Regulations, 2016

L.N. 400 of 2016

INCOME TAX ACT

(CAP. 123)

INCOME TAX MANAGEMENT ACT

(CAP. 372)

Cooperation with Other Jurisdictions on Tax Matters (Amendment)

Regulations, 2016

IN exercise of the powers conferred by articles 76 and 96 of the

Income Tax Act and by article 10A of the Income Tax Management

Act, the Minister for Finance has made the following regulations:-

The title of these regulations is the Cooperation with Other Citation.

Jurisdictions on Tax Matters (Amendment) Regulations, 2016, and

these regulations shall be read and construed as one with the

Cooperation with Other Jurisdictions on Tax Matters Regulations, S.L. 123.127.

hereinafter referred to as "the principal regulations".

In regulation 2 of the principal regulations, the definition Amends

"EU Administrative Cooperation Directive" shall be substituted by regulation

the principal

the following

regulations.

" "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 as amended by EU Council Directives

2014/107/EU, 2015/2376 and 2016/881;".

Regulation 13 of the principal regulations shall be Amends

regulation 13 of

substituted by the following

the principal

regulations.

" Automatic

(1)

The competent authority in Malta

exchange of

shall, by automatic exchange, communicate to the

information.

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 competent authority in Malta shall, by

automatic exchange, communicate to the competent

authority of any other EU Member State, the following

information regarding taxable periods as from 1

January 2016 concerning a Reportable Account of

residents in that other Member State

(a)

the name, address, TIN(s) and date

and place of birth (in the case of an individual) of

each Reportable Person that is an Account Holder

of the account and, in the case of any Entity that is

an Account Holder and that, after application of

due diligence rules consistent with the Annexes, is

identified as having one or more Controlling

Persons that is a Reportable Person, the name,

address, and TIN(s) of the Entity and the name,

address, TIN(s) and date and place of birth of each

Reportable Person;

(b)

the account number (or functional

equivalent in the absence of an account number);

(c)

the name and identifying number (if

any) of the Reporting Financial Institution;

(d)

the account balance or value

(including, in the case of a Cash Value Insurance

Contract or Annuity Contract, the Cash Value or

surrender value) as of the end of the relevant

calendar year or other appropriate reporting

period or, if the account was closed during such

year or period, the closure of the account;

(e)

in the case of any Custodial Account

(i) the total gross amount of

interest, the total gross amount of dividends,

and the total gross amount of other income

generated with respect to the assets held in

the account, in each case paid or credited to

the account (or with respect to the account)

during the calendar year or other appropriate

reporting period; and

(ii) the total gross proceeds from

the sale or redemption of Financial Assets

paid or credited to the account during the

calendar year or other appropriate reporting

period with respect to which the Reporting

Malta Financial Institution acted as a

custodian, broker, nominee, or otherwise as

an agent for the Account Holder;

(f)

in the case of any Depository

Account, the total gross amount of interest paid or

credited to the account during the calendar year or

other appropriate reporting period; and

(g)

in the case of any account not

described in paragraph (e) or paragraph (f), the

total gross amount paid or credited to the Account

Holder with respect to the account during the

calendar year or other appropriate reporting

period with respect to which the Reporting Malta

Financial Institution is the obligor or debtor,

including the aggregate amount of any redemption

payments made to the Account Holder during the

calendar year or other appropriate reporting

period

Provided that for the purposes of exchange

of information under this sub-regulation, unless

otherwise foreseen in this sub-regulation or in the

Annexes to the these regulations, the amount and

characterisation of payments made with respect to

a Reportable Accounts shall be determined in

accordance with Maltese legislation.

(3) (a)

the competent authority in Malta,

where an advance cross-border ruling or an advance

pricing arrangement was issued, amended or renewed

after 31 December 2016 shall, by automatic exchange,

communicate information thereon to the competent

authorities of all other EU Member States as well as to

the European Commission, with the limitation of cases

set out in the proviso to paragraph (e);

(b)

the competent authority in Malta

shall also communicate information to the competent

authorities of all other EU Member States as well as to

the European Commission, with the limitation of cases

set out in the proviso to paragraph (e), on advance

cross-border rulings and advance pricing arrangements

issued, amended or renewed within a period beginning

five years before 1 January 2017

Provided that if advance cross-border rulings

and advance pricing arrangements are issued, amended

or renewed between 1 January 2012 and 31 December

2013, such communication shall take place under the

condition that they were still valid on 1 January 2014

Provided further that if advance cross-border

rulings and advance pricing arrangements are issued,

amended or renewed between 1 January 2014 and 31

December 2016, such communication shall take place

irrespective of whether they are still valid

Provided also that information on advance

cross-border rulings and advance pricing arrangements

issued, amended or renewed before 1 April 2016 to a

particular person or a group of persons, excluding those

conducting mainly financial or investment activities,

with a group-wide annual net turnover, as defined in

point (5) of Article 2 of Directive 2013/34/EU of the

European Parliament and of the Council of less than

forty million euro (€40,000,000), or the equivalent

amount in any other currency, in the fiscal year

preceding the date of issuance, amendment or renewal

of those cross-border rulings and advance pricing

arrangements

shall

be

excluded

from

the

communication referred to in this sub-regulation;

