Offshore Oil and Gas Industry Activities (Personal Tax) Rules, 2018

L.N. 140 of 2018

INCOME TAX ACT

(CAP.123)

Qualifying Employment in Maritime Activities and the Servicing of

Offshore Oil and Gas Industry Activities (Personal Tax) Rules, 2018

IN EXERCISE of the powers conferred by article 96 of the

Income Tax Act, the Minister of Finance, has made the following

rules:-

(1) The title of these rules is the Qualifying Employment Citation and

in Maritime Activities and the Servicing of Offshore Oil and Gas commencement.

Industry Activities (Personal Tax) Rules, 2018.

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

from the year of assessment 2017 as regards eligible offices in the

Servicing of the Offshore Oil and Gas and ancillary services industry

and as from the year of assessment 2018 as regards eligible offices in

Maritime Activities.

(Rule 2)

Eligible Employment and Offices

Maritime Activities

Chief Executive Officer

Chief Operations Officer

Managing Director

Chief Financial Officer

General Manager

Crewing Manager

Technical Manager

Technical Ship Superintendent

Designated Person Ashore

Master

Chief Mate

Second Officer

Chief Engineer

Second Engineer

Chef

Servicing of the Offshore Oil and Gas and

Ancillary Services Industry Activities

Chief Executive Officer

Chief Operating Officer

Head of Training Academy (which Academy must be certified by

an international accreditation institution).

€0.72

(1)

In these rules, unless the subject or context otherwise Interpretation.

requires

"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 who is related to his employer 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;

"business incentive laws" includes the Malta Enterprise Act Cap. 463.

and the Business Promotion Act;

"Commissioner" means the Commissioner for Revenue;

"competent authority" means the Authority for Transport in

Malta established in terms of article 5 of the Authority for Cap. 499.

Transport in Malta Act;

"education qualification" means any diploma, certificate or

other evidence of formal qualifications issued by an educational

establishment attesting the successful completion of a post

secondary education programme, namely a set of courses

provided by an educational establishment recognised as an

education institution by the State in which it is situated;

"eligible office" is an employment defined as key for the

operations of the particular undertaking and whose function is

confirmed by the competent authority, based on an

administrative assessment procedure, which office is listed in the

Schedule and which is held with any of the following;

(i) any undertaking holding a Document of

Compliance (DOC) issued in terms of the International

Safety Management (ISM) Code or a Seafarer Recruitment

and Placement Services Licence issued in terms of the

Maritime Labour Convention, 2006; or

(ii) any undertaking engaging the particular

individual for work on board any ship, excluding ships

operating on regular services as well as ships whose use or

operation requires certification in terms of the Commercial

Vessels Regulations and which are berthed or anchored

within the territorial waters of Malta or any port in Malta

for at least a period of one month over a calendar year

(hereinafter collectively "Maritime activities");

For the purposes of these rules, the term "regular

services" shall have the meaning assigned to it in terms of

the Merchant Shipping (Safe Operation of Regular Ro-Ro

Ferry and High-Speed Passenger Craft Services)

Regulations; or

(iii) any undertaking which carries on mainly a trade

or business consisting in the Servicing of the offshore oil

and gas and ancillary services industry (hereinafter

"Servicing of the offshore oil and gas and ancillary services

activities");

"professional experience" means the actual and lawful

pursuit of the profession concerned;

"professional qualifications" means qualifications attested

by evidence of education qualifications or, by way of derogation,

when provided for by national law, attested by professional

experience of a level comparable to education qualifications and

which is relevant in the profession or sector specified in the work

contract or binding job offer;

"public interest" includes the interests of public safety, the

protection of public order, national security, territorial integrity,

public health or morals;

"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;

"these rules" shall include the provisions of article 56(21)

of the Act and the rules contained in these rules;

"third-country national" means any person who is not a

citizen of the European Union within the meaning of Article 20

of the Treaty on the European Union and the Treaty on the

Functioning of the European Union.

(2)

A person shall be deemed to be related to a body of persons

if

(a) that person and the body of persons are, directly or

indirectly, controlled or beneficially owned to the extent of more

than twenty-five percent (25%) by the same persons; or

(b) that person owns, directly or indirectly, more than

twenty-five percent (25%) of the ordinary share capital or voting

rights of the body of persons.

(1) Income from a qualifying contract of employment Income from a

qualifies under these rules when it is received by a beneficiary and qualifying

contract of

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

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

sixty-five thousand euro (€65,000) and consists of emoluments from

an eligible office.

(2) A qualifying contract of employment shall be considered to

be such if the employment activity contemplated in the contract of

employment is an eligible office.

(3) Income shall not be construed to be income from a

qualifying contract of employment if it is paid by the employer who

has received a benefit or benefits under business incentive laws or

arrangement in terms of the business incentive laws or is paid by a

person who is related to the employer who has received a benefit or

benefits under any business incentive laws or arrangement in terms of

business incentive laws.

