VENTURE CAPITAL FUND (TAX CREDIT) REGULATIONS

SUBSIDIARY LEGISLATION 123.90

VENTURE CAPITAL FUND (TAX CREDIT)

REGULATIONS

24th February, 2006

LEGAL NOTICE 50 of 2006, as amended by Legal Notices 409 of 2007

and 426 of 2012.

The title of these regulations is the Venture Capital Fund

(Tax Credit) Regulations.

In these regulations, unless the context otherwise requires -

"the Act" means the Income Tax Act;

"the Corporation" means the Malta Enterprise Corporation;

"designated venture capital fund" means a collective investment

scheme -

(a) which is a prescribed fund in terms of article 41A(b) of

the Act; and

(b) where the securities issued by such scheme are

securities listed on a stock exchange recognised under

the Financial Markets Act; and

(c) which is named as such by the Corporation by means

of a designation that has not been revoked; and

(d) in which the Corporation holds securities; and

(e) which was set up with the purpose of increasing the

amount of private investment capital available for

Malta-based companies in the seed or early stage of

business development as well as to provide finance for

innovative processes, ideas and techniques; and

(f)

concerning which the Corporation has informed the

Commissioner of the relevant details referred to in

paragraphs (a), (b), (c), (d) and (e) hereof;

"replacement certificate" means a certificate issued by the

Commissioner in accordance with regulation 4;

" t a x c r e di t c e rt i f i c a te " m e a n s a ce rtifica t e issued by the

Commissioner in accordance with regulation 3, or a replacement

certificate as the case may be.

(1) Notwithstanding any obligation to secrecy or

confidentiality, or any other restriction relating to the disclosure of

information imposed by any enactment -

(a) when a designated venture capital fund issues

securities to investors, it shall inform the

Commissioner of such issue; and

(b) a designated venture capital fund shall, upon any

request, give the Commissioner all the information

necessary for the purpose of the requirements of these

regulations.

(2) When the Commissioner receives a notice by a designated

venture capital fund of purchase of securities by investors, and he

is satisfied that such securities have been actually fully paid for, he

shall issue and deliver a tax credit certificate to each person

acquiring the securities.

(3) Each tax credit certificate shall be dated and consecutively

numbered and shall indicate

(a) the name of the designated venture capital fund;

(b) details identifying the securities purchased;

(c) the total nominal value of the securities purchased;

(d) a declaration that the certificate gives the right to a tax

credit as provided for in these regulations;

(e) the name of the person to whom the tax credit

certificated is issued and, if he is an individual, his

legally valid identification document or passport

number or, if it is a company incorporated in Malta, its

company registration number or, in any other case,

such details as the Commissioner may consider

sufficient to properly identify that person or company.

(1) When a person declares in writing that he is the lawful

owner of a tax credit certificate and notifies the Commissioner in

writing that such certificate has been lost, stolen, destroyed or

defaced, he may apply to the Commissioner for a replacement

certificate.

(2) When the application for a replacement certificate is made

to replace a defaced certificate, the original certificate shall be

surrendered to th e Comm issi oner at the same t ime t hat the

application is made.

(3) The Commissioner may issue and deliver to the applicant a

replacement certificate if he is satisfied that the application is made

bona fide: provided that the Commissioner may disallow the

application without assigning any reason therefor.

(4) Before allowing an application under this regulation the

Commissioner may request the applicant to give such undertaking,

security and indemnity as it considers appropriate.

(5) A replacement certificate shall comply with regulation 3(3)

and it shall also indicate that it is a replacement certificate.

(6) The Commissioner shall note and keep record of every

original and replacement certificate.

(1) Subject to the provisions of regulation 6, the person

identified on a tax credit certificate may claim a tax credit

equivalent to thirty percent (30%) of the total nominal value shown

on the said certificate following the surrendering of the said

certificate to the Commissioner

Provided that such certificate may only be surrendered after

the lapse of the third year from the date when the person holding

the certificate had acquired the securities which gave him the right

to apply for the certificate

Provided further that the person surrendering the certificate

has continuously held the securities referred to in the previous

proviso during the said three years

Provided also that the maximum amount of tax credit

claimed by any person for all the relevant years of assessment taken

together may not be greater than €350,000.

(2) Subject to the provisions of subregulation (3), the tax credit

shall be allowable as a deduction from the tax chargeable on the

income of the person identified on the certificate for the year of

assessment commencing on the 1st January of the year immediately

following that in which the certificate is surrendered as aforesaid,

and any amount that remains unabsorbed for that year of

assessment shall be carried forward and treated as a tax credit, to be

deducted from the tax chargeable on gains or profits derived by that

person in subsequent years: provided that the maximum amount of

tax credit that may be claimed which is referred to in the third

proviso to subregulation (1) is not exceeded.

(3) A tax credit allowed in accordance with this regulation may

only give rise to a valid claim for refund of tax where it results that,

after taking into account the said tax credit, such tax had been paid

in excess for any applicable year of assessment, whether such tax

was paid by deduction or otherwise.

(4) When a tax credit certificate has been surrendered as

aforesaid it may not be delivered back to the surrendering person or

delivered or transferred to any other person.

No claim for a tax credit shall be allowable if a claim has

already been made with respect to the surrender of an original

certificate or of a replacement certificate issued to replace the said

original certificate.

The Commissioner and any person acting on his behalf are

indemnified against any claim whatsoever arising from the issue,

delivery or replacement of any certificate or the granting of any tax

credit under these regulations.

(1) The Commissioner shall deem that the designation of a

designated venture capital fund has been revoked on the date when

the Corporation expressly revokes such a designation or on the date

that the relevant entity fails to conform to the definition of

designated venture capital fund as provided in regulation 2,

whichever date is the earlier.

(2) Where the Commissioner deems that such a designation has

been revoked as aforesaid, he shall consider the relevant tax credit

certificates which had not been surrendered by the date of such

revocation to be surrendered on the date of such revocation

Provided that such certificates could be surrendered in

accordance with the provisions of regulation 5(1)

Provided further that the holder of the certificate surrenders

the said certificate not later than six months from the date of such

VENTURE CAPITAL FUND (TAX CREDIT)

revocation.