BUSINESS PROMOTION REGULATIONS (sl_325.6) | MT

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Preamble — BUSINESS PROMOTION REGULATIONS Open official source

SUBSIDIARY LEGISLATION 325.06

BUSINESS PROMOTION REGULATIONS

1st November, 2000

LEGAL NOTICE 135 of 2001, as amended by Legal Notices 228 of 2002,

98 and 128 of 2003, 464 of 2004, 67, 228 and 370 of 2005, 192 of 2006,

and 68 and 424 of 2007; and Act XXVII of 2016 and 284 of 2019.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 1 Title. — BUSINESS PROMOTION REGULATIONS Open official source

The title of these regulations is the Business Promotion

Regulations.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Schedule — BUSINESS PROMOTION REGULATIONS Open official source

(Regulation 4(3)(a))

01. Manufacture of pharmaceuticals, medicinal chemicals and botanical

Manufacture of basic pharmaceutical products, including

(i)

investigation, perfecting and production of medicinal active

substances to be used for their pharmacological properties in

the manufacture of medicaments

(ii)

processing of blood

(iii)

manufacture of chemically pure sugars

(iv)

processing of glands and manufacture of extracts of glands

Manufacture of pharmaceutical preparations, including

(i)

manufacture of medicaments: anti-sera and other blood

fractions, vaccines, diverse medicaments, including

homoeopathic preparations

(ii)

manufacture of chemical contraceptive products for external

use and hormonal contraceptive medicaments

(iii)

manufacture of dental fillings and bone reconstruction cements

(iv)

manufacture of medical impregnated wadding, gauze,

bandages, dressings, surgical gut string and similar items

02. Manufacture of rubber and plastic products

Manufacture of rubber tyres and tubes,

(a)

including

(i)

manufacture of rubber tyres for vehicles, equipment, mobile

machinery and other uses: pneumatic tyres, solid or cushion

tyres

(ii)

manufacture of inner tubes for tyres

(iii)

manufacture of interchangeable tyre treads, tyre flaps, “camel-

back” strips for retreading tyres and similar items

(b)

and excluding

(i)

manufacture of rubber repair materials which is a qualifying

activity in terms of paragraph 02.03 of this Schedule

(ii)

tyre and tube repair, fitting or replacement

Retreading and rebuilding of rubber tyres,

(a)

including

(i)

tyre rebuilding and retreading

(b)

and excluding

(i)

manufacture of rubber repair materials which is a qualifying

activity in terms of paragraph 02.03 of this Schedule

(ii)

repair of punctured tyres

Manufacture of other rubber products,

(a)

including

(i)

manufacture of other products of natural or synthetic rubber,

unvulcanized, vulcanised or hardened: rubber plates, sheets,

strip, rods, profile shapes, tubes, pipes and hoses, rubber

conveyor or transmission belts or belting, rubber hygienic

articles such as sheath contraceptives, teats, hot water bottles

and similar items, rubber articles of apparel, rubber floor

BUSINESS PROMOTION

coverings, rubberised textiles, rubber thread and rope,

rubberised yarn and fabrics, rubber rings, fittings and seals,

rubber roller coverings, inflatable rubber mattresses

(ii)

manufacture of rubber repair materials

(b)

and excluding

(i)

manufacture of tyre cord fabrics

(ii)

manufacture of apparel of elastic fabrics

(iii)

manufacture of rubber footwear

(iv)

manufacture of glues and adhesives based on rubber

(v)

manufacture of “camel-back” strips which is a qualifying

activity in terms of paragraph 02.01 of this Schedule

(vi)

manufacture of inflatable rafts and boats

(vii)

manufacture of mattresses of uncovered cellular rubber

(viii)

manufacture of rubber sports requisites which is a qualifying

activity in terms of paragraph 14.01 of this Schedule

(ix)

manufacture of rubber games and toys which is a qualifying

activity in terms of paragraph 15.01 of this Schedule

(x)

reclaiming of rubber which is a qualifying activity in terms of

paragraph 11.01 of this Schedule

Manufacture of plastic plates, sheets, tubes and profiles,

(a)

including

(i)

manufacture of semi-manufactures of plastic products: plastic

plates, sheets, blocks, film, foil, strip and similar items

(ii)

manufacture of finished plastic products: plastic tubes, pipes

and hoses, hose and pipe fittings

(b)

and excluding

(i)

manufacture of plastics in primary forms: polymers including

those of ethylene, propylene, styrene, vinyl chloride, vinyl

acetate and acrylics, polyamides, phenolic and epoxide resins

and polyurethanes, alkyd and polyester resins and polyethers,

silicones, ion-exchangers based on polymers, cellulose

(ii)

manufacture of plastic optical elements which is a qualifying

activity in terms of paragraph 08.04 of this Schedule

(iii)

manufacture of mattresses of uncovered cellular plastic

Manufacture of plastic packing goods,

(a)

including

(i)

manufacture of plastic articles for the packing of goods: plastic

bags, sacks, containers, boxes, cases, carboys, bottles and

similar items

(ix)

manufacture of instrument parts and accessories: metronomes,

tuning forks, pitch pipes, cards, discs and rolls for automatic

mechanical instruments and similar items

(x)

manufacture of whistles, call horns and other mouth blown

sound signalling instruments

(b)

and excluding

(i)

publishing and reproduction of pre-recorded sound and video

tapes and discs

(ii)

manufacture of microphones, amplifiers, loudspeakers, head-

phones and similar components which is a qualifying activity in

terms of paragraph 07.03 of this Schedule

(iii)

manufacture of record players, tape recorders and similar items

which is a qualifying activity in terms of paragraph 07.03 of

this Schedule

(iv)

manufacture of toy instruments which is a qualifying activity in

terms of paragraph 15.01 of this Schedule

14. Manufacture of sports goods

Manufacture of sports goods,

(a)

including

(i)

manufacture of articles and equipment for sports, outdoor and

indoor games such as hard, soft and inflatable balls, rackets,

bats and clubs, skis, bindings and poles, sailboards, requisites

for sport fishing including landing nets, requisites for hunting,

mountain climbing, leather sports gloves and sports headgear,

basins for swimming and paddling pools, ice-skates, roller-

skates, bows and crossbows and gymnasium or athletic

equipment

(b)

and excluding

(i)

manufacture of boat sails

(ii)

manufacture of sport clothing

(iii)

manufacture of saddlery and harness

(iv)

manufacture of sports footwear

BUSINESS PROMOTION

(v)

manufacture of weapons and ammunition

(vi)

manufacture of sports vehicles other than toboggans and the

like unless qualifying under paragraph 09 of this Schedule

(vii)

manufacture of boats

(viii)

manufacture of billiard tables and bowling equipment which is

a qualifying activity in terms of paragraph 15.01 of this

Schedule

(ix)

manufacture of whips and riding crops

15. Manufacture of games and toys

Manufacture of games and toys,

(a)

including

(i)

manufacture of dolls and doll garments and accessories

(ii)

manufacture of toy animals

(iii)

manufacture of wheeled toys designed to be ridden including

tricycles

(iv)

manufacture of toy musical instruments

(v)

manufacture of articles for funfair, table or parlour games

(vi)

manufacture of playing cards

(vii)

manufacture of pin-tables, coin operated games, billiards,

special tables for casino games, automatic bowling alley

equipment and similar items

(viii)

manufacture of electronic games: video games, chess and

similar games

(ix)

manufacture of reduced-size (“scale”) models and similar

recreational models, electrical trains, construction sets and

similar models

(x)

manufacture of puzzles and similar games

(b)

and excluding

(i)

manufacture of bicycles

(ii)

manufacture of festive, carnival or other entertainment articles

16. Building of pleasure and sporting boats

Building of pleasure and sporting boats

(a)

including

(i)

building of inflatables

(ii)

building of sailboats with or without auxiliary motor

(iii)

building of motor boats

(iv)

building of other pleasure and sporting boats such as canoes,

kayaks, skiffs and similar pleasure and sporting boats

provided such vessels are not used in a trade or business consisting of the

transportation of passengers or goods but including vessels, which

although used in such a trade or business, are so used for the

transportation and accommodation of passengers in vessels not having

more than thirty berths

(b)

and excluding

(i)

manufacture of marine engines which is a qualifying activity in

terms of paragraph 04.01 of this Schedule

(ii)

manufacture of sailboards which is a qualifying activity in

terms of paragraph 14.01 of this Schedule.

BUSINESS PROMOTION

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 2 Interpretation. — BUSINESS PROMOTION REGULATIONS Open official source

(1)

In these regulations, unless the context otherwise

requires

"Act" means the Business Promotion Act;

"Corporation" means

(a) for the purposes of regulation 11, the Institute for the

Promotion of Small Enterprise Limited;

(b) for the purpose of regulations 13 and 14(1) to (5),

Jobsplus;

(c) for the purpose of regulations 4, 5, 6, 7, 8, 9, 10, 12,

14(6) to (9), 18, 20, 28 and 30 to 39, the Malta

Development Corporation;

and for the purposes of the other regulations, the word

"Corporation" shall mean any of the above entities as the case may

require;

"medium-sized enterprise", "small enterprise" and "micro

enterprise" shall have the meaning assigned to them by regulation

3;

"Minister" mean s the Mi nister responsib le f or Econ omi c

Services and includes, to the extent of the authority given, any

person or authority authorised by him to act in that behalf for any

purpose of these regulations;