(c)

bilateral or multilateral advance

pricing arrangements with third countries shall be

excluded from the scope of automatic exchange of

information under this sub-regulation where the

arrangements under which the advance pricing

arrangement was negotiated does not permit its

disclosure to third parties. Such bilateral or multilateral

advance pricing arrangements will be exchanged under

regulation 14, where the arrangements under which the

advance pricing arrangement was negotiated permits its

disclosure, and the competent authority of the third

country gives permission for the information to be

disclosed

Provided that where the bilateral or

multilateral advance pricing arrangements would be

excluded from the automatic exchange of information

under the first sentence of this paragraph, the

information identified in paragraph (e) referred to in the

request that lead to issuance of such a bilateral or

multilateral advance pricing arrangement shall instead

be exchanged under paragraphs (a) and (b);

(d)

paragraphs (a) and (b) shall not apply

in a case where an advance cross-border ruling

exclusively concerns and involves the tax affairs of one

or more natural persons;

(e)

the information to be communicated

by the competent authority in Malta pursuant to

paragraphs (a) and (b) shall include the following

(i) the identification of the person,

other than a natural person, and where

appropriate the group of persons to which it

belongs;

(ii) a summary of the content of the

advance cross-border ruling or advance

pricing arrangement, including a description

of the relevant business activities or

transactions or series of transactions

provided in abstract terms, without leading to

the disclosure of a commercial, industrial or

professional secret or of a commercial

process, or of information whose disclosure

would be contrary to public policy;

(iii) the

dates

of

issuance,

amendment or renewal of the advance cross-

border

ruling

or

advance

pricing

arrangement;

(iv) the start date of the period of

validity of the advance cross-border ruling or

advance pricing arrangement, if specified;

(v) the end date of the period of

validity of the advance cross-border ruling or

advance pricing arrangement, if specified;

(vi) the type of the advance cross-

border

ruling

or

advance

pricing

arrangement;

(vii) the amount of the transaction or

series of transactions of the advance cross-

border

ruling

or

advance

pricing

arrangement if such amount is referred to in

the advance cross-border ruling or advance

pricing arrangement;

(viii) the description of the set of

criteria used for the determination of the

transfer pricing or the transfer price itself in

the case of an advance pricing arrangement;

(ix) the identification of the method

used for determination of the transfer pricing

or the transfer price itself in the case of an

advance pricing arrangement;

(x) the identification of the other

EU Member States, if any, likely to be

concerned by the advance cross-border

ruling or advance pricing arrangement;

(xi) the identification of any person,

other than a natural person, in the other EU

Member States, if any, likely to be affected

by the advance cross-border ruling or

advance pricing arrangement (indicating to

which EU Member States the affected

persons are linked); and

(xii) the indication whether the

information communicated is based upon the

advance cross-border ruling or advance

pricing arrangement itself or upon the

request referred to in paragraph (c)

Provided that information as defined under

points (i), (ii), (viii) and (xi) above shall not be

communicated to the European Commission.

(f)

the competent authority in Malta

shall confirm immediately, if possible by

electronic means, receipt of the information to the

competent authority of the other EU Member

State which provided the information without

delay and in any event no later than seven

working days.

(g)

the competent authority in Malta

shall in accordance with regulation 12, provide

additional information, including the full text of

an advance cross-border ruling or an advance

pricing arrangement.

(4) (a)

the Ultimate Parent Entity of an

MNE Group that is resident for tax purposes in Malta,

or any other Reporting Entity in accordance with

Section II of Annex III, shall file with the

Commissioner for Revenue a country-by-country report

with respect to its Reporting Fiscal Year in accordance

with Section II of Annex III;

(b)

the competent authority in Malta

shall, by means of automatic exchange, communicate

the report received pursuant to paragraph (a) to any

other EU Member State in which, on the basis of the

information in the country-by-country report, one or

more Constituent Entities of the MNE Group of the

Reporting Entity are either resident for tax purposes, or

are subject to tax with respect to the business carried

out through a permanent establishment within the time

limit laid down in sub-regulation 7 (d). Such

information shall be exchanged by electronic means

using the CCN network;

(c)

the country-by-country report shall

contain the following information with respect to the

MNE Group

(i) aggregate information relating

to the amount of revenue, profit (loss) before

income tax, income tax paid, income tax

accrued,

stated

capital,

accumulated

earnings, number of employees, and tangible

assets other than cash or cash equivalents

with regard to each jurisdiction in which the

MNE Group operates;

(ii) an identification of each

Constituent Entity of the MNE Group setting

out the jurisdiction of tax residence of such

Constituent Entity, and where different from

such jurisdiction of tax residence, the

jurisdiction under the laws of which such

Constituent Entity is organised, and the

nature of the main business activity or

activities of such Constituent Entity.

(5) For the purposes of regulation 13(4), any

capitalised term shall have the same meaning as set out

in Annex III to these Regulations.

(6) For the purposes of regulation 13(4), a

Maltese Constituent Entity shall annually report the

country-by-country report as specified in Tables 1, 2

and 3 of Section III of Annex III to these regulations in

such manner as set out in Annex III and within nine

months of the last day of the fiscal year of the MNE

group.

