Cooperation with Other Jurisdictions on Tax Matters

L.N. 472 of 2012

INCOME TAX ACT

(CAP. 123)

INCOME TAX MANAGEMENT ACT

Cooperation with Other Jurisdictions on Tax Matters

(Amendment) Regulations, 2012

IN exercise of the powers conferred by articles 52B, 76(4), and

96(1) of the Income Tax Act, and the powers conferred by article 58

of the Income Tax Management Act, the Minister of Finance, the

Economy and Investment has made the following regulations:-

(1) The title of these regulations is Cooperation with

Other Jurisdictions on Tax Matters (Amendment) Regulations, 2012,

and these regulations shall be read and construed as one with the

Cooperation with Other Jurisdictions on Tax Matters Regulations,

hereinafter referred to as "the principal regulations".

(2) Unless otherwise provided in these regulations, these

regulations shall come into force as from 1st January, 2013.

In regulation 2 of the principal regulations, immediately

after the definition "entities" there shall be added the following new

definition

" "EU Administrative Cooperation Directive" means

Council Directive 2011/16/EU of 15 February 2011 on

administrative cooperation in the field of taxation and repealing

Directive 77/799/EEC;".

(1) Regulation 4 of the principal regulations shall be

amended as follows

(a)

in paragraph (a) of sub-regulation (2) thereof, for the

words "stock exchange in Malta; and" there shall be substituted

the words "central securities depository resident in Malta. For

the purposes of this paragraph, "central securities depository"

has the meaning found in article 2 of the Financial Markets Act;

and"; and

(b)

sub-regulation (13) thereof shall be amended as

follows

(i) for the words "Entities, trustees and other

persons" there shall be substituted the words "Subject to

the provisions of article 19 of the Income Tax Management

Act, entities, trustees and other persons"; and

(ii) for the words "period of nine years from the

end of the year" there shall be substituted the words

"period of five years from the end of the year".

(2) This regulation shall be deemed to have come into force on

22 July, 2011.

Immediately after regulation 10 of the principal Adds new

regulations to

regulations, there shall be added the following new regulations

the principal

regulations.

" Implementa-

(1) By means of regulations 11

tion of Council

to 23, the provisions of the EU Administrative

Directive 2011/

Cooperation Directive shall have effect in

16/EU.

relation to the Income Tax Acts.

(2) For the purposes of the EU

Administrative Cooperation Directive, "tax"

shall mean all taxes of any kind levied in

Malta except for

(a)

value added tax, customs

duties and excise duties covered by

other

Union

legislation

on

administrative cooperation between

Member States;

(b) compulsory social security

contributions payable in Malta;

(c)

fees, such as for certificates

and other documents issued by public

authorities; and

(d) dues of a contractual nature,

such as consideration for public utilities.

(3) For the purposes of the EU

Administrative

Cooperation

Directive,

information shall, as far as possible, be

provided by electronic means using the CCN

network. In this context -

(a)

"electronic means" means

using electronic equipment for the

processing,

including

digital

compression, and storage of data, and

employing wires, radio transmission,

optical

technologies

or

other

electromagnetic means; and

(b) "CCN network" means the

common platform based on the common

communication network developed by

the

European

Union

for

all

transmissions by electronic means

between competent authorities in the

area of customs and taxation.

(4) When the competent authority in

an EU Member State forwards information to

the competent authority in Malta and also

requests feedback on such information, the

competent authority in Malta shall, without

prejudice to the rules on tax secrecy and data

protection applicable in Malta, send feedback

to the competent authority which provided the

information as soon as possible and no later

than three months after the outcome of the use

of the requested information is known. Such

feedback shall be given in line with the

practical arrangements made by the EU

Commission in accordance with the procedure

referred to in Article 26(2) of the EU

Administrative Cooperation Directive.

Exchange of

(1) At the request of the

information on

competent authority of an EU Member State,

request.

the competent authority in Malta shall

communicate to the requesting authority any

information that is foreseeably relevant to the

administration and enforcement of the

domestic laws of that Member State

concerning the taxes referred to in regulation

11(2) that the competent authority in Malta

has in its possession or that it obtains as a

result of administrative enquiries.

(2) The provisions of regulations 1 to

10 shall apply for the purposes of exchanging

information referred to in sub-regulation (1).