"qualifying expenditure" shall mean expenditure of a capital

nature -

(a) incurred in acquiring, developing or constructing

tangible fixed assets consisting of

(i)

land, industrial buildings or structures, including

warehouses and offices within an industrial

building or structure, but excluding showrooms;

or

(ii) plant and machinery, including computer

hardware and software and air conditioning

systems, (but excluding non- commercial

vehicles) and also including office furniture and

fittings or commercial vehicles as may be

certified by the Corporation as essential for the

implementation of a qualifying investment

project; or

(b) incurred in the acquisition or development of

technology or know-how whether this is patented or

not;

where the tangible and intangible assets referred to in paragraphs

(a) and (b) are used in the production of the income derived from

the activities referred to in article 3(1) of the Act; and

where the tangible or intangible assets in respect of which the

expenditure has been incurred is maintained for at least five years

or such other shorter period as the Corporation may deem

appropriate in view of the nature of the investment project; and

"investment project" shall include any qualifying expenditure

incurred by a company whether such expenditure is incurred over a

period of time or not and whether such expenditure is in respect of

a number of items or not

Provided that with respect to companies which do not

qualify as a medium or small sized enterprise, the qualifying

expenditure in terms of paragraph (b) shall not exceed twenty-five

per cent of the total qualifying expenditure

Provided further that the expenditure is incurred in relation

to the setting up of a new activity, the extension or expansion of an

existing activity or in relation to the commencement of an activity

which involves a change in the product or production processes

then undertaken by the company, and provided that the said activity

is carried out in Malta

Provided further that with respect to expenditure referred

to in paragraph (a) the expenditure is incurred on assets -

(i)

which are new or used in Malta for the first time

except when the assets consist of land or

buildings; and

(ii) in respect of which no income tax benefit has

previously been obtained under the Act or any

regulations made thereunder by any person who

is connected with the company claiming any

benefit contemplated by these regulations or the

Act; and, for the purposes of this sub-paragraph,

a person shall be considered to be connected to

such company if one is, directly or indirectly,

controlled or beneficially owned to the extent of

more than fifty per cent by the other or both are,

directly or indirectly, controlled or beneficially

owned to the extent of more than fifty per cent

by the same persons

Provided further that

(i)

immovable property held by title of

emphyteusis; and

(ii) any asset acquired under a contract of hire which

stipulates that ownership of the asset shall or

may pass to the lessee when a specified amount

has been paid,

shall, for the purposes of this definition, be deemed to be assets

acquired by the company

Provided further that with respect to the expenditure

incurred on the acquisition of assets referred to in paragraph (b)

such expenditure is incurred on assets which, in accordance with

generally accepted accounting principles, are amortizable and

which are purchased from third parties under market conditions;

"waste treatment" means physical, thermal, chemical or

biological processes, including sorting, which change the

characteristics of the waste in order to reduce its volume or

hazardous nature, facilitate its handling or enhance recovery, and

shall include waste management.

(2) Subject to the provisions of sub-regulation (1), terms and

expressions used in these regulations shall, unless the context

otherwise requires, have the meaning assigned to them in the Act.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 3 Definition of small and medium-sized enterprises. — BUSINESS PROMOTION REGULATIONS Open official source

(1)

Subject to the other provisions of this sub-regulation -

(a) a medium-sized enterprise is an enterprise which -

(i)

has fewer than two hundred and fifty employees;

and

(ii) has either an annual turnover not exceeding fifty

million euro (50,000,000.00) or a balance sheet

total not exceeding forty-three million euro

(43,000,000.00);

(b) a small enterprise is an enterprise which -

(i) has fewer than fifty employees; and

(ii) has either an annual turnover not exceeding ten

million euro (10,000,000.00) or a balance sheet

total not exceeding ten million euro

(10,000,000.00);

(c) a micro enterprise is an enterprise which -

(i) has fewer than ten employees; and

(ii) has either an annual turnover not exceeding two

million euro (2,000,000.00) or a balance sheet

total not exceeding two million euro

(2,000,000.00).

(2) Notwithstanding sub-regulation (1), except in the cases set

out in the proviso to sub-regulation (4)(b), an enterprise shall not

be considered a medium-sized, a small or a micro enterprise if

twenty-five percent or more of its capital or voting rights are

directly or indirectly controlled, jointly or individually, by one or

more public bodies and, for this purpose, a public body means and

includes

(a) the Government of Malta;

(b) any Government division or department;

(c) any local council set up under the Local Government

Act;

(d) any corporation or authority set up by an Act of

BUSINESS PROMOTION

Parliament;

(e) any foreign entity similar to a public body referred to

in the foregoing paragraphs.

(3) In determining the headcount and the financial ceilings of

an enterprise for the purpose of this regulation, the following

provisions shall apply

(a) in the case of an autonomous enterprise the data,

including the number of staff, shall be determined

exclusively on the basis of the accounts of that

enterprise;

(b) in the case of an enterprise that is not an autonomous

enterprise, the data, including the number of staff,

shall be the aggregate of

(i)

the data determined on the basis of the accounts

and other data of the enterprise or, where they

exist, the consolidated accounts of the enterprise

or the consolidated accounts in which the

enterprise is included through consolidation;

(ii) the data of any partner enterprises of the

enterprise in question, which aggregation shall

be made in proportion to the percentage of the

capital or voting rights, whichever is the greater,

held directly by each such partner enterprise in

the enterprise in question or by the enterprise in

question in each such partner enterprise, as the

case may be

Provided that in the case of cross holdings

reference shall be made to the greater of the

holdings;

(iii) one hundred percent of the data of any enterprise

which is linked directly or indirectly to the

enterprise in question, unless already included

through consolidation in the accounts;

(c) in the application of paragraph (b)(ii), the data of a

partner enterprise shall be the aggregate of the data

determined on the basis of its accounts and its other

data, consolidated if they exist, and one hundred

percent of the data of any enterprises which are linked

to that partner enterprise, unless already included

through consolidation;

(d) in the application of paragraphs (b)(iii) and (c), the

data of linked enterprise shall be the aggregate of the

data determined by reference to its accounts and other

data, consolidated if they exist, and a percentage of the

data of the partner enterprises of that linked enterprise,

if any, which percentage shall be established as

provided in paragraph (b)(ii) unless already included,

at least to the extent of that percentage, through

consolidation;

(e) where in the consolidated accounts no staff data

appears for a given enterprise, staff figures are

calculated by aggregating proportionally the data from

its partner enterprises and by adding the data from the

enterprises to which the enterprise in question is

linked.

(4)

In this regulation -

(a) an "autonomous enterprise" is any enterprise which is

not a partner enterprises or a linked enterprises;

(b) two enterprises are partner enterprises of each another

if they are not linked enterprises and if one of them

holds, either solely or jointly with one or more linked

enterprises, twenty-five percent or more of the capital

or voting rights of the other

Provided that an investor which is not linked,

either individually or jointly, to an enterprise shall not

be deemed to a partner enterprise of that enterprise,

even if the said twenty-five percent threshold is

exceeded, if that investor falls within any of the

following categories

(i)

public investment corporations, venture capital

companies, individuals or groups of individuals

with a regular venture capital investment

activity who invest equity capital in unquoted

businesses ("business angels"), provided the

total investment of those business angels in the

same enterprise is less than one million and two

hundred

and

fifty

thousand

euro

(1,250,000.000);

(ii) universities or non-profit research centres;

(iii) institutional investors, including regional

development funds;

(iv) autonomous local authorities with an annual

budget of less than ten million euro

(10,000,000.00) and fewer than five thousand

inhabitants;

(c) two enterprises are linked enterprises if there is

between them any of the following relationships

(i)

one of them has a majority of the shareholders’

or members’ voting rights in the other;

(ii) one of them has the right to appoint or remove a

majority of the members of the administrative,

management or supervisory body of the other;

(iii) one of them has the right to exercise a dominant

influence over the other pursuant to a contract

entered into with that other enterprise or to a

provision in its memorandum or articles of

association

Provided that investors listed in the proviso to

paragraph (b) shall not be deemed to exercise a

dominant influence if they do not involve

themselves directly or indirectly in the

management of the enterprise in question,

without prejudice to their rights as stakeholders;

(iv)

one of them, being a shareholder in or member

of the other enterprise, controls alone, pursuant

to an agreement with other shareholders in or

members of that other enterprise, a majority of

the shareholders’ or members’ voting rights in

that enterprise;

(v)

one of them has any of the relationships

mentioned above with the other through one or

more other enterprises or any one of the

investors listed in the proviso to paragraph (b);

(vi)

one of them has any of the relationships

mentioned above with the other through a

natural person or a group of natural persons

acting jointly and the enterprises engage in their

activity or in part of their activity in the same

relevant market or in an adjacent market, that is

to say, the market for a product or service that is

situated directly upstream or downstream of the

relevant market.

(5) The determination of whether the conditions referred to in

sub-regulation (1)(a) and (b) and in sub-regulation (2)(a) and (b)

are satisfied shall be made by reference to the enterprise’s last

approved financial statements

Provided that where the company’s last approved financial

statements do not refer to any of the enterprise’s last two financial

periods or where financial statements have not yet been approved,

the determination of whether or not a company satisfied those

conditions shall be made by the Corporation on the basis of

information provided by the company and any other information

available to the Corporation

Provided, moreover, that an enterprise may or, at the

request of the Corporation, shall, make a declaration of status as an

autonomous enterprise, partner enterprise or linked enterprise,

including the data regarding the ceilings set out in this regulation.

The declaration may or, as the case may be, shall be made even if

the capital is spread in such a way that it is not possible to

determine exactly by whom it is held, in which case the enterprise

shall state in good faith whether or not it can legitimately presume

that it is not owned as to 25% or more by one enterprise or jointly

by enterprises linked to one another. Any such declarations shall be

without prejudice to the checks and investigations provided for in

the Act, in these regulations or in any other regulations made under

the Act.

(6) For the purpose of determining whether an enterprise

satisfies the conditions set out in sub-regulations (1) and (2) -

(a) the annual turnover of that enterprise shall be stated in

euro; and

(b) the total assets of that enterprise shall be stated in

euro

Provided that the amount to be taken into account for

determining the turnover shall be calculated excluding value added

tax and other indirect taxes.

(7) If, in respect of an enterprise, it has already been

established by reference to its financial statements for a period of at

least twelve months whether or not it qualifies as a medium-sized

enterprise, a small enterprise or a micro-enterprise, it shall only

acquire or lose such a status if the conditions set out in sub-

regulations (1) and (2) are satisfied or are no longer satisfied, as the

case may be, for two consecutive accounting periods.

(8)

For the purpose of this regulation -

(a) the following shall be deemed to be employees of an

enterprise

(i) employees of the enterprise;

(ii) persons working for the enterprise being

subordinated to it and deemed to be employees

in terms of the law regulating their employment;

(iii) owner-managers;

(iv) partners engaging in a regular activity in the

enterprise and benefiting from financial

advantages from the enterprise;

(b) apprentices or students engaged by an enterprise in

vocational training with an apprenticeship or

vocational training contract shall not be deemed to be

employees of that enterprise;

(c) the number of full-time employees shall be arrived at

by dividing the number of employees who worked full

time for the enterprise at the end of each whole month

comprised in an accounting period by the number of

months in that accounting period.

