TAXATION OF BUSINESS OF INSURANCE FOLLOWING THE ADOPTION OF THE INTERNATIONAL FINANCIAL REPORTING

THE ADOPTION OF THE INTERNATIONAL FINANCIAL

REPORTING STANDARD 17 INSURANCE

CONTRACTS

SUBSIDIARY LEGISLATION 123.216

TAXATION OF BUSINESS OF INSURANCE

FOLLOWING THE ADOPTION OF THE

INTERNATIONAL FINANCIAL REPORTING

STANDARD 17 INSURANCE

CONTRACTS RULES

1st January, 2023

LEGAL NOTICE 334 of 2024.

(1)

The title of these rules is the Taxation of Business

of Insurance following the adoption of the International Financial

Reporting Standard 17 Insurance Contracts Rules.

(2)

These rules shall be deemed to have come into force with

effect from the year of assessment 2024 in relation to accounting

periods which commenced on, or after 1st January 2023.

(3)

These rules shall apply to any person that derives gains

or profits wholly or in part from the business of insurance as an

insurer, insofar as it concerns the gains or profits derived by such

person from the business of insurance and in cases where such person

has adopted the International Financial Reporting Standard 17.

In these rules, unless the context otherwise requires:-

"Act" means the Income Tax Act;

"adjusted profit before tax" means the profit before tax or

loss before tax arising in the relevant accounting period and,

except for the items taken into consideration to determine the

net insurance service result, adjusted in accordance with the

provisions of the Act and subsidiary legislation made

thereunder;

"adoption year of assessment" means the year of

assessment immediately following the first accounting period

for which an insurer has adopted IFRS17 but shall not in any

case be later than the year of assessment 2033;

"annual accounts" shall have the same meaning assigned

to it in article 2 of the Companies Act;

"business of insurance" shall have the same meaning

assigned to it in article 2 of the Insurance Business Act;

"Commissioner" means the Commissioner for Tax and

THE ADOPTION OF THE INTERNATIONAL FINANCIAL

REPORTING STANDARD 17 INSURANCE

CONTRACTS

Customs;

"IFRS 17" or "International Financial Reporting

Standard 17" shall have the meaning assigned to them in

guidelines published on the website of the Commissioner for

Tax and Customs in accordance with the provisions of article

96(2) of the Act;

"insurance finance income or expenses" shall have the

meaning as assigned to it in guidelines published on the website

of the Commissioner for Tax and Customs in accordance with

the provisions of article 96(2) of the Act;

"insurance service result" shall have the meaning

assigned to it in guidelines published on the website of the

Commissioner for Tax and Customs in accordance with the

provisions of article 96(2) of the Act;

"insurer" shall have the meaning assigned to it in article

2 of the Insurance Business Act;

"loss before tax" refers to the total loss before tax of an

insurer for the relevant accounting period as reported in the

audited statement of profit or loss within the annual accounts of

the insurer, irrespective of whether such loss is incurred

exclusively from the business of insurance or otherwise;

"net insurance service result" means the aggregate of the

insurance service result and the net insurance finance income or

expenses as determined in accordance with IFRS 17 and as

reported in an insurer’s statement of profit or loss within the

annual accounts for the relevant accounting period

Provided that items reported in the other

comprehensive income in the statement of comprehensive

income shall only be considered for the relevant accounting

period in the circumstances where such items would at no stage

be transferred to the statement of profit or loss in a subsequent

accounting period;

"profit before tax" refers to total profit before tax of an

insurer for the relevant accounting period as reported in the

audited statement of profit or loss within the annual accounts of

the insurer, irrespective of whether such profit is derived

exclusively from the business of insurance or otherwise;

"relevant accounting period" refers to the first accounting

period for which an insurer has adopted IFRS 17 and each

subsequent accounting period thereafter for which the insurer

THE ADOPTION OF THE INTERNATIONAL FINANCIAL

REPORTING STANDARD 17 INSURANCE

CONTRACTS

continues to apply IFRS 17.