Automatic

(1) The competent authority in

exchange of

Malta shall, by automatic exchange,

information.

communicate to the competent authority of

any other EU Member State, information

regarding taxable periods as from 1 January

2014 that is available concerning residents in

that other Member State, on the following

specific categories of income and capital

(a)

income from employment;

(b) director’s fees;

(c)

life insurance products not

covered by other EU legal instruments

on exchange of information and other

similar measures;

(d) pensions;

(e)

ownership of and income

from immovable property.

(2) The communication of information

referred to in sub-regulation (1) shall take

place once a year, within six months

following the end of the year immediately

preceding the year of assessment during

which the information became available.

(3) For the purposes of this regulation

(a)

"automatic exchange" means

the systematic communication of

predefined information to another EU

Member State, without prior request, at

pre-established regular intervals; and

(b) information is available

when such information is in the tax files

of Malta that is retrievable in

accordance with the procedures for

gathering and processing information in

Malta.

(4) The provisions of this regulation

shall come into force on 1st January, 2015.

Spontaneous

(1) The competent authority in

exchange of

Malta shall communicate the information

information.

referred to in regulation 12(1) to the

competent authority of any other EU Member

State concerned, where

(a)

the competent authority in

Malta has grounds for supposing that

there may be a loss of tax in another EU

Member State; or

(b) a person liable to tax obtains

a reduction in, or an exemption from,

tax in Malta which would give rise to an

increase in tax or to liability to tax in the

other EU Member State; or

(c)

business dealings between a

person liable to tax in Malta and a

person liable to tax in another EU

Member State are conducted through

one or more countries in such a way that

a saving in tax may result in Malta or

the other EU Member State or in both;

or

(d) the competent authority in

Malta has grounds for supposing that a

saving of tax may result from artificial

transfers of profits within groups of

enterprises; or

(e)

information forwarded to

Malta by the competent authority of

another EU Member State has enabled

information to be obtained which may

be relevant in assessing liability to tax in

the latter EU Member State.

(2) The competent authority in Malta

may also communicate, by spontaneous

exchange, to the competent authorities of

another EU Member State any information of

which it is aware and which it considers to be

useful to the competent authorities of that

other Member State.

(3) The competent authority in Malta

shall forward any of the information referred

to in this regulation that becomes available to

it to the competent authority of any other EU

Member State concerned as quickly as

possible, and no later than one month after

such information becomes available.

(4) Where the competent authority in

Malta receives information in accordance

with the provisions of Article 9 of the EU

Administrative Cooperation Directive, it shall

confirm receipt of such information to the

competent authority which provided the

information immediately and in any event no

later than seven working days from the date of

such receipt. The said confirmation shall be

made, where possible, through electronic

means.

(5) For the purposes of this regulation,

"spontaneous exchange" means the non-

systematic communication, at any moment

and without prior request, of information to

another EU Member State.

Presence in

(1) By agreement between the

administrative

requesting authority and the competent

offices and

participation in

authority in Malta, and in accordance with the

administrative

arrangements laid down by the latter - which

enquiries.

arrangements shall take into consideration the

provisions of article 3(1) of the Income Tax

Management Act - officials authorised by the

requesting authority may, with a view to

exchanging the information referred to in

regulation 12(1)

(a)

be present in the offices

where the administrative authorities of

Malta carry out their duties;

(b) be

present

during

administrative enquiries carried out in

Malta.

Where the requested information is

contained in documentation to which the

officials of the Maltese tax administration

have access, the officials of the requesting

authority shall be given copies thereof.

(2) In so far as it is permitted under

Maltese legislation, the agreement referred to

in sub-regulation (1) may provide that, where

officials of the requesting authority are

present during administrative enquiries, they

may interview individuals and examine

records. Where such an interview is agreed to,

any refusal by the person under investigation

to respect the inspection measures of the

authorized officials of the requesting

authority shall be treated as if that refusal

were committed against officials of the

competent authority in Malta.

(3) Officials authorised by the

requesting EU Member State to be present in

Malta in accordance with the provisions of

this regulation shall at all times be able to

produce written authority stating their identity

and their official capacity.

Simultaneous

(1) The competent authority in

controls.