(7) The communication of information shall take

place as follows

(a)

for the categories laid down in sub-

regulation (1), at least once a year, within six

months following the end of the year immediately

preceding the year of assessment during which the

information became available;

(b)

for the information laid down in sub-

regulation (2), annually, within nine months

following the end of the year of assessment during

which the information became available;

(c)

for the information laid down in sub-

regulation (3)

(i) within three months following

the end of the half of the calendar year

during which the advance cross-border

rulings or advance pricing arrangements

have been issued, amended or renewed, in

respect of the information exchanged

pursuant to sub-regulation (3)(a);

(ii) before 1 January 2018 in

respect of the information exchanged

pursuant to sub-regulation (3)(b).

(d)

for the information laid down in sub-

regulation (4), annually, within fifteen months of

the last day of the fiscal year of the MNE Group to

which the country-by-country report relates. The

first country-by-country report shall be

communicated for the fiscal year of the MNE

Group commencing on or after 1 January 2016,

which shall take place within eighteen months

after the last day of that fiscal year.

(8) For the purposes of this regulation

"automatic exchange of information" means

(a)

for the purposes of sub-regulations

(1), (3) and (4) the systematic communication of

predefined information to another EU Member

State, without prior request, at pre-established

regular intervals. For the purposes of sub-

regulation (1), reference to available information

relates to information in the tax files of Malta,

which is retrievable in accordance with the

procedures for gathering and processing

information in Malta;

(b)

for the purposes of sub-regulation

(2), the systematic communication of predefined

information on residents in other EU Member

States to the relevant EU Member State of

residence, without prior request, at pre-established

regular intervals;

(c)

for the purposes of the provisions of

these regulations that implement the EU

Administrative Cooperation Directive, other than

sub-regulations (1), (2), (3) and (4), the systematic

communication of predefined information

provided in paragraph (a) and (b) above.

"advance cross-border ruling" means any

agreement, communication, or any other instrument or

action with similar effects, including one issued,

amended or renewed in the context of an enquiry in

terms of article 13 of the Income Tax Management Act,

including a tax audit, and which meets the following

conditions

(a)

is issued, amended or renewed by the

Commissioner, or on behalf of, the Government of

Malta, irrespective of whether it is effectively

used;

(b)

is issued, amended or renewed, to a

particular person or a group of persons, and upon

which that person or a group of persons is entitled

to rely;

(c)

concerns the interpretation or

application of a legal or administrative provision

concerning the administration or enforcement of

Maltese law relating to taxes;

(d)

relates to a cross-border transaction

or to the question of whether or not activities

carried on by a person in another jurisdiction

create a permanent establishment; and

(e)

is made in advance of the

transactions or of the activities in another

jurisdiction potentially creating a permanent

establishment or in advance of the filing of a tax

return covering the period in which the transaction

or series of transactions or activities took place.

For the purpose of this definition

(i) a cross-border transaction may

involve, but is not restricted to, the making

of investments, the provision of goods,

services, finance or the use of tangible or

intangible assets and does not have to

directly involve the person receiving the

advance cross-border ruling;

(ii) "cross-border

transaction"

means a transaction or series of transactions

where

(A)not all of the parties to the

transaction or series of transactions are

resident for tax purposes in Malta;

(B) any of the parties to the

transaction or series of transactions is

simultaneously resident for tax

purposes in more than one jurisdiction;

(C) one of the parties to the

transaction or series of transactions

carries on business in another

jurisdiction through a permanent

establishment and the transaction or

series of transactions forms part or the

whole of the business of the permanent

establishment.

A

cross-border

transaction or series of cross-border

transactions

shall

also

include

arrangements made by a person in

respect of business activities in another

jurisdiction which that person carries

on through a permanent establishment;

or

(D)such transactions or series of

transactions have a cross border

impact.

"advance pricing arrangement" means any

agreement, communication or any other instrument or

action with similar effects, including one issued,

amended or renewed in the context of an enquiry in

terms of article 13 of the Income Tax Management Act,

including a tax audit, and which meets the following

conditions

(a)

is issued, amended or renewed by the

Commissioner, or on behalf of, the Government of

Malta or more EU Member States irrespective of

whether it is effectively used;

(b)

is issued, amended or renewed, to a

particular person or a group of persons and upon

which that person or a group of persons is entitled

to rely; and

(c)

determines in advance of cross-

border

transactions

between

associated

enterprises, an appropriate set of criteria for the

determination of the transfer pricing for those

transactions or determines the attribution of

profits to a permanent establishment.

For the purpose of this definition

(i) enterprises

are

associated

enterprises where one enterprise participates

directly or indirectly in the management,

control or capital of another enterprise or the

same persons participate directly or

indirectly in the management, control or

capital of the enterprises;

(ii) transfer prices are the prices at

which an enterprise transfers physical goods

and intangible property or provides services

to associated enterprises, and "transfer

pricing" is to be construed accordingly.

(iii) "cross-border

transaction"

means a transaction or series of transactions

involving associated enterprises which are

not all resident for tax purposes in the

territory of a single jurisdiction or a

transaction or series of transactions which

have a cross border impact, and "enterprise"

means any form of conducting business.

(9) The coming into effect of the above

provisions shall be as follows

(a)

the provisions of sub-regulation (1)

and (7)(a) shall be on 1 January 2015;

(b)

the provisions of sub-regulation (2)

and (7)(b) shall be on 1 January 2016;

(c)

the provisions of sub-regulation (3)

and (7)(c) shall be on 1 January 2017;

(d

the provisions of sub-regulation (4)

and (7)(d) shall be on 5 June 2017;

(10) Before 1 January 2018, the competent

Statistics on

automatic

authority in Malta shall provide the EU Commission on

exchange of

information.

an annual basis with statistics on the volume of

automatic exchanges under regulation 13 and, to the

extent possible, with information on the administrative

and other relevant costs and benefits relating to

exchanges that have taken place and any potential

changes, for both tax administrations and third

parties.”.

