Securitisation Transactions (Deductions) Rules, 2011

L.N. 324 of 2011

INCOME TAX ACT

(CAP. 123)

Securitisation Transactions (Deductions) Rules, 2011

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

the Income Tax Act, hereinafter referred to as "the Act", the Minister

of Finance, the Economy and Investment has made the following

rules

The title of these rules is the Securitisation Transactions Citation.

(Deductions) Rules, 2011.

Words and expressions used in these rules, shall, in so far Interpretation.

as their meanings are not defined by the Income Tax Acts, or unless

the context otherwise requires, have the meaning assigned to them in

the Securitisation Act and in any rules and regulations made Cap. 484.

thereunder.

For the purposes of determining the total income of a Time when

securitisation vehicle or for the purpose of ascertaining the income income

securitisation

attributable to a trust where such securitisation vehicle is constituted vehicle

taxable.

as a trust created by a written instrument, as the case may be, income

or gains shall be deemed to arise or to have become realised during

the year in which such income or gains fall to be recognised for

accounting purposes. The deductions referred to in rule 4 shall be

deducted in the year in which they fall to be recognised for

accounting purposes.

(1) For the purpose of ascertaining the total income of a Allowable

securitisation vehicle, or for the purpose of ascertaining the income deductions.

attributable to a trust where such securitisation vehicle is constituted

as a trust created by a written instrument, as the case may be, there

shall be deducted, in addition to any relevant outgoings and expenses

which may be deducted under the provisions of article 14 of the Act,

the following outgoings and expenses

(a)

sums payable by the securitisation vehicle to the

originator or assignor -

(i) for the transfer of securitisation assets to the

said securitisation vehicle; or

(ii) as a result of any risks of the said originator

assumed by the said securitisation vehicle;

(b) premiums, interest or discounts in relation to

financial instruments issued, or funds borrowed, by the

securitisation vehicle to finance the acquisition of securitisation

assets or the assumption of risks; and

(c)

any expenditure incurred by the securitisation

vehicle in respect of the day to day administration of the

securitisation vehicle itself, including expenditure relating to

statutory requirements, and of its assets and risks, including the

collection of any relevant claims. Where the securitisation

vehicle opts to delegate such administration, or part thereof, to

another person, the amount of expenditure incurred for the

services received from such other person for the performance of

the said administration may be deducted.

(2) (a)

Where, after taking into account the relevant

deductions contemplated in article 14 of the Act and in sub-rule

(1)(a), (b) and (c), tax is chargeable on any remaining total income of

the securitisation vehicle, a further deduction of an amount equal to

the said remaining total income may be claimed.

(b) Such further deduction may be claimed at the option of the

securitisation vehicle

Provided that the Commissioner is satisfied that the relevant

originator or assignor, or their assigns or successors in title, has given

his irrevocable written consent to the exercise of such option in

relation to the relevant contract. For this purpose, the securitisation

vehicle needs to provide proof of such written consent giving details

of identity of the originator or assignor, including the tax registration

number for Maltese income tax purposes where applicable, and the

place where the control and management of its business is exercised.

Where it may be considered that a deduction under rule 4

is already provided for under the provisions of article 14 of the Act,

for the avoidance of doubt, the provisions of rules 3 and 4 shall not be

construed to mean that a relevant outgoing or expense may be

deducted more than once.

(1)

An amount equal to -

(a)

such sums payable that are referred to in rule

4(1)(a), and

(b) such further deduction, together with any amount of

loss incurred in the same year or brought forward from previous

years under a different contract and allowed as deduction in

arriving at the total income before the said further deduction, in

case where the option referred to in rule 4(2)(b) is exercised,

shall be deemed to be income in the hands of the relevant originator

or assignor, as the case may be, which for the purposes of the Income

Tax Acts, shall be characterised as income falling under the

provisions of article 4(1)(a) of the Act.

(2) (a)

In the case of income referred to in rule 4(1)(a), it

shall be deemed that such income has arisen during the year in which

any relevant securitisation asset was transferred or the relevant risk

was assumed.

(b) In the case where the option referred to in rule 4(2)(b) was

exercised, it shall be deemed that the relevant income has arisen

during the same year that the deduction was claimed.

(3) The income in the hands of the originator or assignor

referred to in this rule shall be considered to arise in Malta except

where the control and management of the business of the said

originator or assignor is not exercised in Malta.

(1) Securitisation vehicles shall account separately for Accounting

different securitisation contracts such that they may determine the issues.

chargeable income for each contract.

(2) Notwithstanding anything contained in the Income Tax

Acts or in rules or regulations made thereunder, where a securitisation

vehicle is constituted as a company an amount equivalent to the

additional deduction available in terms of rule 4(2)(b) shall be

allocated to the final tax account of the securitisation vehicle.

A securitisation vehicle shall be deemed not to constitute Restriction of

part of a group of companies for the purposes of articles 16 to 22 of group relief.

the Act and no entity may benefit from a deduction of losses made by

such a vehicle once it does not remain a securitisation vehicle.

Where in relation to a transaction, or to a series of Anti-abuse.

transactions, involving at some point a securitisation contract, sums

are determined such that the originator or assignor, or any person

which is controlled and beneficially owned directly or indirectly to

the extent of more than 50% by the same shareholders, is in a position

to obtain an undue advantage which has the effect of reducing their

liability to tax in a manner which is not reconcilable with the object

and purpose of these rules, the Commissioner shall consider any such

transaction, or series thereof, to be a profit-making scheme for the

purposes of the provisions of article 4(1)(a) of the Act and shall

B B 4014

determine the relevant liability to tax in such manner and in such

amount as may be necessary so as to nullify the said advantage.

€0.36