Malta may agree with the competent

authorities of other EU Member States to

conduct a simultaneous control (whether

bilaterally or multilaterally) of one or more

persons of common or complementary

interest with a view to exchanging the

information thus obtained. Where the

competent authority in Malta is in agreement

with the competent authorities of other EU

Member States to enter into a simultaneous

control, it shall, after consultation with the

Commissioner, appoint a representative with

responsibility

for

supervising

and

coordinating the control operation. Such

representative may be appointed from any

department that is considered suitable in

relation to the particular simultaneous control.

(2) The competent authority in Malta

shall identify independently the person or

persons for whom it intends to propose a

simultaneous control and where such person

or persons have been identified it shall notify

the competent authority of the other EU

Member States concerned that it wishes to

propose such a simultaneous control, giving

reasons for its choice. The competent

authority in Malta shall also specify the

period of time during which those controls are

to be conducted.

(3) The competent authority in Malta

shall, upon receipt of a notification for a

simultaneous control from the competent

authority of another EU Member State, decide

whether it wishes to take part in the said

control and shall confirm its agreement or

communicate its reasoned refusal to the

authority that proposed a simultaneous

control.

(1) At the request of the

Administrative

notifications.

competent authority of another EU Member

State, the competent authority in Malta shall,

in accordance with the rules governing the

notification of similar instruments in Malta,

notify the addressee of any instruments and

decisions which emanate from the

administrative authorities of the requesting

EU Member State and concern the application

in its territory of legislation on taxes covered

by the EU Administrative Cooperation

Directive.

(2) For a request for notification to be

valid, such request shall indicate the subject

of the instrument or decision to be notified

and shall specify the name and address of the

addressee, together with any other

information

which

may

facilitate

identification of the said addressee.

(3) The competent authority in Malta

shall inform the requesting authority

immediately of its response and, in particular,

of the date of notification of the instrument or

decision to the addressee.

(4) A request for notification pursuant

to Article 13 of the EU Administrative

Cooperation Directive shall only be

considered to be valid when the competent

authority in Malta receives assurances that the

requesting authority is unable to notify in

accordance with the rules governing the

notification of the instruments concerned in

the requesting Member State, or where such

notification

would

give

rise

to

disproportionate difficulties. Within this

context, it is permissible for the competent

authority of another EU Member State to

notify any document by registered mail or

electronically directly to a person within

Malta.

(5) The competent authority in Malta

may request the competent authority of other

EU Member States for assistance in the

notification to the addressee of any

instruments and decisions which emanate

from the administrative authorities of Malta

and which concern the application in Malta of

legislation on taxes covered by the EU

Administrative Cooperation Directive. Any

such request shall indicate the subject of the

instrument or decision to be notified and shall

specify the name and address of the

addressee, together with any other

information

which

may

facilitate

identification of the said addressee.

Furthermore, such requests may only be made

where it is not possible to make such a

notification in accordance with the rules

governing the notification of the instruments

concerned in Malta or where such notification

would give rise to disproportionate

difficulties. Within this context, it is

permissible for the competent authority in

Malta to notify any relevant document by

registered mail or electronically directly to a

person within the territory of any other EU

Member State.

Disclosure of

(1) (a) Information communicated

information

in any form pursuant to the EU

and documents.

Administrative Cooperation Directive shall be

covered by the obligation of official secrecy

and enjoy the protection extended to similar

information under the Income Tax Acts. Such

information may be used for the

administration and enforcement of Maltese

legislation concerning the taxes referred to in

Article 2 the EU Administrative Cooperation

Directive.

(b) Such information may also

be used for the assessment and enforcement

of other taxes and duties covered by Article 2

of Council Directive 2010/24/EU of 16 March

2010 concerning mutual assistance for the

recovery of claims relating to taxes, duties

and other measures, or for the assessment and

enforcement of compulsory social security

contributions.

(c) In addition, such information

may be used in connection with judicial and

administrative proceedings that may involve

penalties, initiated as a result of infringements

of tax legislation, without prejudice to the

general rules and provisions governing the

rights of defendants and witnesses in such

proceedings.

(2) With the permission of the

competent authority of the Member State

communicating information pursuant to the

EU Administrative Cooperation Directive,

and only in so far as this is allowed under

Maltese

legislation,

information

and

documents received pursuant to the said

Directive may be used for other purposes than

those referred to in sub-regulation (1)(a).

(3) Where the competent authority of

another EU Member State requests

permission for such other use as referred to in

the third paragraph of Article 16(1) of the EU

Administrative Cooperation Directive, the

competent authority in Malta shall only grant

such permission if the information can be

used for similar purposes in Malta.