(9) For the purposes of sub-regulations (1) and (2), the number

of employees shall be determined by adding to the number of full-

time employees the result obtained from dividing the number of

hours worked by employees, who are not employed on a full-time

basis, by one thousand and seven hundred and sixty

Provided that employees who are on maternity or parental

leave shall not be deemed to have worked for the duration of that

leave.

(10) For the purposes of this regulation, if a financial period of a

company, other than the first financial period, is less or more than

twelve months, the amounts referred to in sub-regulation (1)(b) and

in sub-regulation (2)(b) and the number of hours worked by

employees who are not employed on a full-time basis referred to in

sub-regulation (9) shall be divided by three hundred and sixty five

and then multiplied by the number of days comprised in that

accounting period.

(11) For the purposes of this regulation, "enterprise" shall mean

an enterprise which carries on a trade or business in Malta

Provided that this sub-regulation shall not be applicable for

the purpose of determining whether or not an enterprise is a small,

medium-sized or micro enterprise in order to establish

(i)

the tax benefits such enterprise will be entitled

to in year of assessment 2004 and subsequent

years of assessments;

(ii) the other benefits such enterprise will be entitled

to as from 1 January 2003.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 4 Reduced rates of income tax. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where a company, throughout a relevant accounting

period, satisfies the conditions set out in this regulation, the profits

derived by such company from its trade or business carried out in

Malta shall -

(a) with effect from the year of assessment from which the

provisions of this regulation become applicable and

the six subsequent years of assessment, be subject to

income tax at the rate of 5%;

(b) for the six years of assessment immediately following

the years of assessment as determined in accordance

with paragraph (a), be subject to income tax at the rate

of 10%;

(c) for the five years of assessment immediately following

the years of assessment as determined in accordance

with paragraphs (a) and (b), be subject to income tax

at the rate of 15%

Provided that the last year of assessment in respect of

which the provisions of this regulation shall be applicable shall be

year of assessment 2021

Provided further that, subject to the immediately preceding

proviso, the Corporation shall confirm to each company qualifying

in terms of this regulation the minimum number of years of

assessment, which shall not exceed ten years of assessment, in

r e s p e c t o f wh i c h t he pr o v i s i on s o f th i s r e g u l a t i on s h a l l be

applicable to that company; and the Corporation may, not earlier

than twelve months prior to the expiration of such period, renew

such confirmation for a further period not exceeding five years

Provided further that, without prejudice to a company’s

rights with respect to any period confirmed by the Corporation in

terms of the immediately preceding proviso, the Minister may by

notice in the Gazette determine that the last year of assessment in

r e s p e c t o f wh i c h t he pr o v i s i on s o f th i s r e g u l a t i on s h a l l be

applicable shall be a year of assessment prior to year of assessment

2021

Provided further that companies referred to in sub-

regulation (2)(a) shall only be eligible to be taxed at the rates

stipulated in paragraphs (b) and (c) of this sub-regulation, and in

such case the rate of tax referred to in paragraph (b) shall be

applicable for six years of assessment with effect from the year of

assessment from which the provisions of this regulation become

applicable and the rate of tax referred to in paragraph (c) shall be

applicable for the following five years of assessment.

(2) For the purposes of sub-regulation (1), the year of

assessment from which the provisions of this regulation shall

become applicable is -

(a) year of assessment 2002, or any of the subsequent two

years of assessment in the case of -

(i)

a company incorporated in Malta and which

existed on the day immediately preceding the

date of the coming into force of this regulation;

and

(ii) a company incorporated outside Malta and

which was registered as an oversea company in

terms of the Companies Act on the day

immediately preceding the date of the coming

into force of this regulation,

as shall be determined by the company by notice to the

Corporation by not later than 30 April 2003;

(b) any of the first three years of assessment of the

company in the case of any other company as shall be

determined by the company by the end of its third year

of assessment,

so however that, if no such notice is given by the aforementioned

dates, the earlier year from the available years of assessment shall

be the first year of assessment from which the provisions of this

regulation shall be applicable

Provided that where a company as is referred to in

paragraph (a) carries on a trade consisting of a project in respect of

which the Corporation has, prior to the date referred to in the said

paragraph (a), granted its approval, conditional or otherwise, that a

company which undertakes the said project shall qualify for any of

the incentives provided by articles 4, 5 or 5A of the Act, such

company shall, if it has not started utilising the said incentive, be

deemed to be a company falling under paragraph (b). A certificate

issued by the Corporation, to the effect that a company is deemed

to be a company falling under paragraph (b), shall constitute

conclusive evidence of the facts stated therein for all purposes of

law and a copy of any such certificate shall be forwarded by the

Corporation to the Commissioner of Inland Revenue

Provided further that a company to which the preceding

proviso refers shall be deemed to be a company falling under

paragraph (b) as long as it satisfies such of those conditions

contained in the aforementioned Corporation’s approval as the

Corporation may specify in the certificate referred to in the

preceding proviso.

(3) Subject to the provisions of sub-regulation (4), a company

shall qualify for the benefit provided by sub-regulation (1) if its

trade or business, in Malta, consists solely of one or more of the

following qualifying activities

(a) any one or more of the activities set out in the

Schedule, which is published in the English language

only;

BUSINESS PROMOTION

(b) the repair, improvement or maintenance of any of the

following

(i)

yachts or motor boats having a length of at least

eight metres which are not used in a trade or

business consisting of the transportation of

passengers or goods but including yachts or motor

boats, which although used in such a trade or

business, are so used for the transportation and

accommodation of passengers in yachts or motor

boats not having more than thirty berths, aircraft,

engines or equipment incorporated or used in

such vessels or aircraft; or components of such

engines or equipment;

(ii) turbines;

(iii) gantry cranes, quay cranes, reach stackers, tug

masters and large fork lifters (or their

equipment) which are used to handle containers

in a port;

(iv) containers which are fifteen feet or more in

length and which are used for the transportation

of merchandise;

(v) goods the manufacture of which would fall

within any one or more of the activities referred

to in paragraph (a), and which goods have been

manufactured by the company;

(c) repair, maintenance, installation and commissioning of

marine electrical and electronic systems;

(d) software development, including debugging of

software and the installation, implementation, support

and maintenance of the software, and the provision of

training on the use of the software where the

installation, implementation, support, maintenance or

training is carried out by the company which has

developed the said software in Malta or, with respect

to a specific project, is mainly carried out in relation to

software developed by the company in Malta;

(e) development and maintenance of information and

content mainly for international dissemination through

electronically accessed media including the internet,

the world wide web, WAP services, interactive

television, compact discs and intranets;

(f)

research and development, including the design or

development of goods or the development of

production processes or methods;

(g)

waste treatment;

(h) the activities set out in article 11 of the Malta

Freeports Act and carried on mainly in a freeport as

defined by that Act, by a company licensed under that

Act;

(i)

the production of audio visual productions consisting

of feature films, television films, advertising

programmes or advertisements, and documentaries;

(j)

biotechnology, comprising

(i)

the production or development of intellectual

property or goods; or

(ii) the rendering of services;

resulting from, or related to, the study, research,

discovery, application, modification or development of

living organisms or materials derived from them

Provided that a company carrying out the activities set out

under paragraphs (g), or (j) shall only qualify for the benefit

provided by this regulation if the project is approved by the

Corporation and, in giving its approval, the Corporation may

impose such conditions as it deems fit.

(4) A company shall not qualify for the benefit provided by

sub-regulation (1) if -

(a) the company sells by retail and, for this purpose, a

company shall be deemed not to sell by retail if its

sales of goods or services are made to -

(i)

a person who carries on a trade and the goods or

services so sold to such person are either resold

by such person or are used by such person for

the purpose of his trade; or

(ii) a person, other than an individual, who uses

those goods or services for the purpose of an

undertaking carried on by such person;

(b) the company’s trade or business includes any one of

the following activities

(i)

dividing, sorting, packaging, mixing without

changing the character of the good, drying,

labelling, or other similar processes or any

combination of such processes to goods which

are acquired in bulk merely to prepare those

goods for sale or distribution, excluding goods

in respect of which the said company carries on

any other activity referred to in sub-regulation

(3)(a);

(ii) the assembly of any goods where -

(1) the final assembled good is clearly

recognisable

from

the

individual

components or parts from which it is

assembled without regard being had to any

exterior casing of the good; and

(2) the components and parts from which the

good is assembled are such that the good is

nearly complete and the assembly work

and the supervision of such assembly work

only require the employment of almost

exclusively unskilled workers,

BUSINESS PROMOTION

such that the assembly operation is of a spurious

nature when considered in the light of

manufacturing activities;

(iii) without prejudice to sub-regulation (3)(b) and

(c), the repair, maintenance, preservation,

improvement, reconditioning, refurbishing or

restoration of any good or any combination of

such activities where such activities do not

impose on such goods a change in their

character;

(iv) without prejudice to sub-regulation (3)(c), the

installation, commissioning or assembly of

goods on site, where the said goods have not

been manufactured by the company which is

installing, commissioning or assembling the

goods on site

Provided that the provisions of this paragraph shall

not be applicable to a company which carries on only

any one or more of the activities set out in sub-

regulation (3)(b) to (j)

Provided further that the provisions of this

paragraph shall not be applicable to a company which

carries on any assembly work as, or as part of, the

activities referred to in sub-regulation (3)(h);

(c) the company, being eligible for the benefits provided

by articles 4, 5 or 5A of the Act, has not, in terms of

article 34(2) of the Act, waived its right to be eligible

for the benefits provided by those articles for the year

of assessment in question and for subsequent years of

assessment

Provided that a company which has not waived its

right to be eligible to the benefits provided by articles

4, 5 and 5(a) of the Act as aforesaid may make its

determination pursuant to sub-regulation (2) by

notifying the Corporation.

(5)

(a) A company shall be eligible to qualify for the benefits

provided by this regulation if it has been determined

that it is so eligible by the Corporation.