4. Regulation 18 of the principal regulations shall be

amended as follows

(a) regulation (1)(a) shall be substituted by the following

"(a)

information communicated in any form pursuant to

the EU Administrative Cooperation Directive (including

information, reports and documents communicated by the EU

Commission pursuant to Art. 23a thereof) 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

Provided that reports and documents produced by

the EU Commission, referred to in Art. 23a of the EU

Administrative Cooperation Directive, may be used by EU

Member States only for analytical purposes, and shall not be

published or made available to any other person or body without

the express agreement of the EU Commission."; and

(b)

immediately after sub-regulation (5) thereof there

shall be added the following new sub-regulation

"(6) Notwithstanding sub-regulation

(1) to (4), information received from other EU

Member States pursuant to Article 8aa of the

EU Administrative Cooperation Directive

shall be used for the purposes of assessing

high-level transfer pricing risks and other base

erosion and profit shifting related risks,

including assessing the risk of non-

compliance by members of the MNE group

with applicable transfer pricing rules, and

where appropriate for economic and statistical

analysis. Transfer pricing adjustments made

by the Commissioner shall not be based on the

information exchanged pursuant to Article 8aa

of the EU Administrative Cooperation

Directive. Notwithstanding the provisions of

this sub-regulation, there is no prohibition on

using the information communicated between

EU Member States pursuant to Art. 8aa of the

EU Administrative Cooperation Directive as a

basis for making further enquiries into the

MNE Group’s transfer pricing arrangements

or into other tax matters in the course of an

enquiry in terms of article 13 of the Income

Tax Management Act, including a tax audit

and, as a result, appropriate adjustments to the

taxable income of a Constituent Entity may be

made.".

5. Regulation 22 of the principal regulations shall be Amends

regulation 22 of

substituted by the following

the principal

regulations.

(1)

Requests for information and for

administrative enquiries pursuant to regulation 12 and

their replies, acknowledgements, requests for additional

background information, inability or refusal pursuant to

regulation 10(2) shall, as far as possible, be sent using

the standard form adopted by the EU Commission in

accordance with the procedure referred to in Article

26(2) of the EU Administrative Cooperation Directive.

(2) Spontaneous

information

and

its

acknowledgement pursuant to regulation 14, requests

for administrative notifications pursuant to regulation

17 and feedback information pursuant to regulation

11(4) and (5) shall be sent using the standard form

adopted by the Commission in accordance with the

procedure referred to in Article 26(2) of the EU

Administrative Cooperation Directive.

(3) The automatic exchange of information

pursuant to regulation 13(1) shall be sent using a

standard computerised format aimed at facilitating such

automatic exchange and based on the existing

computerised format pursuant to Article 9 of Directive

2003/48/EC, to be used for all types of automatic

exchange of information, except as provided in sub-

regulation (4) adopted by the Commission in

accordance with the procedure referred to in Article

26(2) of the EU Administrative Cooperation Directive.

(4) A standard form, including the linguistic

arrangements, shall be adopted by the EU Commission

in accordance with the procedure referred to in Article

26(2) of the EU Administrative Cooperation Directive

before 1 January 2017. The automatic exchange of

information on advance cross-border rulings and

advance pricing arrangements pursuant to regulation

13(3) shall be carried out using this standard form. This

standard form shall not exceed the components for

exchange of the information listed in regulation

13(3)(e) and other relating fields linked to these

components necessary to achieve the objectives of

regulation 13(3).

(5) The automatic exchange of information on

country-by-country report pursuant to regulation 13(4)

shall be carried out using the standard form provided in

Tables 1, 2 and 3 of Section III of Annex III to these

regulations and in accordance with linguistic

arrangements adopted by the EU Commission in

accordance with Article 26(2) of the EU Administrative

Cooperation Directive.".

6. Paragraph (b) of regulation 45 of the principal regulations

shall be substituted as follows

"(b)

references in regulation 13(2), (3)(b), (4) and

(5)(b), and in regulations 36 to 44 and in Annexes I and II of

these regulations to "Member State", "Member State Person"

and "EU Administrative Cooperation Directive" shall be

construed to mean "Non-EU Reportable Jurisdiction", "a person

resident in a Non-EU Reportable Jurisdiction" and "Common

Reporting Standard" respectively. For the purposes of this

regulation, the term "Common Reporting Standard" means the

Standard for Automatic Exchange of Financial Account

Information in Tax Matters as developed by the Organisation for

Economic Co-operation and Development.".

7. Immediately after regulation 46 of the

principal Adds new

regulations 47

regulations there shall be added the following regulations

and 48 to the

principal

regulations.

The Commissioner may use any information-

gathering power under the Income Tax Acts, including

those under the provisions of article 10A and article 20

of the Income Tax Management Act, to obtain any

information specified in Section III of Annex III to

these regulations, notwithstanding that the said

information may not be required for the purposes of the

Income Tax Acts. The provisions of this regulation shall

be interpreted widely in the same manner as the

interpretation found in regulation 5.