Where any person derives gains or profits wholly or in

part from the business of insurance as an insurer, insofar as it concerns

the gains or profits derived by such person from the business of

insurance, the total income of such person shall, notwithstanding the

provisions of sub-article (1) of article 27 of the Act, as from the

adoption year of assessment and for each subsequent year of

assessment thereafter for which the insurer continues to apply IFRS

17, be ascertained in accordance with the provisions of these rules

Provided that the provisions of these rules shall not affect

the ascertainment of the total income of any insurer in respect of any

year preceding a year of assessment prior to the adoption year of

assessment.

Notwithstanding any provisions contained in the Act and

subject to rule 5(2), the total income of an insurer brought to charge in

the adoption year of assessment and every subsequent year of

assessment for which the insurer continues to apply IFRS 17

thereafter, as referred to in rule 3, shall be the adjusted profit before

tax.

(1)

The change, if any, to an insurer’s accumulated

profits or losses brought to charge in the adoption year of assessment

as a direct result of the insurer’s implementation of IFRS 17, shall for

the purposes of these rules, be referred to as follows

(a)

if the change consists of an increase in the

accumulated profits or a reduction in the accumulated losses,

this shall be referred to as "adoption gains"; and

(b)

if the change consists of an increase in the

accumulated losses or a reduction in the accumulated profits,

this shall be referred to as "adoption losses".

(2)

Any adoption gains arising in the manner stipulated in

sub-rule (1)(a), shall be considered as constituting gains or profits

forming part of the adjusted profit before tax brought to charge in the

adoption year of assessment and all provisions of the Act and these

rules relating to the taxation and the collection of such gains or profits,

shall apply mutatis mutandis thereto.

(3)

Any adoption losses arising in the manner stipulated in

sub-rule (1)(b), shall be considered as losses in terms of article

14(1)(g) of the Act incurred in the adoption year of assessment, and all

provisions of the Act relating to the deductibility of such losses, shall

apply mutatis mutandis thereto.

THE ADOPTION OF THE INTERNATIONAL FINANCIAL

REPORTING STANDARD 17 INSURANCE

CONTRACTS

Notwithstanding the provisions of rule 5, an insurer may

elect, in such manner and within such period as the Commissioner may

determine, to spread the payment of the tax chargeable on any

adoption gains determined pursuant to rule 5

Provided that the payment of the tax chargeable on such

adoption gains shall be spread equally over a maximum period of five

(5) consecutive years commencing from the adoption year of

assessment and such period shall be referred to as the "maximum

deferral period"

Provided further that this election shall be irrevocable,

and the period over which the insurer elects to spread the payment of

the tax chargeable on the adoption gains shall be referred to as the

"chosen deferral period", which may not in any case, exceed the

maximum deferral period

Provided further that should an insurer, for any reason

whatsoever, cease to be subject to tax in terms of these rules, the

deferral of payment granted in terms of an election provided for in

accordance with this rule shall be immediately discontinued and any

outstanding balance shall be deemed to have become due by the tax

settlement date of the last year of assessment relative to such

accounting period within which the insurer is subject to tax under

these rules and the provisions of article 42 of the Income Tax

Management Act shall apply mutatis mutandis

Provided further that an insurer shall notify the

Commissioner in such manner and within such period as the

Commissioner may determine, that such election no longer applies.

"profitt aġġustat qabel it-taxxa" tfisser il-profitt qabel it-

taxxa jew it-telf qabel it-taxxa li jinkiseb fil-perijodu ta’ kontjar

rilevanti u, ħlief għall-oġġetti meħuda inkunsiderazzjoni sabiex

jiġi ddeterminat ir-riżultat nett tas-servizz tal-assigurazzjoni,

aġġustat skont id-dispożizzjonijiet tal-Att u l-leġiżlazzjoni

sussidjarja magħmula taħtu;

"profitt qabel it-taxxa" tirreferi għall-profitt totali qabel

it-taxxa ta’ assiguratur għall-perijodu ta’ kontjar rilevanti kif

irrapportat fid-dikjarazzjoni awditjata tal-profitt jew telf fil-

kontijiet annwali tal-assiguratur, irrispettivament minn jekk tali

profitt huwiex miksub esklussivament mill-kummerċ ta’

assigurazzjoni jew b’mod ieħor;

