Tax Matters (Amendment) Regulations, 2017

L.N. 344 of 2017

INCOME TAX ACT

(CAP.123)

INCOME TAX MANAGEMENT ACT

(CAP. 372)

Cooperation with Other Jurisdictions on

Tax Matters (Amendment) Regulations, 2017

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, 2017 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".

Regulation 2 of the principal regulations shall be amended Amends

regulation 2 of

the principal

regulations.

(a) immediately after the definition of "authorised

representative" there shall be added the following definition

" "beneficial owner" means any natural person(s) who

ultimately owns or controls the customer and, or the natural

person(s) on whose behalf a transaction or activity is being

conducted and includes

(a) in the case of an entity, any natural

person(s) who ultimately owns or controls that body

corporate or body of persons through direct or

indirect ownership of twenty-five per centum (25%)

plus one or more of the shares or ownership interests

in that entity, or through control via other means,

other than a company that is listed on a regulated

market which is subject to disclosure requirements

consistent with European Union law or equivalent

international standards which ensure adequate

transparency of ownership information

Provided that a shareholding of twenty-five per

centum (25%) plus one (1) share or more, or the

holding of an ownership interest or voting rights of

more than twenty-five per centum (25%) in the

customer shall be an indication of direct ownership

when held directly by a natural person, and of indirect

ownership when held either by a natural person

through one or more entities or through a trust or a

similar legal arrangement, or a combination thereof

Provided further that if, after having exhausted

all possible means and provided there are no grounds

of suspicion, no beneficial owner in terms of this

paragraph has been identified, the beneficial owner

shall be the natural person(s) who hold the position of

senior managing official(s);

(b)

in the case of express trusts

(i)

the settlor;

(ii)

the trustee(s);

(iii) the protector, if any;

(iv) the beneficiaries, or where the

individuals benefiting from the trust have yet to

be determined, the class of persons in whose

main interest the trust is set up or operates; and

(v) any other natural person exercising

ultimate control over the trust by means of

direct or indirect ownership or by other means;

(c) in the case of legal entities such as

foundations, and legal arrangements similar to trusts,

the natural person(s) holding equivalent or similar

positions to those referred to in point (b);"; and

(b) the definition of "EU Administrative Cooperation

Directive" shall be substituted by the following

" "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, 2016/881 and

2016/2258;".

Regulation 4 of the principal regulations shall be amended

(a) in sub-regulation (1) thereof, the words "Entities shall

keep updated information that identifies their owners and the

level and type of their respective ownership stakes in such

entities", shall be substituted by the words "Entities shall keep

updated information that identifies their owners and the level and

type of their respective ownership stakes in such entities,

including information on legal and beneficial owners";

(b) paragraph (b) of sub-regulation (3) thereof shall be

substituted by the following

"(b)

a company that has issued

share warrants in accordance with article 121

of the Companies Act shall inform the

competent authority in Malta of such issue not

later than one month from the date of

publication of these regulations in the case of

share warrants issued before the said date, or

fourteen days after the date of any issue made

after the said date. Such companies shall also

keep a register with the information that

identifies the owners of such share warrants.

Notwithstanding any other provision in any

Act, a person in possession of a share warrant

shall not be entitled to any rights in relation to

such share warrant unless the relevant company

has been provided with the information that

identifies

such

person.

Furthermore,

notwithstanding any other provision in any

Act, a transfer of such share warrant shall not

be valid at law if the relevant company has not

been informed within fourteen days of the said

transfer of the information that identifies the

new owner

Provided that the provisions of the

preceding paragraph shall have effect up to 27

December 2017."; and

(c) paragraph (a) of sub-regulation (4) thereof shall be

substituted by the following

"(a) Trustees that are established under the laws of

Malta or that are resident in Malta shall take all reasonable

measures to ensure that updated information is kept that

identifies the settlor, other trustees, the protector (if any)

and beneficiaries of express trusts (whether the proper law

of such trusts is that of Malta or elsewhere).".

Immediately after sub-regulation (6) of regulation 5 of the

principal regulations, there shall be added the following new sub-

regulation

"(7) For the purpose of the implementation and

enforcement of the laws giving effect to the EU Administrative

Cooperation Directive and to ensure the functioning of the

administrative cooperation it establishes, the Commissioner for

Revenue shall have access to the mechanisms, procedures,

documents and information referred to in:-

(a) Articles 13, 30, 31 and 40 of Directive (EU)

2015/849 of the European Parliament and of the Council of

20 May 2015 on the prevention of the use of the financial

system for the purposes of money laundering or terrorist

financing, amending Regulation (EU) No 648/2012 of the

European Parliament and of the Council, and repealing

Directive 2005/60/EC of the European Parliament and of

the Council and Commission Directive 2006/70/EC; and

(b) any provisions of Maltese law transposing the

said Articles 13, 30, 31 and 40 of Directive (EU) 2015/

849.".

Sub-regulation (6) of regulation 13 of the principal

regulations shall be substituted by the following

"(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

in such manner as set out in Annex III and within twelve months

of the last day of the fiscal year of the MNE group.".

Regulation 43 of the principal regulations shall be

substituted by the following

"43. If a Reporting Malta Financial Institution or any other

person enters into any transactions or schemes, the main purpose

or one of the main purposes of which is to avoid any obligation

under the EU Administrative Cooperation Directive, these

regulations are to have effect as if such transactions or schemes

had not been entered into.".