(b) For the purpose of making a determination pursuant to

paragraph (a), the Corporation shall consider whether,

given its activities, the company satisfies the

conditions set out in sub-regulations (3) and (4).

(c) For the purposes of paragraph (b), the Corporation may

request such information and explanations as it deems

fit and may visit the premises of the company.

(d) On being satisfied that a company satisfies the

conditions set out in sub-regulations (3) and (4), the

Corporation shall provide the said company with a

certificate signifying the accounting period from which

the company does satisfy the said conditions, and the

company’s entitlement to the benefit provided by this

regulation shall be conditional on the production of

this certificate by the said company. A copy of any

such certificate shall be forwarded by the Corporation

to the Commissioner of Inland Revenue.

(e) The certificate referred to in paragraph (d) shall

constitute prima facie, and not conclusive, proof that

the company qualifies for the benefit provided by this

regulation.

(f) The Corporation shall communicate its decision as to

whether a company satisfies the conditions set out in

sub-regulations (3) and (4) within sixty days from the

receipt of all information requested by the Corporation

for the purpose of making its determination.

(g) The Corporation may, as and when it deems fit, request

information and explanations from a company which

has been furnished with a certificate pursuant to

paragraph (d), and may visit the premises of such a

company in order to determine whether the company is

still eligible to qualify for the benefits provided by this

regulation.

(6) A company wishing to avail itself of the benefits provided

by this regulation shall apply for a determination referred to in sub-

regulation (5) by submitting an application to the Corporation.

(7) A company shall only be entitled to benefit from the

provisions of this regulation if, with the submission of its income

tax return for every year of assessment in respect of which it claims

a benefit in accordance with this regulation, it submits -

(a) a declaration, signed by all the directors of the

company or by the company secretary where such

declaration is approved by the board of directors of the

company, confirming that throughout the relevant

accounting period the company’s trade or business

consisted solely of the activities referred to in sub-

regulation (3) and that the company is not disqualified

from benefiting from the provisions of this regulation

by virtue of sub-regulation (4). Where the declaration

is signed by the company secretary it shall also state

(i)

whether all the directors of the company were

present at the meeting approving the declaration

and, if not all the directors were present,

whether the meeting was properly convened as

required by the company’s memorandum and

articles;

(ii) whether the declaration was unanimously

approved by all the directors present at the

meeting and, if approval was not unanimous, the

number of votes against and the number of votes

for the motion; and

(b) a declaration, signed by the auditor of the company for

the accounting period in question, confirming that, to

the best of his knowledge and belief, the declaration

referred to in paragraph (a) is correct.

(8) Where a company (hereinafter in this sub-regulation

referred to as the "relevant company") carries on a trade or business

which consists solely or mainly in the mere expansion, duplication

or replacement of a trade or business formerly carried on in Malta

by any company in any way directly or indirectly connected or

associated with the relevant company through shareholding, voting

or other ownership or controlling rights, irrespective of the person

in whom such rights are or may have been vested, the following

provisions shall apply

(a) where such other company is a company to which sub-

regulation (2)(a) applies, the relevant company shall,

even if it is incorporated in Malta or registered as an

oversea company after the date referred to in that sub-

regulation, be deemed to be a company to which the

said sub-regulation applies; and the years of

assessment referred to in sub-regulation (1)(b) and (c)

shall, with respect to the relevant company, commence

from year of assessment from which the provisions of

this regulation became applicable in respect of the

other company in accordance with the provisions of

sub-regulation (2);

(b) where such other company is a company to which sub-

regulation (2)(b) applies and the relevant company is

also a company to which the said sub-regulation

applies, the years of assessment referred to in sub-

regulation (1)(a), (b) and (c) shall, with respect to the

relevant company, commence from the year of

assessment from which the provisions of this

regulation became applicable for the other company in

accordance with the provisions of sub-regulation (2)

Provided that the provisions of article 25(3), (4) and (5) of

the Act shall be applicable to this condition in like manner as they

are applicable to article 4(1)(c) of the Act.

(9) Profits which are taxed at a reduced rate of income tax as

provided by sub-regulation (1) shall, for the purposes of the Income

Tax Act, be allocated to the Maltese Taxed Account and article 67

of that Act shall not be applicable to any distribution of such profits

whether or not such distribution is made by the company qualifying

from the benefit provided by this regulation or by any other

company which, directly or indirectly, receives dividends which

include the profits which have been taxed at a reduced rate in

accordance with the provisions of this regulation.

(10) The provisions of article 25 of the Act shall, as far as they

are applicable, apply to the incentive provided by this regulation

and, for this purpose, references in that article to a qualifying

company shall include references to a company qualifying for the

benefit provided by this regulation; and subarticles (1) and (2)

thereof shall apply with respect to the years of assessment as

determined in accordance with sub-regulations (1) and (2).

(11) In this regulation "relevant accounting period" shall mean

the accounting period as determined in accordance with article 11

of the Income Tax Act which ends in the year preceding year of

assessment 2002 and subsequent years of assessment, as the case

may require.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 5 Investment tax credits. — BUSINESS PROMOTION REGULATIONS Open official source

(1) A company which qualifies for the benefit provided by

regulation 4 or which would have so qualified, but for the fact that

the years of assessment in respect of which it may so qualify have

not, as elected for by the said company, yet commenced or have

elapsed, shall, in respect of year of assessment 2002 and

subsequent years of assessment, be entitled to an investment tax

credit which tax credit shall, with respect to an investment project

approved in writing by the Corporation before its setting up, be

calculated either -

(a) as a percentage of the qualifying expenditure incurred

by such company in the year preceding the year of

assessment in question; or

(b) in accordance with the provisions of sub-regulations

(3) to (11)

Provided that the total amount of the investment tax credit

that may be claimed in terms of this regulation for a given

investment project shall be such that the conditions set out in

regulations 12 and 18 are satisfied.

(2) The percentage referred to in sub-regulation (1)(a) shall, in

the case of a company which qualifies as a small-sized enterprise,

not exceed 50%, in the case of a company which qualifies as a

medium sized enterprise the said percentage shall not exceed 40%,

and in the case of any other company the said percentage shall not

exceed 30%.

(3) A company may claim an investment tax credit by

reference to the wage costs pertaining to the jobs created, in Malta,

as a result of an investment project the expenditure on which

constitutes qualifying expenditure.

(4) For the purposes of sub-regulation (3), the investment tax

credit based on job creation shall be a percentage of the wage cost

for the first twenty-four month period of the employment of an

individual in respect of whom the job was created.

(5) In the case of a company which qualifies as a small-sized

enterprise, the percentage referred to in sub-regulation (4) shall not

exceed 50%, in the case of a company which qualifies as a medium

sized enterprise the said percentage shall not exceed 40%, and in

the case of any other company the said percentage shall not exceed

30%.

(6) The amount of investment tax credit based on job creation

which a company may claim in a year of assessment shall be based

on the wage cost incurred by that company in the accounting period

ending in the year preceding that year of assessment.

(7) A company shall be considered to have created a job as a

result of an investment project for those individuals who are

employed by the company during the employment qualifying

period as defined in sub-regulation (9), as long as the employment

of any such individual is not in replacement of another individual

and provided that such employment is not terminated before the

lapse of five years from the date on which they were employed

Provided that for the purpose of determining whether jobs

have been created, individuals who are employed by the company

on a part-time basis shall be deemed to be a number of full-time

employees as is produced by dividing the number of hours worked

by such part-time employees by one thousand and seven hundred

and sixty

Provided further that where the accounting period ending

in the year preceding a year of assessment is more or less than

twelve months, the number of hours worked by part-time

employees shall be divided by an amount which shall be arrived at

by dividing the amount of one thousand and seven hundred and

sixty by three hundred and sixty-five and then multiplying the

result by the number of days comprised in that accounting period.

(8) For the purpose of determining whether an individual has

been employed by a company for the required five year period

referred to in sub-regulation (7), it shall be deemed that the date of

commencement of employment of an individual who has been

employed by that company in replacement of another individual,

whose employment was terminated for whatever reason, shall be

the date of commencement of employment of the individual whose

employment was replaced; provided that any such individual is

employed within six months of the date of termination of

employment of the individual whose employment is replaced.

(9) For the purposes of this regulation, the employment

qualifying period shall be the period commencing on the day which

precedes the day on which the assets pertaining to the investment

project are first employed by the company by one hundred and

eighty-three days, up to the third anniversary of the date of

completion of the investment project.

(10) A company wishing to claim an investment tax credit for a

year of assessment based on job creation in accordance with sub-

regulations (3) to (9) shall submit details of its investment project

and of the individuals employed as a result of that investment

project to the Corporation for its approval and shall, for each year

comprised in the employment qualifying period, submit further

details with respect to the same investment project consisting of

further amounts invested, termination of employees previously

detailed as having been employed and new employees

distinguishing between employees in respect of whom new jobs

have been created and employees employed in replacement of

employees whose employment has been terminated as well as the

wage costs in respect of which a credit is to be claimed in terms of

this regulation for that year of assessment.

(11) The Corporation, on being satisfied with the submissions

referred to in sub-regulation (10), and within sixty days from the

receipt of all relevant information it may request, shall issue a

certificate setting out the investment tax credits to which the

company is entitled to.

(12) A company which is entitled to an investment tax credit in

respect of a year of assessment shall be entitled to deduct from the

amount of income tax which is due on its chargeable income

derived from its trade or business for that year of assessment the

amount of the investment tax credit and, where the investment tax

credit, for any year of assessment, exceeds the income tax payable

by such a company for that year, the excess shall be added to the

investment tax credit for the following year and deemed to be part

of that investment tax credit, or if there is no such investment tax

credit for that year, be deemed to be the investment tax credit for

that year and so on for subsequent years

Provided that so much of the investment tax credit which is

not so utilised at the end of any year and which is therefore carried

forward to be added to the investment tax credit of the following

year of assessment and deemed to be part of that investment tax

credit or to be deemed to be the investment tax credit for that year,

shall be increased by seven per cent per annum or by such other

rate as may be prescribed by the Minister by notice in the Gazette;

and where any part of the investment tax credit as so increased is

again not utilised, so much of it as is not utilised shall be further

increased by the said percentage and carried forward to the

following year and so on for subsequent years

Provided further that an investment tax credit may only be

deducted from the tax due on chargeable income which is derived

from one or more of the activities referred to in regulation 4(3).