"riżultat nett tas-servizz tal-assigurazzjoni" tfisser l-

aggregat tar-riżultat tas-servizz tal-assigurazzjoni u d-dħul jew

l-ispejjeż nett tal-finanzi tal-assigurazzjoni kif iddeterminat

skont l-IFRS 17 u kif irrappurtat f’dikjarazzjoni ta’ qligħ jew

telf tal-assiguratur fil-kontijiet annwali għall-perijodu ta’

kontjar rilevanti

Iżda l-oggetti rrappurtati fid-dħul komprensiv l-

ieħor fid-dikjarazzjoni tad-dħul komprensiv għandhom jiġu

kkunsidrati biss għall-perijodu ta’ kontjar rilevanti fiċ-

ċirkostanzi fejn tali oġġetti fl-ebda stadju ma jkunu trasferiti

fid-dikjarazzjoni tal-qligħ jew telf f’perijodu ta’ kontjar

sussegwenti;

"riżultat tas-servizz tal-assigurazzjoni" għandu jkollha l-

istess t-tifsira kif mogħti lilha fil-linji gwida ppubblikati fuq is-

sit web tal-Kummissarju tat-Taxxa u Dwana skont id-

dispożizzjonijiet tal-artikolu 96(2) tal-Att;

"sena ta’ stima ta’ adozzjoni" tfisser is-sena ta’ stima li

tiġi minnufih wara l-ewwel perijodu ta’ kontjar fejn l-

assiguratur adotta l-IFRS17 iżda fl-ebda każ ma għandha tkun

WARA L-ADOZZJONI TAL-ISTANDARD

INTERNAZZJONALI TAR-RAPPORTAR FINANZJARJU 17

DWAR KUNTRATTI TA’ ASSIGURAZZJONI

iktar tard mis-sena ta’ stima 2033;

"telf ta’ qabel it-taxxa" tirreferi għat-telf totali qabel it-

taxxa ta’ assiguratur għall-perijodu ta’ kontjar rilevanti kif

irrappurtat fid-dikjarazzjoni awditjata tal-profitt jew telf fil-

kontijiet annwali tal-assiguratur, irrispettivament minn jekk tali

telf ikunx imġarrab esklussivament mill-kummerċ ta’

assigurazzjoni jew b’mod iehor.

3. Meta kwalunkwe persuna tikseb qligħ jew profitti għal

kollox jew f’parti mill-kummerċ tal-assigurazzjoni bħala assiguratur,

sa fejn jikkonċerna l-qligħ jew il-profitti miksuba minn tali persuna

mill-kummerċ tal-assigurazzjoni, l-income totali ta’ tali persuna

għandu, minkejja d-dispożizzjonijiet tas-subartikolu (1) tal-artikolu 27

tal-Att, mis-sena ta’ stima ta’ adozzjoni u għal kull sena ta’ stima

sussegwenti wara li għaliha l-assiguratur ikompli japplika l-IFRS 17,

jiġu aċċertati skont id-dispożizzjonijiet ta’ dawn ir-regoli

Iżda d-dispożizzjonijiet ta’ dawn ir-regoli ma

għandhomx jaffettwaw l-aċċertament tal-income totali ta’ kwalunkwe

assiguratur fir-rigward ta’ kull sena li tippreċedi s-sena ta’ stima qabel

is-sena ta’ stima ta’ adozzjoni.

4. Minkejja kwalunkwe dispożizzjoni li tinsab fl-Att u

soġġett għar-regola 5(2), l-income totali tal-assiguratur intaxxat fis-

sena ta’ stima ta’ adozzjoni u kull sena ta’ stima sussegwenti li għaliha

l-assiguratur jkompli japplika l-IFRS 17 minn hemm ’il quddiem, kif

imsemmi fir-regola 3, għandu jkun il-profitt aġġustat qabel it-taxxa.