(1)

Where a Maltese Constituent Entity

fails to comply with any of the obligations set out in the

EU Administrative Cooperation Directive, the Maltese

Constituent Entity shall be liable to the following

penalties

(a)

where a Maltese Constituent Entity

fails to retain the documentation and information

it collected in the course of meeting its reporting

obligations as provided in these regulations for a

minimum period of five years starting from the

end of the year in which the information relates, to

a penalty of two thousand five hundred euro

(€2,500);

(b)

Where a Maltese Constituent Entity

fails to report the information required to be

reported in terms of sub-regulation 13(4) within

the time stipulated in sub-regulation 13(5), to a

penalty of

(i) two hundred euro (€200); and

(ii) one hundred euro (€100) for

every day during which the default existed

provided that this penalty shall not exceed in

total twenty thousand euro (€20,000).

(2) Where a Maltese Constituent Entity fails to

report the information required to be reported in terms

of sub-regulation 13(4) in a complete and accurate

manner, to a penalty of

(i)

in the case of minor errors –

(aa) two hundred euro (€200); and

(bb) fifty euro (€50) for every day

during which the default existed: provided

that this penalty shall not exceed in total five

thousand euro (€5,000);

(ii)

in the case of significant non-

compliance, a penalty of fifty thousand euro

(€50,000).

(3) Where a Maltese Constituent Entity fails to

comply with a request for information by the

Commissioner made consequent to regulation 42, to a

penalty of

(i)

one thousand euro (€1,000); and

(ii)

one hundred euro (€100) for every

day during which the default existed: provided

that this penalty shall not exceed in total thirty

thousand euro (€30,000).".

8. Immediately after Annex II of the principal regulations

there shall be added the following new Annex

"ANNEX III

Filing Rules For Groups Of Multinational Enterprises

SECTION I

DEFINED TERMS

1. The term "Group" means a collection of enterprises related

through ownership or control such that it is either required to prepare

Consolidated Financial Statements for financial reporting purposes

under applicable accounting principles or would be so required if

equity interests in any of the enterprises were traded on a public

securities exchange.

2. The term "Enterprise" means any form of conducting

business by any person referred to in points (b), (c) and (d) of Article

3 point 11 of the EU Administrative Cooperation Directive.

3. The term "MNE Group" means any Group that includes

two or more enterprises the tax residence for which is in different

jurisdictions, or includes an enterprise that is resident for tax purposes

in one jurisdiction and is subject to tax with respect to the business

carried out through a permanent establishment in another jurisdiction,

and is not an Excluded MNE Group.

4. The term "Excluded MNE Group" means, with respect to

any Fiscal Year of the Group, a Group having total consolidated

group revenue of less than EUR 750,000,000 or an amount in local

currency approximately equivalent to EUR 750,000,000 as of January

2015 during the Fiscal Year immediately preceding the Reporting

Fiscal Year as reflected in its Consolidated Financial Statements for

such preceding Fiscal Year.

5. The term "Constituent Entity" means any of the following

(a)

any separate business unit of an MNE Group that is

included in the Consolidated Financial Statements of the MNE

Group for financial reporting purposes, or would be so included

if equity interests in such business unit of an MNE Group were

traded on a public securities exchange;

(b)

any such business unit that is excluded from the

MNE Group's Consolidated Financial Statements solely on size

or materiality grounds;

(c)

any permanent establishment of any separate

business unit of the MNE Group included in (a) or (b) provided

the business unit prepares a separate financial statement for

such permanent establishment for financial reporting,

regulatory, tax reporting, or internal management control

purposes.

6. The term "Reporting Entity" means the Constituent Entity

that is required to file a country-by-country report conforming to the

requirements in regulation 13(4)(c) in its jurisdiction of tax residence

on behalf of the MNE Group. The Reporting Entity may be the

Ultimate Parent Entity, the Surrogate Parent Entity, or any entity

described in point 1 of Section II.

7. The term "Ultimate Parent Entity" means a Constituent

Entity of an MNE Group that meets the following criteria

(a)

it owns directly or indirectly a sufficient interest in

one or more other Constituent Entities of such MNE Group such

that it is required to prepare Consolidated Financial Statements

under accounting principles generally applied in its jurisdiction

of tax residence, or would be so required if its equity interests

were traded on a public securities exchange in its jurisdiction of

tax residence;

(b)

there is no other Constituent Entity of such MNE

Group that owns directly or indirectly an interest described in

point (a) in the first mentioned Constituent Entity.

8. The term "Surrogate Parent Entity" means one Constituent

Entity of the MNE Group that has been appointed by such MNE

Group, as a sole substitute for the Ultimate Parent Entity, to file the

country-by-country report in that Constituent Entity's jurisdiction of

tax residence, on behalf of such MNE Group, when one or more of

the conditions set out in point (b) of point 1 of Section II apply.

9. The term "Fiscal Year" means an annual accounting period

with respect to which the Ultimate Parent Entity of the MNE Group

prepares its financial statements.

10. The term "Reporting Fiscal Year" means that Fiscal Year

the financial and operational results of which are reflected in the

country-by-country report referred to in regulation 13(4)(c).

11. The term "Qualifying Competent Authority Agreement"

means an agreement that is between authorised representatives of

Malta and non-Union jurisdictions that are parties to an International

Agreement and that requires the automatic exchange of country-by-

country reports between the party jurisdictions.

