Cooperation with Other Jurisdictions on Tax Matters

L.N. 213 of 2021

INCOME TAX ACT

(CAP. 123)

Cooperation with Other Jurisdictions on Tax Matters

(Amendment) Regulations, 2021

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

the Income Tax Act, the Minister for Finance and Employment has

made the following order:-

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

Jurisdictions on Tax Matters (Amendment) Regulations, 2021 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

regulation 2 of

"beneficial owner" shall be substituted by the following

the principal

regulations.

" "beneficial owner" means any natural person or persons

who ultimately own or control the customer and, or the natural

person or persons on whose behalf a transaction or activity is

being conducted and, or

(a) in the case of an entity, the beneficial owner

shall consist of any natural person or persons who

ultimately own or control that entity through direct or

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

one (1) or more of the shares or more than twenty-five per

centum (25%) of the voting rights or an ownership interest

of more than twenty-five per centum (25%) in that,

including through bearer share holdings, 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 by one

or more body corporates or body of persons 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 or persons who hold the position of senior

managing official or officials, and record of the actions

taken and any difficulties encountered to determine who the

beneficial owner is in terms of this paragraph shall be kept.

(b) in the case of express trusts the beneficial owner shall

consist of

(i)

the settlor or settlors;

(ii)

the trustee or trustees;

(iii) the protector or protectors, where applicable;

(iv) the beneficiaries, or the class of beneficiaries as

may be applicable; 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 beneficial owner shall

consist of the natural person or persons holding equivalent or

similar positions to those referred to in paragraph (b);".

Regulation 4 of the principal regulations shall be amended

as follows

(a)

in sub-regulation (1) thereof

(i) in paragraph (a) the words "the legal owners;

and" shall be substituted by the words "the legal owners

and the beneficial owners; and";

(ii) in paragraph (b) the words "the foundation."

shall be substituted by the words "the foundation;" and

immediately thereafter there shall be added the following

"(c) for the purposes of paragraph (a) and (b)

above, the term ‘beneficiaries’ shall mean both

beneficiaries as identified in terms of article 2(1) of Cap. 331.

the Trusts and Trustees Act and beneficial owners as

defined in regulation 2.";

(b) in sub-regulation (11), the words "For the purposes of

these regulations, "banking information" includes all records

pertaining to the accounts as well as to related financial and

transactional information." shall be substituted by the words "For

the purposes of these regulations, "banking information"

includes

(a) information that identifies the legal owners of

the accounts;

(b) information that identifies the beneficial owners

of the accounts; and

(c|) all records pertaining to the accounts and to

related financial transactional information.".

Immediately after regulation 4 of the principal regulations Adds new

regulation to the

there shall be added the following regulation

principal

regulations.

The Commissioner may give notice in writing

to any person to furnish him, within a reasonable time

stated in such notice, not being less than twenty days, such

information as may be necessary in order to verify that

such person is complying with the obligations set out in

these regulations. Such requests shall be sent to that

person either by electronic means to a verified email

address of that person or sent by post to the person’s

registered address. Where any of the

information

requested is not submitted to the Commissioner within the

time limit specified in the notice, the person shall be liable

to a penalty of not less than five hundred euro (€500) and

not exceeding nineteen thousand, two hundred and fifty

euro (€19,250)

Provided that where the Commissioner is satisfied

that the default in respect of which the penalties have been

imposed were justifiable, the Commissioner may remit

such penalties in whole or in part as he may think fit. In

every case the Commissioner shall inform the said person

in writing.".

Sub-regulation (2) of regulation 6 of the principal

regulations shall be substituted by the following

"(2) Where the person fails to show that the information

was kept or was properly updated, as required under these

regulations, the person who had the duty to keep or update such

information shall be liable to a penalty of nineteen thousand, two

hundred and fifty euro (€19,250).".

Regulation 35 of the principal regulations shall be

substituted by the following

"35. (1) Where a person comes within the scope of the

penalties as set out in these regulations, the Commissioner shall

advise such person by means of a notice in writing which penalty

the Commissioner intends to impose, the reason for its

imposition and the time within which such penalty is to be paid

Provided that in such cases, reference to the specific

legal provision would constitute sufficient notice.

(2) The notice referred to in sub-regulation (1) may be

served on the relevant person either personally or by being sent

by registered post to the last known business or private address

Provided that where such notice is not made because

the taxpayer could not be found or for other reasons attributable

to him and the Commissioner publishes a notice in the Gazette

and in one or more daily newspapers stating that a notice has

been made and inviting the taxpayer to call for it at the

Department, then such notice shall also be deemed to have been

duly notified.

(3) Where the penalty is not paid within the time

specified in the notice referred to in sub-regulation (1), the

Commissioner shall inform the person referred to in sub-

regulation (1) and serve him with a demand notice advising that

person that, unless the latter notice is contested in a court of law

within thirty days from its date of service, it shall constitute an

executive title in terms of article 40(1)(d) of the Income Tax

Management Act. For this purpose only, the relevant penalty

shall be considered to be a tax which should have been paid.

(4) Where the Commissioner is satisfied that the default

in respect of which the penalties have been imposed under sub-

regulation (1) was not due to any fault or neglect on the part of

the relevant person, he shall remit the whole of the said penalties

and, in any other case, may remit such part or all of the said

penalties as he may think fit. In every case the Commissioner

shall inform the said person accordingly.

(5) The payment by any person of any penalties imposed

under these regulations shall in no way exonerate that person

from its obligations under these regulations.

(6) Where such penalty remains unpaid within the time

specified in the notice referred to in sub-regulation (1), the

provisions of article 47 of the Income Tax Management Act Cap. 372.

relating to the collection and recovery of tax shall apply to the

collection and recovery of such penalty.".

Immediately after sub-regulation (3) of regulation 48 of the Amends

principal regulations there shall be added the following sub- regulation

the principal

regulations

regulations.

"(4) Where a Maltese Constituent Entity that is neither

the Ultimate Parent Entity nor the Surrogate Parent Entity nor

the Constituent Entity referred to in point 1 of Section II of

Annex III, fails to notify the Commissioner of the identity and

tax residence of the Reporting Entity obliged to file a country-

by-country report with respect to a Reporting Fiscal year by not

later than the last day for filing of a tax return of that Constituent

Entity for the preceding fiscal year, it shall be liable to a penalty

of

(a)

two hundred euro (€200); and

(b) 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).

(5) Where a Constituent Entity of a MNE Group that is

resident for tax purposes in Malta, fails to notify the

Commissioner of whether it is the Ultimate Parent Entity or the

Surrogate Parent Entity or the Constituent entity referred to in

point 1 of Section II of Annex III, by not later than the last day

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

preceding fiscal year, the Constituent Entity shall be liable to a

penalty of

(a)

two hundred euro (€200); and

(b)

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).".

€0.54