(13) The provisions of article 25 of the Act shall, as far as is

applicable, apply to the incentive provided in terms of this

regulation and for this purpose references in that article to a

qu a li fy in g co mp a ny sh a l l in clude r efe rences to a company

qualifying for the benefit provided by this regulation.

(14) Where a company has benefited from the provisions of this

regulation, the investment tax credit shall be deemed to have

relieved from tax so much of that company’s chargeable income

which, when m ultipl ied by t he rates of t ax at which i t was

chargeable in that year, is equal to the investment tax credit, and

where such chargeable income has been taxed at different rates of

tax the investment tax credit shall first be deemed to have relieved

that part of the income which has been taxed at the lowest rate; and

where the company or any subsequent company distributes the

income which is so deemed to have been relieved from tax, such

company or companies shall state in the dividend warrant

pertaining to any such distribution that such income has been

relieved from tax by an investment tax credit in accordance with

this regulation; and the tax which has been so relieved shall not be

available for refund for any purpose of the Income Tax Acts.

(15) The chargeable income which is deemed to have been

relieved from tax in accordance with sub-regulation (14) shall, for

the purposes of the Income Tax Act, be allocated to the Maltese

Taxed Account of the company in question and upon distribution

shall be exempt from income tax to the same extent as dividends

referred to in article 9 of the Act, and for this purpose references in

that article to a qualifying company shall include references to a

company qualifying for the benefit provided by this regulation.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 6 Value added incentive scheme. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where a qualifying company, being a company which

qualifies as such in terms of article 3(1)(a) and (b) of the Act,

throughout a relevant accounting period, satisfies the conditions set

out in this regulation, an amount of the company’s profits as is

determined in accordance with sub-regulation (3), shall -

(a) with effect from the year of assessment from which the

provisions of this regulation may become applicable

and the six subsequent years of assessment, be subject

to income tax at the rate of 5%;

(b) for the six years of assessment immediately following

the years of assessment as determined in accordance

with paragraph (a), be subject to income tax at the rate

of 10%;

(c) for the five years of assessment immediately following

the years of assessment as determined in accordance

with paragraphs (a) and (b), be subject to income tax

at the rate of 15%

Provided that the last year of assessment in respect of

which the provisions of this regulation shall be applicable shall be

year of assessment 2021

Provided further that, subject to the immediately preceding

proviso, the Corporation shall confirm to each company qualifying

in terms of this regulation the minimum number of years of

assessment, which shall not exceed ten years of assessment, in

r e s p e c t o f wh i c h t he pr o v i s i on s o f th i s r e g u l a t i on s h a l l be

applicable to that company; and the Corporation may, not earlier

than twelve months prior to the expiration of such period, renew

such confirmation for a period not exceeding five years

Provided further that, without prejudice to a company’s

rights with respect to any period confirmed by the Corporation in

terms of the immediately preceding proviso, the Minister may by

notice in the Gazette determine that the last year of assessment in

r e s p e c t o f wh i c h t he pr o v i s i on s o f th i s r e g u l a t i on s h a l l be

applicable shall be a year of assessment prior to year of assessment

2021

Provided further that companies referred to in sub-

regulation (2)(a) shall only be eligible to be taxed at the rates

stipulated in paragraphs (b) and (c) hereof, and in such case the rate

of tax referred to in paragraph (b) shall be applicable for six years

of assessment with effect from the year of assessment from which

the provisions of this regulation may become applicable, and the

rate of tax referred to in paragraph (c) shall be applicable for the

following five years of assessment.

(2) For the purposes of sub-regulation (1), the year of

assessment from which the provisions of this regulation become

applicable, is -

(a) year of assessment 2002, or any of the subsequent two

years of assessment in the case of -

(i)

a company incorporated in Malta and which

existed on the day immediately preceding the

date of coming into force of this regulation; and

(ii) a company incorporated outside Malta and

which was registered as an oversea company in

terms of the Companies Act on the day

immediately preceding the date of coming into

force of this regulation,

as shall be determined by the company by notice to the

Corporation by not later than 30 April 2003;

(b) any of the first three years of assessment of the

company in the case of any other company as shall be

determined by the company by the end of its third year

of assessment,

so however that if no such notice is given by the aforementioned

dates, the earlier year from the available years of assessment shall

be the first year of assessment from which the provisions of this

regulation shall be applicable.

(3) The amount of profits which shall be subject to reduced

rates of income tax in accordance with the provisions of sub-

regulation (1) shall be arrived at by the following formula

(a)

V c - V b

V b

















P c - P b

X

(c)









(b)

S c - S b

S b

Where

V c = value added in relevant accounting period

V b = average value added in base period

S c = sales in relevant accounting period

S b = average sales in base period

P c = profit in relevant accounting period

P b = average profit in base period

Provided that the amount of tax payable by a company as a

resu lt o f th is r egu lat io n shal l in n o case be lo wer th an th e

company’s average tax payable in the base period for year of

assessment 2002 which shall be arrived at by dividing the total of

the tax payable by the company for each year of assessment

pertaining to each accounting period comprised in the base period

by the number of days in those accounting periods and multiplying

the result thereof by the number of days comprised in the relevant

accounting period; and, for the purpose of this proviso, "tax

payable" shall comprise the tax payable by the company on its

chargeable income derived from its trade or business

Provided further that the total amount of profits which are

BUSINESS PROMOTION

brought to charge to tax in a year of assessment, shall in no case

exceed the actual amount of profits as calculated before the

application of the formula set out in this sub-regulation.

(4) A company shall only qualify for the benefit provided by

the provisions of this regulation if it satisfies all of the following

conditions

(a) the amount of value added resulting from the

company’s audited financial statements for the

relevant accounting period exceeds the average

amount of value added as shown in that company’s

financial statements covering the base period;

(b) throughout the base period and the relevant accounting

period it was a qualifying company;

(c) during the relevant accounting period it satisfied the

conditions set out in regulation 4(4), without regard

being had to the provisos to paragraph (b) thereto;

(d) during the relevant accounting period its trade or

business did not include the preparation or production

of "food in the course of catering" including -

(i)

meals or snacks including -

(1) hot and cold dishes including antipasto and

dessert;

(2) sandwiches, toast, potato chips, sausage

rolls, pizza, pastizzi, qassatat and similar

snacks;

(3) biscuits, cakes, confectionery and similar

items but excluding those sealed in a

package by the manufacturer and supplied

in that original sealed package, and those

items which individually weigh 500 grams

or more;

(4) food supplied in restaurants, cafeterias,

canteens,

bars

and

other

similar

establishments

(5) food prepared or produced for parties,

functions, weddings and similar events;

(6) food

prepared

or

produced

for

consumption on aircraft and vessels or for

consumption by persons pertaining to a

particular location or organisation,

including patients in hospitals or homes,

residents of hotels or guest houses,

workers in a particular workplace and the

preparation or production of food in

similar circumstances;

(ii) milk, milkshake, tea, coffee and chocolate

supplied in liquid form, excluding milk and

milkshake supplied by the manufacturer thereof

in bottles and containers for distribution to retail

outlets but including any form of drink which is

merely produced by adding liquid to powder or

substance and where such drink is produced in

order that it may be served in a bar, restaurant,

canteen, cafeteria or other establishment or place

to individuals for consumption.

(5)

For the purposes of this regulation

(a) except for paragraph (c), "profits" means the

company’s chargeable income for income tax purposes

after deducting any part thereof which does not accrue

to the company from its trade or business carried out in

Malta and after account has been taken of any

incentive or benefit obtained by the company under the

provisions of the Act or of these regulations;

(b) a loss made in any accounting period comprised in a

base period shall be deemed to be zero profits;

(c) "value added" means the aggregate of -

(i)

the profits, before taxation, derived by the

company from its trade or business, as reported

in the company’s financial statements for the

accounting period in question;

(ii) the wages and salaries paid by the company,

whether in cash or in kind, to its full-time and

part-time employees and which amounts have

been reported to the Inland Revenue Department

under the final settlement system rules or any

other rules complementing or replacing the

same;

(iii) the social security contributions paid by the

company in respect of the amounts referred to in

sub-paragraph (ii); and

(iv) the cost of services which are provided by a

company which, during the relevant accounting

period, did not qualify for any of the benefits

provided by this regulation, regulation 4 or

articles 4, 5 or 5A of the Act and which is,

directly or indirectly, controlled and beneficially

owned to the extent of more than ninety per cent

by the same persons and for the purpose of this

sub-paragraph (iv) the cost of services shall

mean the wages and salaries paid by such other

company, whether in cash or in kind, to its full

time and part-time employees that carried out

the services in question to the company claiming

the benefit of this regulation and which amounts

have been reported to the Inland Revenue

Department under the final settlement system

rules and any other rules complementing or

replacing the same;

(d) where a company was not in existence, or in the case

of a qualifying company incorporated outside Malta

such company was not registered as an oversea

company in accordance with the Companies Act,

during the accounting periods comprised in a base

period, the company shall, for the purpose of applying

the formula set out in sub-regulation (3), be deemed to

have had zero profits and zero value added in the base

period and the result of parts (a) and (b) of the said

formula shall be deemed to be one;

(e) the amount of total sales shall be calculated free on

board and where the sale is made pursuant to a

contract of works, the amount of total sales shall

include the uninvoiced value of any materials and

components provided by the customer;

(f)

the average value added, average sales and average

profits of a base period shall be arrived at by dividing

the aggregate sales, value added and profits of the

accounting periods comprised in the base period by the

number of days comprised in those accounting periods

and multiplying the result thereof by the number of

days comprised in the relevant accounting period;

(g) the base period shall be comprised of the accounting

periods the profits of which fall to be charged to tax in

the three years of assessment preceding the two years

of assessment which precede the year of assessment in

which the profits of the relevant accounting period fall

to be charged to tax

Provided that where the profits of the relevant

accounting period fall to be charged to tax in the

company’s fourth year of assessment, the base period

shall be comprised of the accounting period the profits

of which fall to be charged to tax in the company’s

first year of assessment; and where the profits of the

relevant accounting period fall to be charged to tax in

the company’s fifth year of assessment, the base period

shall be comprised of the accounting period or periods

the profits of which fall to be charged to tax in the

company’s first two years of assessment;

(h) where the result of parts (a) and (b) of the formula set

out in sub-regulation (3) is a negative amount, such

result shall be multiplied by "-1";

(i)

where the result of part (b) of the formula set out in

sub-regulation (3) is zero, the result of parts (a) and

(b) of the said formula shall be deemed to be one.