12. The term "International Agreement" means the

Multilateral Convention for Mutual Administrative Assistance in Tax

Matters, any bilateral or multilateral Tax Convention, or any Tax

Information Exchange Agreement to which Malta is a party, and that

by its terms provides legal authority for the exchange of tax

information between jurisdictions, including automatic exchange of

such information.

13. The term "Consolidated Financial Statements" means the

financial statements of an MNE Group in which the assets, liabilities,

income, expenses and cash flows of the Ultimate Parent Entity and

the Constituent Entities are presented as those of a single economic

entity.

14. The term "Systemic Failure" with respect to a jurisdiction

means either that a jurisdiction has a Qualifying Competent Authority

Agreement in effect with Malta but has suspended automatic

exchange (for reasons other than those that are in accordance with the

terms of that Agreement), or that a jurisdiction otherwise persistently

failed to automatically provide to Malta country-by-country reports in

its possession of MNE Groups that have Constituent Entities in

Malta.

SECTION II

GENERAL REPORTING REQUIREMENTS

1. A Constituent Entity resident in Malta which is not the

Ultimate Parent Entity of an MNE Group shall file a country-by-

country report with respect to the Reporting Fiscal Year of an MNE

Group of which it is a Constituent Entity, if the following criteria are

satisfied

(a)

the entity is resident for tax purposes in Malta;

(b)

one of the following conditions applies

(i) the Ultimate Parent Entity of the MNE Group

is not obligated to file a country-by-country report in its

jurisdiction of tax residence;

(ii) the jurisdiction in which the Ultimate Parent

Entity is resident for tax purposes has a current

International Agreement to which Malta is a party but does

not have a Qualifying Competent Authority Agreement in

effect to which Malta is a party by the time specified in

regulation 13(4) (a) for filing the country-by-country

report for the Reporting Fiscal Year;

(iii)

there has been a Systemic Failure of the

jurisdiction of tax residence of the Ultimate Parent Entity that

has been notified by Malta to the Constituent Entity resident for

tax purposes in Malta.

Without prejudice to the obligation of the Ultimate Parent

Entity referred to in regulation 13(4)(a) or its Surrogate Parent

Entity to file the first country-by-country report for the fiscal

year of the MNE Group commencing on or after 1 January

2016, the obligation for Constituent Entities set out in point 1 of

this Section shall apply for country-by-country reports with

respect to the Reporting Fiscal Years commencing on or after 1

January 2017 onwards.

A Constituent Entity resident in Malta as defined in

paragraph 1 shall request its Ultimate Parent Entity to provide it

with all information required to enable it to meet its obligations

to file a country-by-country report, in accordance with

regulation 13(4)(c). If despite that, that Constituent Entity has

not obtained or acquired all the required information to report

for the MNE Group, this Constituent Entity shall file a country-

by-country report containing all information in its possession,

obtained or acquired, and notify the Commissioner that the

Ultimate Parent Entity has refused to make the necessary

information available. This shall be without prejudice to the

right of the Commissioner to apply penalties provided for in

national legislation and the competent authority of Malta shall

inform all EU Member States of this refusal.

Where there are more than one Constituent Entities of the

same MNE Group that are resident for tax purposes in the Union

and one or more of the conditions set out in point (b) apply, the

MNE Group may designate one of such Constituent Entities to

file the country-by-country report conforming to the

requirements of regulation 13(4)(c) with respect to any

Reporting Fiscal Year within the deadline specified in

regulation 13(6) and to notify the Commissioner that the filing

is intended to satisfy the filing requirement of all the

Constituent Entities of such MNE Group that are resident for

tax purposes in the Union. The competent authority of Malta

shall, pursuant to regulation 13(4)(b), communicate the country-

by-country report received to any other EU Member State in

which, on the basis of the information in the country-by-country

report, one or more Constituent Entities of the MNE Group of

the Reporting Entity are either resident for tax purposes, or are

subject to tax with respect to the business carried out through a

permanent establishment.

Where a Constituent Entity cannot obtain or acquire all the

information required to file a country-by-country report, in line

with regulation 13(4)(c), then such Constituent Entity shall not

be eligible to be designated to be the reporting entity for the

MNE Group in accordance with the fourth paragraph of this

point. This rule shall be without prejudice to the obligation of

the Constituent Entity to notify the Commissioner that the

Ultimate Parent Entity has refused to make the necessary

information available.

2. By derogation from point 1, when one or more of the

conditions set out in point (b) of the first paragraph of point 1 apply,

an entity described in point 1 shall not be required to file a country-

by-country report with respect to any Reporting Fiscal Year if the

MNE Group of which it is a Constituent Entity has made available a

country-by-country report in accordance with regulation 13(4)(c)

with respect to such Fiscal Year through a Surrogate Parent Entity

that files that country-by-country report with the tax authority of its

jurisdiction of tax residence on or before the date specified in

regulation 13(6) and that, in case the Surrogate Parent Entity is tax

resident in a jurisdiction outside the Union, satisfies the following

conditions

(a)

the jurisdiction of tax residence of the Surrogate

Parent Entity requires filing of country by-country reports

conforming to the requirements of regulation 13(4)(c);

(b)

the jurisdiction of tax residence of the Surrogate

Parent Entity has a Qualifying Competent Authority Agreement

in effect to which Malta is a party by the time specified in

regulation 13(6) for filing the country-by-country report for the

Reporting Fiscal Year;

(c)

the jurisdiction of tax residence of the Surrogate

Parent Entity has not notified the competent authority of Malta

of a Systemic Failure;

(d)

the jurisdiction of tax residence of the Surrogate

Parent Entity has been notified no later than the last day of the

Reporting Fiscal Year of such MNE Group by the Constituent

Entity resident for tax purposes in its jurisdiction that it is the

Surrogate Parent Entity;

(e)

a notification has been provided

to

the

Commissioner in accordance with point 4.