Paragraph (c) of regulation 44 of the principal regulations Amends

regulation 44 of

shall be substituted as follows

the principal

regulations.

"(c) where a Reporting Malta Financial Institution fails to

apply the due diligence procedures specified in Section II

through to Section VII of Annex I, including obtaining a self-

certification for New Accounts, to a penalty of five thousand

euro (€5,000);".

In regulation 45 of the principal regulations, the words Amends

"The provisions of regulation 13(2), (3)(b), (4) and (5)(b), and regulation

the principal

regulations 36 to 44 shall apply mutatis mutandis in relation to regulations.

jurisdictions that are not EU Member States, hereinafter in these

regulations referred to as "Non-EU Reportable Jurisdictions" ", shall

be substituted by the words "The provisions of regulation 13(2), (7)(b),

(8)(b) and (9)(b) and regulations 36 to 44 shall apply mutatis mutandis

in relation to jurisdictions that are not EU Member States, hereinafter

in these regulations referred to as "Non-EU Reportable

Jurisdictions" ".

Immediately after regulation 48 of the principal regulations Adds new

regulation 49 to

there shall be added the following regulation

the principal

regulations.

49. (1) The provisions of regulation

"Extension of

application to

jurisdictions 13(4), (5), (6), (7)(d), (8)(a) and (9)(d), and

that are not

EU Member regulations 36 and 47 to 48 shall apply mutatis

mutandis in relation to jurisdictions that are not

States.

EU Member States and

(a) with which an arrangement is

in place pursuant to which there is an

obligation in place to provide the

information specified in Section III of

Annex III; and

(b) which are identified in the list

published by the Commissioner on the

website of

the Inland

Revenue

Department under the provisions of article

96(2) of the Income Tax Act;

(2) In applying this regulation, the 2015

final consolidated report, entitled "Transfer

Pricing Documentation and Country-by-

Country Reporting, on Action 13 of the OECD/

G20 Action Plan on Base Erosion and Profit

Shifting", as developed by the Organisation for

Economic Cooperation and Development shall

be used as a source of illustration or

interpretation.".

Section VIII of Annex I to the principal regulations shall be

amended as follows

(a) sub-paragraph C (9)(b) thereof shall be substituted by

the following

"(b) any Financial Account of an Account Holder,

regardless of the date such Financial Account was opened,

(i) the Account Holder also holds with the

Reporting Malta Financial Institution (or with a

Related Entity within the same Member State as the

Reporting Financial Institution) a Financial Account

that is a Pre-existing Account under sub-paragraph

C(9)(a);

(ii) the Reporting Malta Financial Institution

(and, as applicable, the Related Entity within the

same Member State as the Reporting Financial

Institution) treats both of the aforementioned

Financial Accounts, and any other Financial

Accounts of the Account Holder that are treated as

Pre-existing Accounts under point (b), as a single

Financial Account for purposes of satisfying the

standards of knowledge requirements set forth in

paragraph A of Section VII, and for purposes of

determining the balance or value of any of the

Financial Accounts when applying any of the account

thresholds;

(iii) with respect to a Financial Account that is

subject to AML/KYC Procedures, the Reporting

Malta Financial Institution is permitted to satisfy

such AML/KYC Procedures for the Financial

Account by relying upon the AML/KYC Procedures

performed for the Pre-existing Account described in

sub-paragraph C(9)(a); and

(iv) the opening of the Financial Account does

not require the provision of new, additional or

amended customer information by the Account

Holder other than for the purposes of the EU

Administrative Cooperation Directive."; and

(b) sub-paragraph C(17)(a) thereof shall be substituted

by the following

"17. The term "Excluded Account" means any of the

following accounts

(a) a retirement or pension account that

satisfies the following requirements

(i) the account is subject to regulation

as a personal retirement account or is part of a

registered or regulated retirement or pension

plan for the provision of retirement or pension

benefits (including disability or death benefits);

(ii) the account is tax-favoured (that is,

contributions to the account that would

otherwise be subject to tax are deductible or

excluded from the gross income of the Account

Holder or taxed at a reduced rate, or taxation of

investment income from the account is deferred

or taxed at a reduced rate);

(iii) information reporting is required to

the tax authorities with respect to the account;

(iv) withdrawals are conditioned on

reaching a specified retirement age, disability,

or death, or penalties apply to withdrawals

made before such specified events; and

(v) either (i) annual contributions are

limited to an amount denominated in Euro that

corresponds to USD 50 000 or less; or (ii) there

is a maximum lifetime contribution limit to the

account of an amount denominated in Euro that

corresponds to USD 1 000 000 or less, in each

case applying the rules set forth in paragraph C

of Section VII for account aggregation and

currency translation.

A Financial Account that otherwise

satisfies the requirement of sub-paragraph

C(17)(a)(v) will not fail to satisfy such

requirement solely because such Financial

Account may receive assets or funds transferred

from one or more Financial Accounts that meet

the requirements of sub-paragraph C(17)(a) or

(b) or from one or more retirement or pension

funds that meet the requirements of any of sub-

paragraphs B(5) through (7);".

€0.72