(6) Where a company which claims the benefit provided by

this regulation has, since the end of any accounting period

comprised in a base period, acquired the business, or part thereof,

of another person, who is connected with such company, whether

such acquisition is made by means of a merger or otherwise, the

value added, total sales and profits for that accounting period and

relating to the business acquired, shall be added to the value added,

total sales and profits respectively of the company for the purpose

of determining the amount of profits which shall be subject to

reduced rates of income tax in accordance with the provisions of

this regulation; and for the purposes of this sub-regulation, a person

shall be considered to be connected to such company if one is,

directly or indirectly, beneficially owned and controlled to the

extent of more than fifty per cent by the other or both are, directly

or indirectly, beneficially owned and controlled to the extent of

more than fifty per cent by the same persons.

(7) The provisions of regulation 4(5) to (11) shall apply

mutatis mutandis to the benefit provided by this regulation as they

apply to the benefit provided by that regulation.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 7 Rules for articles 6, 7, 24B and 24C of the Act. — BUSINESS PROMOTION REGULATIONS Open official source

(1) The provisions of articles 6, 24B and 24C of the Act,

and with effect from year of assessment 2003, the provisions of

article 7 of the Act, shall only be applicable to expenditure which is

qualifying expenditure as defined in these regulations

Provided that the provisions of article 7 of the Act shall

only be applicable with respect to qualifying expenditure incurred

in a c q u i r in g p l a n t o r m a c h i ne r y, o r in d u s tr i a l b ui l di n g s or

structures as set out in the said article

Provided further that the provisions of this sub-regulation

shall not affect the entitlement of any company in terms of article

5A of the Act, which article shall apply without regard being had to

the provisions of this sub-regulation..

(2) Where the provisions of articles 6 and 24B of the Act are

applied to a company which is not entitled to the incentive provided

by regulation 5, the reduction in the rate of income tax shall be

arrived at by multiplying nineteen and a quarter percentage points

by the rate of tax at which the company is chargeable to tax in a

year of assessment and dividing the product by the rate of income

tax prescribed by article 56(6) of the Income Tax Act

Provided that where the company’s chargeable income,

before applying the provisions of the said articles 6 and 24B of the

Act, is taxable at different rates of tax

(a) the reduction in the rate of tax shall be calculated

separately for each part of the company’s chargeable

income, as is so taxable at different rates of tax, as is

set in this sub-regulation; and

(b) the profits which shall first be deemed to be re-

invested for the purpose of article 6 of the Act shall, if

the company by extraordinary resolution so resolves,

be those profits which are chargeable to tax at the

highest rate.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 8 Soft loans. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where the Corporation is satisfied that the activities of

a qualifying company, being a company which qualifies as such in

terms of article 3(1)(a) and (b) of the Act, may contribute to the

development of the economy as is consistent with the aims and

objectives of the Government, the Corporation may grant loans to

the said company, which loans shall not exceed 75% of the

qualifying expenditure.

(2) The rate of interest charged by the Corporation on loans

granted in terms of this regulation shall be at least equal to a rate to

be arrived at by deducting two and a half percentage points from

the minimum discount rate established by the Central Bank of

Malta by means of directives issued in terms of the Central Bank of

Malta Act.

(3) The repayment of principal and the payment of interest on

any loan granted in terms of the provisions of this regulation shall

be secured by a general hypothec over the property of the company

receiving the loan in addition to any other security which the

Corporation may require

Provided that for the purposes of Title XXIII of Part II of

Book Second of the Civil Code, the Corporation may allow a

hypothecary debt in respect of a loan or other banking facility

granted by a financial institution to rank immediately prior to the

general hypothec or other security of the Corporation relative to

such loan

Provided further that the Corporation may accept a prime

bank guarantee or other similar security in respect of its loan

instead of or in addition to a general hypothec as aforesaid.

(4) The repayment of any loan granted under the provisions of

this regulation and the payment of interest thereon shall be made

within a period of time and at instalments to be agreed upon with

the Corporation, but such period shall in no case exceed ten years

from the date on which the first loan amount was received by the

company

Provided that, unless otherwise stipulated by the

Corporation, for the first two years of the duration of the loan the

company shall only be required to pay interest on the loan.

(5) Where the Corporation has approved that a loan be granted

b y i nstalm ent s, an d an y p art of such loan has not yet been

advanced, the Corporation may, without prejudice to any other

remedy, withhold any portion of the loan still outstanding if -

(a) any sum of money, whether principal or interest, due in

respect of any loan provided under this regulation or

article 16 of the Act, remains unpaid; or

(b) any prior loan made under this regulation or under

article 16 of the Act has not been applied for the

purpose for which it was made or has not been

expended in a careful, timely and economical manner;

or

(c) the company has gone into liquidation or has become

insolvent or has assigned property for the benefit of

creditors; or

(d) there has been a breach or non-observance of any

condition attached to the loan.

(6) The granting of loans made under this regulation shall not

be subject to the provisions of the External Transactions Act.

(7)

A company which carries on or intends to carry on the

activities referred to in regulation 4(3)(e), (f) or (j), either solely or

together with any of the activities referred to in article 3(1)(a) and

(b) of the Act shall, subject to the approval of the Corporation, be

entitled to the benefit provided by this regulation.

(8)

No new loans may be granted by the Corporation in terms of

the provisions of this regulation with effect from the first (1) day of

July of the year 2019.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 9 Loan interest subsidies. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where the Corporation is satisfied that the activities of

a qualifying company, being a company which qualifies as such in

terms article 3(1)(a) and (b) of the Act, may contribute to the

development of the economy as is consistent with the aims and

objectives of the Government, the Corporation may subsidise the

rate of interest payable by the company on loans which the said

company may take out in order to acquire additional assets to be

employed in the company’s trade or business to the extent that the

expenditure on such assets constitutes qualifying expenditure.

(2) The subsidy referred to in sub-regulation (1) shall be such

as to ensure that the rate of interest effectively borne by the

qualifying company shall not be less than the rate established in

accordance with regulation 8(2).

(3) The subsidy provided by this regulation shall be in respect

of loans taken to finance qualifying expenditure for which a soft

loan in terms of regulation 8 has not been granted.

(4) Loans which qualify for the interest rate subsidy

contemplated by this regulation shall be loans provided by banks

and other licensed financial institutions.

(5) A company which carries on or intends to carry on the

activities referred to in regulation 4(3)(e), (f) or (j) either solely or

together with any of the activities referred to in article 3(1)(a) and

(b) of the Act shall, subject to the approval of the Corporation, be

entitled to the benefit provided by this regulation

(6)

No new subsidies may be granted by the Corporation in terms

of the provisions of this regulation with effect from the first (1) day of

July of the year 2019.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 10 Loan guarantees. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where the Corporation is satisfied that the activities of

a qualifying company, being a company which qualifies as such in

terms of article 3(1)(a) and (b) of the Act, may contribute to the

development of the economy as is consistent with the aims and

objectives of the Government, the Corporation may guarantee loans

taken by the company to finance the acquisition of additional assets

to be employed in the company’s trade or business to the extent that

the expenditure on such assets constitutes qualifying expenditure.

(2) The loan guarantee referred to in sub-regulation (1) shall

not exceed 75% of the qualifying expenditure in respect of which

the loan is provided.

(3) For every loan guarantee provided, the Corporation shall

keep sufficient funds on investment in order to cover the maximum

amount of capital and interest that the Corporation may be required

to pay as guarantor at any point in time.

(4) When acting as guarantor, the Corporation shall retain its

rights to be subrogated in the rights of the lender once it effects a

payment under the guarantee.

(5) The Corporation shall only provide guarantees to banks

and other licensed financial institutions.

(6) A company which carries on or intends to carry on the

activities referred to in regulation 4(3)(e), (f) or (j) either solely or

together with any of the activities referred to in article 3(1)(a) and

(b) of the Act shall, subject to the approval of the Corporation, be

entitled to the benefit provided by this regulation.

(7) An unemployed person registering for employment under

P a r t O n e a n d P a r t Tw o o f t h e R e g i s t e r o f p e r s o n s s e e k i n g

employment maintained in terms of article 11 of the Employment

and Training Services Act, who undertakes or intends to undertake

at his own expense specialised information technology training,

may, subject to the approval of the Corporation, be granted the

benefit provided by this regulation.

(8)

No new loan guarantees may be granted by the Corporation

in terms of the provisions of this regulation with effect from the first

(1) day of July of the year 2019.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 11 Small and medium-sized enterprises. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where the Corporation is satisfied that a qualifying

company which is a small or medium-sized enterprise requires the

assistance of experts in a particular field, the Corporation may give

such an enterprise a grant which shall not exceed 50% of the cost of

the services of such experts

Provided that such a grant shall not be given in respect of

services which are of a continuous nature or are provided

p e r i o d i c a l l y a n d r e l a t e t o t h e e n t e r p r i s e ’s u s u a l o p e r a t i n g

expenditure such as routine consultancy services or advertising.

(2) Where the Corporation is satisfied that a qualifying

company which is a small or medium-sized enterprise may benefit

from its participation in fairs and exhibitions, the Corporation may

give such an enterprise a grant which shall not exceed 50% of the

costs of renting, setting up and running the stand; provided that

such a grant may only be provided in respect of the first

participation of an enterprise in a certain fair or exhibition.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 12 Maximum aid for investment projects for SMEs. — BUSINESS PROMOTION REGULATIONS Open official source

The aggregate amount that a company may benefit from in

respect of an investment project in terms of regulations 5, 8 and 9

and articles 6, 7, 24B and 24C of the Act shall not -

(i)

where the company qualifies as a

small-sized

enterprise, exceed the higher of -

(a) 50% of the qualifying expenditure pertaining to

that investment project; or

(b) 50% of the wage cost for the twenty-four month

period pertaining to individuals in respect of

whom jobs were created as determined by

regulation 5(7) to (11);

(ii) where the company qualifies as a medium-sized

enterprise, exceed the higher of -

(a) 40% of the qualifying expenditure pertaining to

that investment project; or

(b) 40% of the wage cost for the twenty-four month

period pertaining to individuals in respect of

whom jobs were created as determined by

regulation 5(7) to (11).

