Repatriation of Persons established in a Field of Excellence

L.N. 111 of 2013

INCOME TAX ACT

(CAP. 123)

Repatriation of Persons established in a Field of Excellence

Rules, 2013

IN exercise of the powers conferred by articles 56(25) and 96 of

the Income Tax Act, the Minister of Finance, the Economy and

Investment has made the following rules

(1)

The title of these rules is the Repatriation of Citation and

coming into

Maltese Persons established in a Field of Excellence Rules, 2013.

force.

(2) These rules shall be deemed to have come into force on the

1st January, 2013.

In these rules, unless the context otherwise requires

Interpretation.

"the Act" means the Income Tax Act;

"artificial arrangement" shall include an arrangement in terms of

which a beneficiary receives any benefit or payment, in whatever

form, from a person of which the beneficiary holds more than 25% of

the shares and with whom the beneficiary is employed at any time

during the year, and such beneficiary does not declare for tax

purposes such benefit or payment in Malta or is not liable to tax on

such income in Malta;

"Commissioner" means the Commissioner of Revenue;

"Corporation" means the Malta Enterprise

Corporation

established in terms of the Malta Enterprise Act;

"eligible person" means an individual who is established in a

field of excellence and returns as an ordinary resident in Malta

provided that he had been ordinarily resident in Malta for at least

twenty years but has not been ordinarily resident in Malta for the ten

consecutive years prior to his return to Malta;

"field of excellence" means an area of professional competence

in which an eligible person has excelled and which area is relevant for

the manufacturing and research and development sectors, as may be

defined in Guidelines which may be issued by Malta Enterprise

Corporation in terms of the Malta Enterprise Act;

"qualifying contract of employment" means the employment of

an eligible person in a field of excellence in such sector/s as may be

defined in the Guidelines;

"rights acquired under this law" means the right to elect to pay

tax at the reduced rate of tax contemplated in article 56(21) of the Act

and these rules.

(1)

Income from a qualifying contract of employment

qualifies under these rules when it is received by an eligible person

and consists in income subject to tax under article 4(1)(b) of the Act

(exclusive of the annual value of any fringe benefits) of a minimum

of seventy-five thousand euro (€75,000) and consists of emoluments

received by an eligible person.

(2) A qualifying contract of employment shall be considered

to be such if such contract of employment is approved in writing by

the Corporation.

(1)

A beneficiary is an eligible person who, to the

satisfaction of the Corporation, meets all of the following conditions

(a)

he is an individual who derives income subject to

tax under article 4(1)(b) of the Act, being emoluments payable

under a qualifying contract of employment, and received in

respect of work or duties carried out in Malta or in respect of

any period spent outside Malta in connection with such work or

duties or on leave during the carrying out of such work or

duties;

(b)

he proves to the satisfaction of Malta Enterprise

Corporation that he is in possession of educational and, or

professional qualifications as are relevant in the profession or

sector specified in the binding job offer or in the qualifying

contract of employment as these may be further defined in

Guidelines which may be issued by Malta Enterprise

Corporation in terms of the Malta Enterprise Act;

(c)

he is protected as an employee under Maltese law,

irrespective of the legal relationship, for the purpose of

exercising genuine and effective work for, or under the direction

of, someone else, is paid, and has the required adequate and

specific competence, as proven to the satisfaction of Malta

Enterprise Corporation.

(2) A beneficiary shall fully disclose for tax purposes and

declare emoluments received in respect of income from a qualifying

contract of employment and all income received from a person related

to his employer paying out income from a qualifying contract which

is chargeable to tax in Malta.

(1)

When an individual exercises the option available Minimum

under article 56(25) of the Act in respect of a year of assessment, the amount

chargeable to

minimum amount of income which shall be chargeable to tax at the tax.

reduced rate provided for in that sub-article in respect of that year of

assessment shall be deemed to be seventy-five thousand euro

(€75,000)

Provided that the rate of 15% shall apply without possibility to

claim any relief, deduction, reduction, credit or set-off of any kind,

sohowever that, notwithstanding the generality of the foregoing, a

beneficiary shall be allowed deductions of tax under article 23 of the

Income Tax Management Act

Provided that where an individual exercises the option available

under article 56(25) of the Act, the income that is charged to tax at the

rate of 15% shall be deemed to constitute the first part of the

individual’s total income for the year of assessment in question and

the tax on the remaining income shall be calculated at the rate or rates

that would have been applicable to that remaining income had the

option not been exercised.

(2) The option available under article 56(25) of the Act may

not be exercised in respect of any year of assessment preceding the

year of assessment 2013.

(3) The option available under article 56(25) of the Act shall

apply for a consecutive period of five years commencing from the

year preceding the first year of assessment in which that person is

first liable to tax under the provisions of the Act after returning to

reside in Malta.

Where any person, in order to obtain benefits under these Anti-abuse

rules, makes use of artificial arrangements, the Commissioner shall, provisions.

by order in writing, determine the liability to tax of the said person,

for any year of assessment, in such manner and in such amount as

may be necessary, in the circumstances of the case, to nullify benefits

obtained under these rules. A person who disagrees with an order

served upon him as aforesaid shall have the same rights to object to

that order and to appeal from a decision of the Commissioner refusing

that objection as if that order were an assessment issued under the

Income Tax Management Act and the relevant provisions of that Act Cap. 372.

relating to objections and appeals shall apply mutatis mutandis.

(1)

For the purpose of ascertaining an individual’s Request for

right to exercise the option referred to in these rules and ensuring the information.

proper application of these rules, the Commissioner and the

Corporation may require that individual to produce, within the time

indicated by the Commissioner and the Corporation in that request,

such further information and documents as the Commissioner and the

Corporation may consider necessary, including certifications and

declarations of the employer of that individual.

(2) If an individual fails, without any valid reason, to comply

with any request relating to his income made to him by the

Commissioner and the Corporation in accordance with this rule, the

Commissioner and the Corporation may order that article 56(25) of

the Act shall not apply to that income. In such a case, the

Commissioner may make an assessment and the tax on that income

shall be calculated at the rates provided for in the Act without any

reference to the said sub-article.

The option available under article 56(25) of the Act shall

be exercised by means of a declaration signed by the beneficiary and

endorsed by the Corporation made on such form or in such manner as

the Commissioner may require and attached to or included in the tax

return for the relative year of assessment. It shall not be deemed to

have been validly exercised unless the income to which it applies has

been fully and correctly declared in the said tax return and unless the

said declaration and tax return are filed by not later than the relative

tax return date

Provided that when the said declaration or the relative tax return

is filed later than the tax return date, the Commissioner may treat the

option as having been validly exercised if he is satisfied that the delay

was due to a reasonable excuse.

(1)

For the purposes of rule 4, the Corporation shall

issue a formal determination relating to anything which needs to be

proven to its satisfaction in terms of these rules.

(2) An application for a formal determination relating to

eligibility under these rules shall be made on such form or in such

manner as the Corporation may require and shall contain the

information and documents therein requested.

For the purposes of rule 9, the Corporation shall, following

an application filed by a beneficiary, endorse the form required by the

Commissioner.

€0.36