Research and Development Activities Regulations, 2017

L.N. 166 of 2017

MALTA ENTERPRISE ACT

(CAP. 463)

Research and Development Activities Regulations, 2017

IN exercise of the powers conferred upon him by article 5

of the Malta Enterprise Act, the Minister for the Economy,

Investment and Small Business, in consultation with the Malta

Enterprise Corporation, has made the following regulations:-

(1)

The title of these regulations is the Research and Citation and

coming into

Development Activities Regulations, 2017.

force.

(2) These regulations shall be deemed to have come into effect

as from the 1st January 2017.

In these regulations, unless the context otherwise requires

Interpretation.

"the Act" means the Malta Enterprise Act;

"the Corporation" means Malta Enterprise established

under the Act;

"the Guidelines" means such guidelines as may be

published by the Corporation from time to time in terms of the

Act;

"Small and Medium Sized Enterprises" (SMEs) shall

having the meaning attributed to it by Annex I of Commission

Regulation (EU) No 651/2014 of 17 June 2014 declaring certain

categories of aid compatible with the internal market in

application of Articles 107 and 108 of the Treaty;

The terms "Large Enterprises", "Fundamental Research",

"Experimental Development", "industrial research", "highly

qualified personnel" and "research and knowledge-

dissemination Organisation" shall have the meanings attributed

to them by Commission Regulation (EU) No 651/2014 of 17

June 2014 declaring certain categories of aid compatible with

the internal market in application of Articles 107 and 108 of the

Treaty;

"Research and Development activity" is any activity that

constitutes experimental development and/or industrial research

as may be further described in the Incentive Guidelines.

Where the Corporation is satisfied that an undertaking has

carried out a Research Activity the Corporation may assist such an

undertaking by means of a tax credit in accordance with the terms and

conditions set out in the Guidelines.

(1)

Where the Corporation is satisfied that an

undertaking requires assistance to carry out a project for the

development of products, services or processes that necessitates the

execution of experimental development and/or industrial activities,

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 relation to the experimental development and/or

industrial activities and in accordance with the terms and conditions

set out in the Guidelines.

(2) This assistance may be provided only if the project

together with the relative costs have been approved a priori in writing

by the Corporation.

(1)

Where the Corporation is satisfied that an

undertaking requires assistance to carry out feasibility studies in

preparation for an industrial research or an experimental development

activities, the Corporation may assist such an undertaking by means

of a cash grant as a percentage of the eligible costs incurred by such

an undertaking in accordance with the terms and conditions set out in

the Guidelines.

(2) This assistance may be provided only if the feasibility

studies with the relative costs have been approved a priori in writing

by the Corporation.

Where the Corporation is satisfied that an SME requires

assistance for the loan of highly qualified personnel from large

undertakings or a Research and Knowledge-dissemination

Organisations, the Corporation may assist such an undertaking by

means of a tax credit in accordance with the terms and conditions set

out in the Guidelines.

(1)

An undertaking benefiting from tax credits in terms

of these regulations and the respective Guidelines shall be entitled to

deduct from the amount of income tax which is due on its chargeable

income derived from its trade or business in the years of assessment

following the award of the benefit an amount equivalent to the Tax

credit awarded.

(2) An undertaking that in any year of assessment does not

utilise any tax credit awarded or deducts a value from the amount of

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

trade or business that is less than the tax credit awarded shall carry

forward the unutilised tax credit for the following years of assessment

and so on for subsequent years.

(3) Tax credits awarded in terms of these regulations and the

respective Guidelines shall not give rise to a right to a refund of tax.

(4) 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.

(5) (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 respective tax Cap. 123.

accounts of the company in question, in accordance with the Tax

Accounts (Income Tax) Rules, 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 (4) is

distributed to a member which is also a company (hereinafter referred

to a s "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.

(6) 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.

The provisions of Assistance for Research and

Development and Innovation Regulations shall remain applicable for

assistance awarded by the Corporation prior to the coming into force

of these regulations.

Applications for assistance under these regulations shall

reach the Corporation by not later than the 31st December, 2020.

€0.36