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 13 Incentives for job creation. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where the Corporation is satisfied that an enterprise

has creat ed a f ull -t im e j ob f or a qual ifyi ng in di vid ual , th e

Corporation shall issue a certificate confirming that the said

enterprise has created such job and is accordingly entitled to the

benefits of this regulation.

(2) An enterprise shall be considered as having created a job

for the purpose of sub-regulation (1) when it employs a qualifying

individual for a period of at least three years and where such

employment is not in replacement of that of another individual

whose employment was terminated by the enterprise; provided that

in the case of a qualifying individual qualifying as such in terms of

sub-regulation (13)(c), a job shall be considered as being created if

the previous employer of the qualifying individual confirms in

writing that the post vacated by the said individual need not be

replaced.

(3) The onus of proof that the employment of a qualifying

individual is not in replacement of that of another individual whose

employment was terminated by the enterprise shall lie with the

enterprise.

(4) Where an enterprise may be entitled to benefit from the

provisions of this regulation in respect of the employment of a

qualifying individual and in the six months immediately preceding

the date on which it has employed that qualifying individual, the

employment of another individual was terminated, whether or not

such employment was terminated by the enterprise, the enterprise

shall provide proof to the Corporation that the employment of the

qualifying individual is not in replacement of the employment of

any such other individual or that such other individual terminated

his employment voluntarily.

(5) For the purpose of determining whether a qualifying

individual has been employed by an enterprise for the required

three year period referred to in sub-regulation (2), it shall be

deemed that the date of commencement of employment of an

individual who has been employed by that enterprise in

repl acement of another individual, whose employment was

terminated by the enterprise as a consequence of that individual’s

gross misconduct or who terminated his employment with the

enterprise voluntarily, shall be the date of commencement of

employment of the individual whose employment was replaced;

and i t shal l be incu mben t on th e enterprise to pro ve t o th e

satisfaction of the Corporation that the individual so employed was

in replacement of the individual whose employment was terminated

as described in this sub-regulation.

(6) The benefits which an enterprise shall be entitled to under

the provisions of this regulation are the following

BUSINESS PROMOTION

(a) when the individual is a qualifying individual in terms

of sub-regulation (13)(a) or (b), the enterprise shall, in

computing its total income for the purposes of the

Income Tax Act, in respect of a year of assessment, be

entitled to deduct, in addition to the deductions

allowed by the provisions of that Act, an additional

65% of the wage cost of such a qualifying individual

incurred by the enterprise in the year preceding the

year of assessment in question

Provided that this additional deduction shall be due

only in respect of the wage cost incurred in respect of

the first twelve months of the qualifying individual’s

employment and if, before the expiration of sixty days

from the date on which the said qualifying individual

was employed, the enterprise submits to the

Corporation details of a training programme which the

qualifying individual is to undergo and such

programme meets the approval of the Corporation, the

additional deduction shall be increased to 100%;

(b) when the individual is a qualifying individual in terms

of sub-regulation (13)(c), the enterprise shall, in

computing its total income for the purpose of the

Income Tax Act, in respect of a year of assessment, be

entitled to deduct, in addition to the deductions

allowed by the provisions of that Act, an additional

150% of the wage cost of such qualifying individual

incurred by the enterprise in the year preceding the

year of assessment in question

Provided that this additional deduction shall be due

only in respect of the wage cost incurred in respect of

the first twenty-four months of the qualifying

individual’s employment and if, before the expiration

of sixty days from the date on which the said

qualifying individual was employed, the enterprise

submits details of a training programme which the

qualifying individual is to undergo and such

programme meets the approval of the Corporation, the

additional deduction shall be increased to 200%.

(7)

For the purposes of sub-regulation (6) -

(a) when the individual is a qualifying individual in terms

of sub-regulation (13)(a), the wage cost in respect of

which the additional deduction is due shall not exceed

125% of an amount established by the Corporation in

respect of that individual;

(b) when the individual is a qualifying individual in terms

of sub-regulation (13)(b), the wage cost in respect of

which the additional deduction is due shall not exceed

125% of the wage cost pertaining to such individual’s

main employment during the last twelve months prior

to the commencement of his employment with the

enterprise claiming the said additional deduction;

(c) when the individual is a qualifying individual in terms

of sub-regulation (13)(c), the wage cost in respect of

which the additional deduction is due shall not exceed

125% of the wage cost pertaining to such individual’s

main employment during the last twenty-four months

prior to the commencement of his employment with

the enterprise claiming the said additional deduction

Provided that, for the purposes of paragraphs (b) and (c),

the wage cost in respect of which the additional deduction is due

shall exclude any terminal benefits, benefits in respect of untaken

leave, bonuses or any other payments which are not part of the

basic emoluments payable to the qualifying individual.

(8) For the purposes of this regulation "wage cost" shall mean

the aggregate of the gross basic emoluments paid to a qualifying

i n d i v i d u a l a n d t h e e m p l o y e r ’s s h a r e o f t h e so c i a l s e c u r i t y

contributions payable in respect of those gross emoluments.

(9) An enterprise may, by application to the Corporation and in

lieu of claiming a deduction in terms of sub-regulation (6)(b), opt

to be given a cash grant to be calculated by multiplying 70% of the

additional deduction referred to in that sub-regulation by the rates

or rate of tax at which the enterprise was taxable in the year of

assessment in respect of which it became entitled to such additional

deduction if the qualifying individual has been employed for the

required three year period referred to in sub-regulation (2).

(10) Where an enterprise creates a job for a qualifying

individual who is registered as a disabled person with Jobsplus in

accordance with regulation 3 of the Persons with Disability

(Registration and Appeal) Regulations, the entitlement to an

additional deduction shall in all cases be of 200%.

(11) The benefits provided by this regulation shall only be due

to an enterprise on proof being shown that the qualifying individual

has been employed for the required three year period. During the

said three year period the collection of income tax which, but for

the provisions of this regulation, would be payable by an enterprise

shall be kept in abeyance and shall become due and payable only if

the employment of the qualifying individual is terminated before

the expiration of three years from the date of his employment, and

in any such case the tax shall be due and payable within sixty days

from the date of such termination of employment.

(12) For the purpose of this regulation, an "enterprise" shall

include the person who has claimed a deduction in accordance with

the provision s of t his regu lation, perso ns which co ntro l or

beneficially own, directly or indirectly, more than fifty per cent of

such person, and persons which are controlled or beneficially

owned, directly or indirectly, to the extent of more than fifty per

cent by such person.

(13) For the purposes of this regulation, a ‘qualifying

individual’ shall mean an individual who either -

(a) has been registered as unemployed for -

(i)

a minimum of one year prior to his employment

with the enterprise, in the case of an individual

who is either over forty years of age or is an

individual to whom sub-regulation (10) is

applicable; or

(ii) a minimum of two years prior to his employment

with the enterprise in the case of any other

individual;

(b) is identified by the Employment Re-structuring Unit

within the Ministry for Economic Services as being an

individual who may become redundant as a

consequence of a restructuring programme undertaken

by the enterprise with which he is employed; or

(c) is employed with a public sector related entity and

occupies a position as may be prescribed and, or

identified by the Minister by notice in the Gazette.

(14) Subject to the approval of the Corporation, the provisions

of this regulation shall also be applicable where an enterprise

engages an individual who is a qualifying individual in terms of

sub-regulation (13)(c) under a secondment arrangement between

the enterprise and the employer of such individual, and in granting

its approval the Corporation may impose such conditions as it may

deem fit.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 14 Training assistance. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where the Corporation is satisfied that any individual

employed by a qualifying company, being a company which

qualifies as such in terms of article 3(1)(a) and (b) of the Act, is a

full-time or part-time employee, whether employed under an

indefinite or definite contract (hereinafter in this regulation

referred to as the "employee") and that such employee is

undergoing training in accordance with a training programme

approved by the Corporation, a training grant may be given by the

Corporation to the company, which grant shall not exceed -

(a) where such grant is given to a company which

qualifies as a small or medium-sized enterprise -

(i)

45% of the eligible costs where the training

provided is specific training; and

(ii) 80% of the eligible costs where the training

provided is general training;

(b) where the grant is given to a company which does not

qualify as a small or medium-sized enterprise -

(i)

35% of the eligible costs where the training

provided is specific training; and

(ii) 60% of the eligible costs where the training

provided is general training.

(2)

For the purposes of sub-regulation (1), the eligible costs

are

(a) trainers’ fees and, or costs;

(b) trainers’ and the employee’s travel expenses;

(c) cost of consultancy services with regard to the training

project;

(d) the personnel costs relating to the employee: provided

that only the hours during which the employee

effectively participates in the training, after deduction

of any productive hours or of their equivalent, may be

taken into account.

(3)

In this regulation

(a) "general training" means training that provides

qualifications or skills that are transferable to other

enterprises or fields of work and thereby improving

the employability of an employee; and

(b) "specific training" means training involving tuition

which is applicable only to the employee’s present or

future position within the enterprise to which the grant

is given.

(4) The Corporation may, after having obtained the approval of

the Minister, provide grants in excess of the limits set out in this

regulation.

(5) A company which carries on or intends to carry on the

activities referred to in regulation 4(3)(e), (f) or (j), either solely or

together with any of the activities referred to in article 3(1)(a) and

(b) of the Act shall, subject to the approval of the Corporation, be

entitled to the benefit provided by this regulation.

(6) The Corporation may provide a training grant in the form

of a tax credit (hereinafter referred to as a "training tax credit") to a

company which carries on or intends to carry on an activity which

consists of the repair, improvement or maintenance of aircraft or of

engines or equipment incorporated in such aircraft; and where the

Corporation approves the granting of such a training tax credit, the

provisions of sub-regulations (7) to (9) shall apply.

(7) Without prejudice to the provisions of the proviso to sub-

regulation (9), the amount of the training tax credit which may be

approved by the Corporation shall not exceed the maximum amount

of g rants whi ch the Co rporation may gi ve in terms o f sub-

regulation (1).