(4) (a)

Where

the

competent

authority in Malta considers that information

which it has received from the competent

authority of another EU Member State is

likely to be useful for the administration and

enforcement of legislation of a third EU

Member State concerning the taxes referred to

in Article 2 the EU Administrative

Cooperation Directive, it may transmit that

information to the competent authority of

such third EU Member State, provided that

transmission is in accordance with the rules

and procedures laid down in the said

Directive. It shall inform the competent

authority of the Member State from which the

information originates about its intention to

share that information with the third Member

State. The competent authority in Malta shall

refrain from sharing the information with the

third EU Member State where the competent

authority of the EU Member State of origin of

the information opposes such sharing in the

manner and within the timeframe as provided

in Article 16(3) of the EU Administrative

Cooperation Directive.

(b) Where a competent authority

of another EU Member State requests

permission from the competent authority in

Malta to transmit information which it has

received from the competent authority in

Malta to a third EU Member State because it

considers that such information is likely to be

useful for the administration and enforcement

of legislation of such third EU Member State

concerning the taxes referred to in Article 2

the EU Administrative Cooperation Directive,

the competent authority in Malta shall give its

permission or otherwise, depending on the

case, not later than ten working days of

receipt of such request.

(5) Information obtained by the

competent authority in Malta pursuant to the

provisions of Article 16(2) of EU

Administrative Cooperation Directive, and

which has been transmitted pursuant to the

provisions of Article 16(3) of that same

Directive, may only be used in Malta if

permission has been granted by the competent

authority of the EU Member State from which

the information originated.

(6) Information, reports, statements

and any other documents, or certified true

copies or extracts thereof, obtained by the

competent authorities of another EU Member

State and communicated to the competent

authority in Malta in accordance with the

provisions of the EU Administrative

Cooperation Directive may be invoked as

evidence by the competent bodies in Malta on

the same basis as similar information, reports,

statements and any other documents provided

by an authority of Malta.

Third

Malta shall enter into an

countries.

arrangement with other EU Member States

that provides mutual and wider cooperation

than that provided under the EU

Administrative

Cooperation

Directive

provided that -

(a)

Malta has entered into an

arrangement that provides for such

mutual and wider cooperation than that

provided

for

under

the

EU

Administrative Cooperation Directive

with a jurisdiction that is not an EU

Member State; and

(b) the said EU Member State

requests to enter into such an

arrangement.

Exchange of

(1) Where

the

competent

information

authority in Malta receives from a third

with third

countries.

country information that is foreseeably

relevant

to

the

administration

and

enforcement of the domestic legislation of

Malta concerning the taxes referred to in

Article 2 of the EU Administrative

Cooperation Directive, it may, in so far as this

is allowed pursuant to an arrangement with

that third country, provide that information to

the competent authorities of the EU Member

States for which that information might be

useful and to any requesting authorities.

(2) The competent authority in Malta

may communicate, in accordance with the

provisions on the communication of personal

data to third countries found in Maltese

legislation,

information

obtained

in

accordance with the provisions of the EU

Administrative Cooperation Directive to a

third country, provided that all of the

following conditions are met

(a)

the competent authority of

the EU Member State from which the

information originates has consented to

that communication;

(b) the third country concerned

has given an undertaking to provide the

cooperation required to gather evidence

of the irregular or illegal nature of

transactions which appear to contravene

or constitute an abuse of tax legislation.

Data

All exchange of information made

protection.

pursuant to the EU Administrative

Cooperation Directive shall be subject to the

provisions of the Data Protection Act. In this

respect, the provisions of articles 7, 19, 20(1),

21 and 35 of the Data Protection Act shall not

apply as the provision of information under

the EU Administrative Cooperation Directive

constitutes a necessary measure in the interest

of taxation matters.

Forms and

Communications made by the

formats.

competent authority in Malta pursuant to the

provisions of the EU Administrative

Cooperation Directive shall, as far as

possible, be sent using such standard form

adopted by the Commission in accordance

with the procedure referred to in Article 26(2)

of the said Directive.

Repeal of

Regulation 3 of the European

regulation 3 of

Union Directives Regulations shall be

the European

Union

repealed as on 1st January 2013.".

Directives

Regulations.

€1.35