A beneficiary is an individual who meets the following Beneficiary.

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 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 the

competent authority;

(c) he proves to the satisfaction of the competent

authority that he is in possession of professional qualifications or

experience;

(d) he fully discloses for tax purposes and declares

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 as chargeable to tax in Malta;

(e) he proves to the satisfaction of the competent

authority that he performs activities of an eligible office; and

(f) he proves to the satisfaction of the competent

authority that

(i) he is in receipt of stable and regular resources

which are sufficient to maintain himself and the members

of his family without recourse to the social assistance

system in Malta;

(ii) he resides in accommodation regarded as

normal for a comparable family in Malta and which meets

the general health and safety standards in force in Malta;

(iii) he is in possession of a valid travel document;

(iv) he is in possession of sickness insurance in

respect of all risks normally covered for Maltese nationals

for himself and the members of his family; and

(v)

he is not domiciled in Malta.

(1) When an individual exercises the option available

under article 56(21) of the Act in respect of a year of assessment, the

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

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

assessment shall be sixty-five thousand euro (€65,000)

Provided that should income from a qualifying contract of

employment exceed the sum of five million euro (€5,000,000), no

further tax would be charged on income from a qualifying contract of

employment in excess of five million euro (€5,000,000)

Provided that the rate of 15% shall apply without

possibility to claim any relief, deduction, credit or set off of any kind

Provided that, a beneficiary shall be allowed deductions of

tax paid in terms of article 23 of the Income Tax Management Act.

(2) The option available under article 56(21) of the Act may

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

year of assessment 2017 as regards eligible offices in the Servicing of

the Offshore Oil and Gas and Ancillary Services Industry and any year

of assessment preceding the year of assessment 2018 as regards

eligible offices in Maritime activities.

(1) The option available under article 56(21) of the Act EEA and Swiss

shall, with respect to EEA and Swiss nationals, apply for a consecutive nationals.

period of five years commencing from the first year of assessment in

which that person is first liable to tax under the provisions of the Act.

(2) The option available under article 56(21) of the Act shall,

with respect to third-country nationals, apply for a consecutive period

of four years commencing from the first year of assessment in which

that person is first liable to tax under the provisions of the Act.

(3) Rights acquired under this law shall be deemed to have

been withdrawn with immediate effect if the grant of benefits under

these rules and the beneficiary’s stay in Malta are not in the public

interest.

(4) Notwithstanding anything to the contrary contained in

these rules any person who falls under the provisions of sub-rule (1) or

sub-rule (2), irrespective of whether he has availed himself of the

benefit provided by these rules or not, shall be eligible, upon

application, for a one-time extension of five years or four years

respectively to his qualifying period, subject to the continued

adherence to the other provisions of these rules

Provided that the eligibility under the said rules shall not

exceed a consecutive period of ten 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.

(1) Where any person, in order to obtain benefits under

these rules, makes use of artificial arrangements, the Commissioner

shall, 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 relating to objections and appeals shall apply mutatis mutandis

Provided that if any person claims a benefit under these

rules when that person was not entitled to the said benefit, such person

shall be liable to pay a penalty equal to the amount of benefit claimed

and if the benefit was in fact paid to him that person shall in addition

be liable to repay the benefit received and to additional tax of seven

per cent per month or part thereof commencing from the month in

which the said benefit was paid to him up to the month in which he

repaid the benefit and any payment made by the said person in respect

of the tax repayable by him in terms of this proviso shall first be

applied against any additional tax due thereon

Provided further that liability to pay additional tax in terms

of the preceding proviso shall not be applicable when the person

referred to therein proves that he has acted in good faith.

(2) For the purposes of this rule, ‘benefit’ shall mean the total

tax saved by an individual who elects to apply these rules.

(1) For the purpose of ascertaining an individual’s right

to exercise the option referred to in these rules and ensuring the proper

application of these rules, the Commissioner and the competent

authority may require that individual to produce, within the time

indicated by the Commissioner and the competent authority in that

request, such further information and documents as the Commissioner

and the competent authority 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 competent authority in accordance with this

rule, the Commissioner and the competent authority may order that

article 56(21) 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-rule.

The option available under article 56(21) of the Act shall be Option available

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

56(21) of the

endorsed by the competent authority made on such form or in such Act.

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 competent authority Formal

shall issue a formal determination relating to anything which needs to Determination.

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 competent authority may require and shall contain the

information and documents therein requested.

(3) After consultation with the competent authority, the

Minister responsible for Justice shall determine whether a

beneficiary’s stay in Malta is not in the public interest.

For the purposes of rule 9, the competent authority shall, Endorsement of

following an application, filed by a beneficiary, endorse the form the form.

required by the Commissioner.