 4 hereof involves collaboration between

two undertakings independent from each other or between an

undertaking and a research organisation, the Corporation may

provide such an undertaking with the forms of assistance referred

to in regulation 3 hereof with the aid intensities for collaboration as

indicated in the Schedule to these regulations, in accordance with

the terms and conditions set out in the Guidelines.

Where the Corporation is satisfied that an undertaking

that may contribute to the economic development of Malta requires

assistance to carry out technical feasibility studies preparatory to

industrial research or experimental development, the Corporation

may provide such an undertaking with the forms of assistance

referred to in regulation 3 hereof in accordance with the terms and

conditions set out in the Guidelines.

Where the Corporation is satisfied that a small and Assistance for the

medium-sized undertaking that may contribute to the economic industrial

development of Malta requires assistance to obtain or to validate

patents and other industrial property rights, the Corporation may

provide such an undertaking with the forms of assistance referred to

in regulation 3 hereof in accordance with the terms and conditions

of the Guidelines.

Where the Corporation is satisfied that a small or Assistance to obtain

medium-sized undertaking that may contribute to the economic the services of highly

development of Malta requires assistance in obtaining the services secondment.

of highly qualified personnel on secondment from a research

organisation or a large undertaking to undertake research and

development or innovation activities, the Corporation may provide

such an undertaking with the forms of assistance referred to in

regulation 3 hereof in accordance with the terms and conditions set

out in the Guidelines

Provided that any personnel so seconded with a small or

medium-sized undertaking shall not replace any of its existing

personnel but shall be employed in a newly created function with

such undertaking

Provided further that any personnel so seconded must have

been employed for at least two years in the research organisation

or a large undertaking providing the personnel on secondment.

The seconded personnel must work on research and development

and innovation activities within the small and medium-sized

undertaking receiving the assistance.

Where the Corporation is satisfied that an undertaking Assistance to

that may contribute to the economic development of Malta requires innovation clusters.

assistance to set up, organise and operate an innovation cluster

which manages the participation and access to the innovation

cluster’s premises, facilities and activities, the Corporation may

provide such an undertaking with the forms of assistance referred to

in regulation 3 hereof in accordance with the terms and conditions

of the Guidelines.

(1) An undertaking benefiting from tax credits in

terms of these regulations and the respective Guidelines in respect

of a year of assessment shall be entitled to deduct from the amount

of income tax which is due on its chargeable income derived from

its trade or business for that year of assessment the amount of the

tax credit and, where the tax credit, for any year of assessment,

exceeds the income tax payable by such an undertaking for that

year, the excess shall be added to the tax credit for the following

year and deemed to be part of that tax credit, or if there is no such

tax credit for that year, be deemed to be the tax credit for that year

and so on for subsequent years

Provided that such tax credit which is not so utilised

at the end of any year and which is therefore carried forward to

be added to the tax credit of the following year of assessment and

deemed to be the tax credit for that year, shall be increased by such

rate as may be prescribed in the Guidelines; and where any part

of the tax credit as so increased is again not utilised, so much of it

as is not utilised shall be further increased by the said percentage

and carried forward to the following year and so on for subsequent

years

Provided further that a tax credit shall not give rise to a

right to a refund of tax.

(2) When an undertaking has benefited from the

provisions of these regulations, the tax credit shall be deemed to

have relieved from tax so much of that undertaking’s chargeable

income which, when multiplied by the rates of tax at which it

was chargeable in that year, is equal to the tax credit, and where

the undertaking or any subsequent undertaking distributes the

income which is so deemed to have been relieved from tax,

such undertaking or undertakings shall state in the dividend

warrant pertaining to any such distribution that such income has

been relieved from tax by a tax credit in accordance with these

regulations; and the tax which has so been relieved shall not be

available for refund for any purpose of the Income Tax Act.

(3) (a) The chargeable income which is deemed to

have been relieved from tax in accordance with these regulations

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

the Final Taxed Account of the company in question and any

dividends, or part thereof, distributed from such income shall be

exempted from income tax in the hands of the members of the

company on receipt of such distribution.

(b) Where the dividend referred to in sub-

regulation (2) is distributed to a member which is also a company

(hereinafter referred to as “the second company”), the said dividend

shall likewise be distributed by the second company to its 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 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 sub-regulation shall continue to be applied for as long as

such income or part thereof to which this regulation applies are

distributed by way of dividends.

(4) Where for a year of assessment, an undertaking

qualifies for a tax credit under regulation 5 of the Business

Promotion Regulations, 2001 and also under the provisions of L.N. 135 of 2001.

these regulations, it shall avail itself of the tax credit due under the

Business Promotion Regulations, 2001 before any set-off is made

in respect of the tax credit due under these regulations.

(5) No tax credit shall be due to an undertaking under

these regulations for a year of assessment unless it is claimed in the

appropriate section of a tax return submitted by electronic means

by not later than the relative tax return date.

The Corporation shall not approve any new research Approval of new

projects after the 31st December, 2013 or after such date as the research projects.

Corporation may specify by means of a notice in the Gazette.

The levels of assistance that may be granted in terms of Maximum level of

these regulations shall be established by the respective Guidelines

published by the Corporation pursuant to the Act. The maximum

intensity levels of assistance shall be as indicated in the Schedule

hereto.

These regulations shall not apply to firms in difficulty

in terms of Community Guidelines on State aid for rescuing and

restructuring firms in difficulty as described in the Official Journal

C244, 01.10.2004.