3. Any Constituent Entity of an MNE Group that is resident

for tax purposes in Malta shall notify the Commissioner whether it is

the Ultimate Parent Entity or the Surrogate Parent Entity or the

Constituent entity referred to in point 1, no later than the last day for

filing of a tax return of that Constituent Entity for the preceding fiscal

year.

4. Where a Constituent Entity of an MNE Group, that is

resident for tax purposes in Malta, is not the Ultimate Parent Entity

nor the Surrogate Parent Entity nor the Constituent Entity referred to

in point 1, it shall notify the Commissioner of the identity and tax

residence of the Reporting Entity, no later than the last day for filing

of a tax return of that Constituent Entity for the preceding fiscal year.

5. The country-by-country report shall specify the currency

of the amounts referred to in that report.

SECTION III

Country-by-country Report

A. Template for the country-by-country report

Table 1: Overview of allocation of income, taxes and business

activities by tax jurisdiction

Name of the MNE group

Fiscal year concerned

Currency used

Tangible

Profit

Income Tax Income Tax

Revenues

Assets other

Tax

(Loss)

Paid

Accrued -

Stated

Accumulated

Number of

than Cash

Unrelated

Related

Jurisdiction

before

(on Cash

Current

Capital

Earnings

Employees

Total

and Cash

Party

Party

Income Tax Basis)

Year

Table 2: List of all the Constituent Entities of the MNE group included in each

aggregation per tax jurisdiction

Name of the MNE group

Fiscal year concerned

Main Business Activity(ies)

Provision of Services to Unrelated

Tax

Constituent Jurisdiction of

Administrative, Management

Manufacturing or Production

Regulated Financial Services

Research and Development

Organisation

Purchasing or Procurement

Entities

Holding Shares or Other

Tax

or

Internal Group Finance

Holding or Managing

Jurisdic Resident in Incorporation

Intellectual Property

or Support Services

Equity instruments

tion

if Different

the Tax

Sales, Marketing

from Tax

or Distribution

Jurisdiction Jurisdiction of

Insurance

Dormant

Residence

Parties

Other 1

1.

2.

3.

1.

2.

3.

1. Please specify the nature of the activity of the Constituent Entity in the "Additional Information"

Table 3: Additional Information

Name of the MNE group

Fiscal year concerned

Please include any further brief information or explanation you consider necessary or that would facilitate the understanding of the

compulsory information provided in the country-by-country report

B. General instructions for filling in the country-by-country report

1. Purpose

The template shall be used for reporting a multinational enterprise's (MNE)

group allocation of income, taxes and business activities on a tax jurisdiction-by-

tax jurisdiction basis.

2. Treatment of Branches and Permanent Establishments

The permanent establishment data shall be reported by reference to the tax

jurisdiction in which it is situated and not by reference to the tax jurisdiction of

residence of the business unit of which the permanent establishment is a part.

Residence tax jurisdiction reporting for the business unit of which the permanent

establishment is a part shall exclude financial data related to the permanent

establishment.

3. Period covered by the annual template

The template shall cover the fiscal year of the Reporting MNE. For

Constituent Entities, at the discretion of the Reporting MNE, the template shall

reflect on a consistent basis either of the following information

(a)

information for the fiscal year of the relevant Constituent

Entities ending on the same date as the fiscal year of the Reporting MNE, or

ending within the 12 month period preceding such date;

(b)

information for all the relevant Constituent Entities reported for

the fiscal year of the Reporting MNE.

4. Source of data

The Reporting MNE shall consistently use the same sources of data from

year to year in completing the template. The Reporting MNE may choose to use

data from its consolidation reporting packages, from separate entity statutory

financial statements, regulatory financial statements, or internal management

accounts. It is not necessary to reconcile the revenue, profit and tax reporting in the

template to the consolidated financial statements. If statutory financial statements

are used as the basis for reporting, all amounts shall be translated to the stated

functional currency of the Reporting MNE at the average exchange rate for the

year stated in the Additional Information section of the template. Adjustments

need not be made, however, for differences in accounting principles applied from

tax jurisdiction to tax jurisdiction.

The Reporting MNE shall provide a brief description of the sources of data

used in preparing the template in the Additional Information section of the

template. If a change is made in the source of data used from year to year, the

Reporting MNE shall explain the reasons for the change and its consequences in

the Additional Information section of the template.

C. Specific instructions for filling in the Country-by-Country Report

1. Overview of allocation of income, taxes and business activities by tax

jurisdiction (Table 1)

1.1. Tax Jurisdiction

In the first column of the template, the Reporting MNE shall list all of the tax

jurisdictions in which Constituent Entities of the MNE group are resident for tax

purposes. A tax jurisdiction is defined as a State as well as a non-State jurisdiction

which has fiscal autonomy. A separate line shall be included for all Constituent

Entities in the MNE group deemed by the Reporting MNE not to be resident in any

tax jurisdiction for tax purposes. Where a Constituent Entity is resident in more

than one tax jurisdiction, the applicable tax treaty tie breaker shall be applied to

determine the tax jurisdiction of residence. Where no applicable tax treaty exists,

the Constituent Entity shall be reported in the tax jurisdiction of the Constituent

Entity's place of effective management. The place of effective management shall

be determined with internationally agreed standards.