5. (1)

Il-bidla, jekk ikun hemm, fil-profitti jew telf

akkumulat ta’ assiguratur meqjusa taxxabli fis-sena ta’ stima ta’

adozzjoni bħala riżultat dirett tal-implimentazzjoni mill-assiguratur

tal-IFRS 17, għandha għall-finijiet ta’ dawn ir-regoli, issir referenza

għaliha kif ġej

(a)

jekk il-bidla tikkonsisti f’żieda fil-profitti

akkumulati jew tnaqqis fit-telf akkumulat, din għandha ssir

referenza għaliha bħala "qligħ mill-adozzjoni"; u

(b)

jekk il-bidla tikkonsisti f’żieda fit-telf akkumulat

jew tnaqqis fil-profitti akkumulati, din għandha ssir referenza

għaliha bħala "telf ta’ adozzjoni".

(2)

Kwalunkwe qligħ minn adozzjoni li jirriżulta fil-

manjiera stipulata fis-subregola (1)(a), għandu jitqies li jikkostitwixxi

qligħ jew profitti li jiffurmaw parti mill-profitt aġġustat qabel it-taxxa

meqjus taxxabli fis-sena ta’ adozzjoni ta’ stima u d-dispożizzjonijiet

kollha tal-Att u ta’ dawn ir-regoli relatati mat-tassazzjoni u l-ġbir ta’

dak il-qligħ jew profitti, għandhom japplikaw mutatis mutandis

WARA L-ADOZZJONI TAL-ISTANDARD

INTERNAZZJONALI TAR-RAPPORTAR FINANZJARJU 17

DWAR KUNTRATTI TA’ ASSIGURAZZJONI

għalihom.

(3)

Kwalunkwe telf ta’ adozzjoni li jirriżulta bil-mod stipulat

fis-subregola (1)(b), għandu jitqies bħala telf skont l-artikolu 14(1)(g)

tal-Att li jkun sar fis-sena ta’ stima ta’ adozzjoni, u d-dispożizzjonijiet

kollha tal-Att dwar it-tnaqqis ta’ dan it-telf, għandhom japplikaw

mutatis mutandis għalihom.

6. Minkejja d-dispożizzjonijiet tar-regola 5, assiguratur

jista’ jagħżel, b’tali mod u f’tali perijodu li l-Kummissarju jista’

jiddetermina, li jifrex il-ħlas tat-taxxa li għandha titħallas fuq

kwalunkwe qligħ mill-adozzjoni determinat skont ir-regola 5

Iżda l-ħlas tat-taxxa li għandha titħallas fuq tali qligħ

mill-adozzjoni għandha tkun mifruxa b’mod ugwali fuq perijodu

massimu ta’ ħames (5) snin konsekuttivi li jibda jiddekorri mis-sena

ta’ stima ta’ adozzjoni u tali perijodu għandu ssir referenza għalih

bħala l-"perijodu massimu ta’ differiment"

Iżda wkoll din l-għażla għandha tkun irrevokabbli, u l-

perijodu li matulu l-assiguratur jagħżel li jifrex l-ħlas tat-taxxa li

għandha titħallas fuq il-qligħ mill-adozzjoni għandu ssir referenza

għalih bħala l-"perijodu ta’ differiment magħżul", li ma jista’, fl-ebda

każ, jeċċedi l-perijodu massimu ta’ differiment

Iżda wkoll jekk assiguratur, għal kwalunkwe raġuni, ma

jibqax soġġett għat-taxxa skont dawn ir-regoli, id-differiment tal-ħlas

mogħti fit-termini tal-għażla provduta skont din ir-regola għandu

jitwaqqaf minnufih u kwalunkwe bilanċ pendenti għandu jitqies li jkun

sar dovut sad-data ta’ settlement tat-taxxa tal-aħħar sena ta’ stima

relattiva għal dak il-perijodu ta’ kontjar li fih l-assiguratur ikun soġġett

għat-taxxa skont dawn ir-regoli u d-dispożizzjonijiet tal-artikolu 42

tal-Att dwar l-Amministrazzjoni tat-Taxxa għandu japplika mutatis

mutandis

Iżda wkoll l-assiguratur għandu javża lill-Kummissarju

b’tali mod u f’tali perijodu li l-Kummissarju jista’ jiddetermina, li dik

l-għażla ma tibqax tapplika.