Tax Accounts (Income Tax) (Amendment) Rules, 2018

L.N. 38 of 2018

INCOME TAX ACT

(CAP. 123)

Tax Accounts (Income Tax) (Amendment) Rules, 2018

IN EXERCISE of the powers conferred by articles 2 and 96 of

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

(1)

The title of these rules is the Tax Accounts Citation and

(Income Tax) (Amendment) Rules, 2018, and these rules shall be read coming

force.

and construed as one with the Tax Accounts (Income Tax) Rules, S.L. 123.101

hereinafter referred to as "the principal rules".

(2) These rules shall be applicable as from the year of

assessment 2018.

Rule 3 of the principal rules shall be amended as follows

Amends rule 3

of the principal

rules.

(1) rule 3 of the principal rules shall be renumbered as

Rule 3(1); and

(2) immediately after sub-rule (1) of rule 3 of the

principal rules, there shall be added the following new sub-rule

"(2) Where profits of a company are relieved from

tax through the deduction referred to in paragraph (o) of

sub-article (1) of article 14 of the Act, or any rules issued Cap. 123

in terms of that paragraph, an amount corresponding to one

hundred and ten per cent (110%) of the amount of profits

which are so relieved from tax shall be allocated to the

company’s final tax account in the following manner

(a) an amount corresponding to one hundred

per cent (100%) of the amount of profits which are

so relieved from tax shall be allocated directly to the

final tax account (hereinafter referred to as the

"direct allocation"); and

(b) an additional reallocation of profits of an

amount corresponding to ten per cent (10%) of the

relieved profits, out of the tax account to which such

relieved profits would, ignoring the provisions of

this sub-rule, otherwise fall to be allocated

(hereinafter referred to as the "additional

reallocation")

Provided that if the amount of the additional

reallocation exceeds the total profits of the

undertaking for the particular basis year that would

have, ignoring the provisions of this sub-rule, been

allocated to the tax account to which such profit

would otherwise have been allocated, any such

excess shall be ignored for the purposes of the

additional reallocation

Provided further that

(i) the additional reallocation shall be effected

subsequent to any tax account reallocation required

in terms of sub-rules (4) and (7) of rule 5; and

(ii) the direct allocation and the additional

reallocation shall not be effected in respect of

deemed interest that is claimed as a deduction in

terms of sub-rule (1) of rule 3 of the Notional Interest

Deduction Rules against interest income deemed to

be received by the shareholder or partner of the

undertaking in terms of rule 5 of the Notional

Interest Deduction Rules."

€0.18