1.2. Revenues

In the three columns of the template under the heading 'Revenues', the

Reporting MNE shall report the following information

(a)

the sum of revenues of all the Constituent Entities of the MNE

group in the relevant tax jurisdiction generated from transactions with

associated enterprises;

(b)

the sum of revenues of all the Constituent Entities of the MNE

group in the relevant tax jurisdiction generated from transactions with

independent parties;

(c)

the total of the sums referred to in points (a) and (b).

Revenues shall include revenues from sales of inventory and properties,

services, royalties, interest, premiums and any other amounts. Revenues shall

exclude payments received from other Constituent Entities that are treated as

dividends in the payer's tax jurisdiction.

1.3. Profit (Loss) before Income Tax

In the fifth column of the template, the Reporting MNE shall report the sum

of the profit (loss) before income tax for all the Constituent Entities resident for tax

purposes in the relevant tax jurisdiction. The profit (loss) before income tax shall

include all extraordinary income and expense items.

1.4. Income Tax Paid (on Cash Basis)

In the sixth column of the template, the Reporting MNE shall report the total

amount of income tax actually paid during the relevant fiscal year by all the

Constituent Entities resident for tax purposes in the relevant tax jurisdiction. Taxes

paid shall include cash taxes paid by the Constituent Entity to the residence tax

jurisdiction and to all other tax jurisdictions. Taxes paid shall include withholding

taxes paid by other entities (associated enterprises and independent enterprises)

with respect to payments to the Constituent Entity. Thus, if company A resident in

tax jurisdiction A earns interest in tax jurisdiction B, the tax withheld in tax

jurisdiction B shall be reported by company A.

1.5. Income Tax Accrued (Current Year)

In the seventh column of the template, the Reporting MNE shall report the

sum of the accrued current tax expense recorded on taxable profits or losses of the

year of reporting of all the Constituent Entities resident for tax purposes in the

relevant tax jurisdiction. The current tax expense shall reflect only operations in

the current year and shall not include deferred taxes or provisions for uncertain tax

liabilities.

1.6. Stated Capital

In the eighth column of the template, the Reporting MNE shall report the sum

of the stated capital of all the Constituent Entities resident for tax purposes in the

relevant tax jurisdiction. With regard to permanent establishments, the stated

capital shall be reported by the legal entity of which it is a permanent

establishment unless there is a defined capital requirement in the permanent

establishment tax jurisdiction for regulatory purposes.

1.7. Accumulated Earnings

In the ninth column of the template, the Reporting MNE shall report the sum

of the total accumulated earnings of all the Constituent Entities resident for tax

purposes in the relevant tax jurisdiction as of the end of the year. With regard to

permanent establishments, accumulated earnings shall be reported by the legal

entity of which it is a permanent establishment.

1.8. Number of Employees

In the tenth column of the template, the Reporting MNE shall report the total

number of employees on a full-time equivalent (FTE) basis of all the Constituent

Entities resident for tax purposes in the relevant tax jurisdiction. The number of

employees may be reported as of the year-end, on the basis of average employment

levels for the year, or on any other basis consistently applied across tax

jurisdictions and from year to year. For this purpose, independent contractors

participating in the ordinary operating activities of the Constituent Entity may be

reported as employees. Reasonable rounding or approximation of the number of

employees is permissible, providing that such rounding or approximation does not

materially distort the relative distribution of employees across the various tax

jurisdictions. Consistent approaches shall be applied from year to year and across

entities.

1.9. Tangible Assets other than Cash and Cash Equivalents

In the eleventh column of the template, the Reporting MNE shall report the

sum of the net book values of tangible assets of all the Constituent Entities resident

for tax purposes in the relevant tax jurisdiction. With regard to permanent

establishments, assets shall be reported by reference to the tax jurisdiction in

which the permanent establishment is situated. Tangible assets for this purpose do

not include cash or cash equivalents, intangibles, or financial assets.

2. List of all the Constituent Entities of the MNE group included in each

aggregation per tax jurisdiction (Table 2)

2.1. Constituent Entities Resident in the Tax Jurisdiction

The Reporting MNE shall list, on a tax jurisdiction-by-tax jurisdiction basis

and by legal entity name, all the Constituent Entities of the MNE group which are

resident for tax purposes in the relevant tax jurisdiction. As stated in point 2 of the

General instructions with regard to permanent establishments, however, the

permanent establishment shall be listed by reference to the tax jurisdiction in

which it is situated. The legal entity of which it is a permanent establishment shall

be noted.

2.2. Tax Jurisdiction of Organisation or Incorporation if Different from Tax

Jurisdiction of Residence

The Reporting MNE shall report the name of the tax jurisdiction under whose

laws the Constituent Entity of the MNE is organised or incorporated if it is

different from the tax jurisdiction of residence.

2.3. Main Business Activity(ies)

The Reporting MNE shall determine the nature of the main business

activity(ies) carried out by the Constituent Entity in the relevant tax jurisdiction,

by ticking one or more of the appropriate boxes.".

B

€2.52