(8) The amount of training tax credit which may be approved

by the Corporation in respect of a company for a year of assessment

shall be based on the eligible costs incurred by such company in the

accounting period ending in the year preceding that year of

assessment.

(9) A company entitled to a training tax credit may benefit

from that tax credit for year of assessment 2003 and subsequent

years of assessment by deducting from the amount of income tax

which is due on its chargeable income derived from its trade or

business for a year of assessment the amount of the training tax

credit and where the framing tax credit, for any year of assessment,

exceeds the income tax payable by such a company for that year the

excess shall be added to the training tax credit for the following

year and deemed to be part of that training tax credit, or if there is

no such training tax credit for that year, be deemed to be the

training tax credit for that year and so on for subsequent years

Provided that so much of the training tax credit which is not so

utilised at the end of any year and which is therefore carried

forward to be added to the training tax credit of the following year

of assessment and deemed to be part of that training tax credit or to

be deemed to be the training tax credit for that year, shall be

increased by seven per cent per annum or by such other rate as may

be further prescribed by the Minister by notice in the Gazette; and

where any part of the training tax credit as so increased is again not

utilised so much of it as is not utilised shall be further increased by

the said percentage and carried forward to the following year and

so on for subsequent years

Provided further that a training tax credit may only be

deducted from the tax due on chargeable income which is derived

from any of the activities referred to in sub-regulation (6).

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 15 Income tax kept in abeyance. — BUSINESS PROMOTION REGULATIONS Open official source

Unless otherwise provided in these regulations, where the

entitlement of a company to the benefits provided by the Act or by

these regulations for a year of assessment cannot be established

only by reason of the fact that not enough time has elapsed for the

purpose of determining whether certain conditions have been

satisfied, the collection of the income tax which, but for the

provisions of the Act and these regulations, would be payable by

such company, shall be kept in abeyance until the expiration of six

months from the date on which such entitlement can be established,

and in the event that the said conditions are not satisfied and

therefore the income tax kept in abeyance becomes payable, the

date on which it shall be due for payment for the purposes of the

Inco me Tax Management Act shall be the day i mmediately

following the last day on which it shall be kept in abeyance as

aforesaid and the fact that such tax has become payable shall not be

considered to be an omission for the purpose of the Income Tax

Acts.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 16 Approval in writing. — BUSINESS PROMOTION REGULATIONS Open official source

On granting its approval for any purpose under these

regulations, the Corporation shall confirm its approval in writing

setting out the conditions to be satisfied by a company or

enterprise, as the case may be, and the company’s or enterprise’s

entitlement to the benefits provided by these regulations shall be

conditional on the production of such written approval by the

company or enterprise.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 17 Application. — BUSINESS PROMOTION REGULATIONS Open official source

Any application required to be submitted to the

Corporation in order to benefit from any of the provisions of the

Act or of these regulations shall be in such form and contain such

particulars as the Corporation may require.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 18 Maximum benefit for investment projects. — BUSINESS PROMOTION REGULATIONS Open official source

(1) The aggregate amount that a company may benefit

from in respect of an investment project in terms of regulations 5,

8, and 9 and articles 6, 7, 24B and 24C of the Act shall not, where

the company does not qualify as a small or medium-sized

enterprise, exceed the higher of -

(a) 30% of the qualifying expenditure pertaining to that

investment project; or

(b) 30% of the wage cost for the first twenty-four month

period pertaining to individuals in respect of whom

jobs were created as determined by regulation 5(7) to

(11).

(2) The benefit referred to in sub-regulation (1) and in

regulation 12 shall be the net benefit enjoyed by the company after

deduction of any taxes payable by the company as a result of

receiving any assistance under the said regulations and articles, and

where the benefit is enjoyed by such company over a number of

years the benefit shall be discounted to present value at a discount

rate equivalent to the percentage referred to in regulation 5(12) and

using such methods as shall be determined by the Corporation.

(3) In determining whether the provisions of this regulation

and of regulation 12 are or have been satisfied, where the terms of

any soft loan or interest rate subsidy granted in terms of regulations

8 or 9 are altered or an amount of any soft loan, or part thereof, is

repaid before the due date (hereinafter collectively referred to as an

"alteration"), if as a consequence of any such alteration -

(a) the amount which could have been claimed by a

company in terms of article 7 of the Act or in terms of

regulation 5 exceeds the amount actually claimed, the

company shall be entitled to claim such additional

amount, under that article or regulation, for the

purpose of determining its chargeable income or tax

payable, as the case may be, for the year of

assessment, the tax return filing date of which next

follows the date on which any such alteration is made;

(b) a company’s chargeable income or income tax payable

for any year of assessment is in excess than that which

it has declared in its income tax return or paid for that

year of assessment, this fact shall not be considered as

an omission for the purposes of the Income Tax Acts;

and any tax which becomes payable as a consequence

of any such alteration shall be deemed to be income

tax payable for the year of assessment, the tax return

filing date of which next follows the date on which any

such alteration is made.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 19 Certificate confirming fulfilment of conditions. — BUSINESS PROMOTION REGULATIONS Open official source

A certificate issued by the Corporation confirming that any

provision of the Act or of these regulations have been complied

with or that the computation of any incentive provided by the Act

or by these regulations is correct shall, without prejudice to any

other proof available to a company or enterprise, be conclusive

evidence of the matters referred to in the certificate.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 20 Copy of income tax returns and notice to the Corporation. — BUSINESS PROMOTION REGULATIONS Open official source

(1) A company which claims a benefit provided by the Act

or these regulations in year of assessment 2001 or subsequent years

of assessment, shall furnish the Corporation with a copy of every

income tax return, audited financial statements, TIFD documents,

and any other information or documents concerning its chargeable

income derived from its trade or business for any year of

assessment in which it claims a benefit, within three months from

the earlier of

(i)

the last date on which it is obliged to file such

returns and documents with the Department of

Inland Revenue; or

(ii) the date on which it filed its such returns and

documents with the Department of Inland

Revenue;

and where a company submits any further returns, adjustments or

any other information pertaining to the aforementioned returns or

documents, it shall also furnish the Corporation with a copy thereof

within three months of it having provided the Inland Revenue with

such further returns, adjustments or other information.

(2) A qualifying company which has claimed any benefit

provided by or under the Act in respect of year of assessment 2000

shall furnish the Corporation with a copy of its income tax return

for year of assessment 2000 by not later than the 30th June 2001 or

such later date as the Corporation may determine.

(3) A qualifying company which intends to benefit from any of

the incentives provided by articles 4, 5 and 5A of the Act in any

year subsequent to year of assessment 2000 shall notify the

Corporation of such intention by the 30th June, 2001, or such later

date as the Corporation may determine, specifying

(a) the likely years of assessment in respect of which it

intends to qualify for the benefit provided by article 4

of the Act or for the benefit provided by article 5 of the

Act by virtue of article 5(6)(b);

(b) the likely number of years of assessment in respect of

which it intends to qualify for the benefits provided by

article 5A of the Act or the incentive provided by

article 5 of the Act, other than by virtue of article

5(6)(b) of the Act;

and where a qualifying company specifies that it intends to so

qualify, such company may, and if requested by the Corporation

shall, provide statements, business plans or financial projections in

support of its intention to so qualify.

(4) A qualifying company which intends to benefit from any of

the incentives provided by articles 4, 5 and 5A of the Act in any

year subsequent to year of assessment 2002 shall, irrespective of

the fact that it has already notified the Corporation in terms of sub-

regulation (3), notify the Corporation of such intention not later

than thirty (30) days from the 9th August, 2002, or such later date

as may be determined by the Corporation, by completing the form

set out in the schedule, which is published in the English language

only, and any company which fails to notify the Corporation as

herein provided shall forfeit its right to be eligible to the benefits

provided by those articles.

(5) A qualifying company may only be entitled to the

incentives provided by articles 4, 5 and 5A of the Act, in any year

of assessment subsequent to year of assessment 2002, only as

indicated by it in its notification to the Corporation in terms of sub-

regulation (4).

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 21 Database of assistance provided. — BUSINESS PROMOTION REGULATIONS Open official source

The Corporation shall keep a database of all assistance

provided to, or claimed by, companies and enterprises in order to

enable it to -

(a) verify whether the provisions of the Act and of these

regulations have been complied with;

(b) provide the State Aid Monitoring Board with such

information as it may require; and

(c) inform the Department of Inland Revenue whether the

benefits claimed in terms of the Act and these

regulations have been properly calculated.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 22 Grants not taxable. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Benefits and grants provided in terms of these

regulations or the Act or in terms of the Malta Enterprise

Corporation Act shall be exempt from income tax and the

provisions of article 36 of the Act shall apply with regard to such

receipts as the provisions of that article are applicable to the grants

referred to in subarticle (4)(b) of that article.

(2) For the purposes of sub-regulation (1), the benefit provided

by regulations 8 and 9 shall be the difference between the interest

charged by the Corporation and the interest which is normally

charged by a commercial bank in Malta as determined by the

Corporation and the company benefiting from these regulations

shall be entitled to deduct the benefit accruing to it in an

accounting period from its chargeable income of that accounting

period.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 23 Benefits to certain partnerships inure to partners. — BUSINESS PROMOTION REGULATIONS Open official source

Where any benefit provided by these regulations or by the

Act is due to a partnership and, in accordance with the Income Tax

Acts, the partners thereof and not the partnership itself are

assessable to tax on any income of such partnership, any such

benefit provided by these regulations or by the Act to a partnership

shall be due to the partners of any such partnership.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 24 Certain partnerships. — BUSINESS PROMOTION REGULATIONS Open official source

A partnership, other than a partnership en commandite the

capital of which is divided into shares shall, for the purposes of

article 15 of the Act and article 56(20) of the Income Tax Act, be

considered to be a company, as defined in that Act, and the

provisions of the said subarticle shall be applicable to such a

partnership in like manner and to the same extent as it would have

been applicable to a company which has as its shareholders the

partners of the said partnership having equivalent rights in the

company as they have in the partnership.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 25 Qualifying companies. — BUSINESS PROMOTION REGULATIONS Open official source

Where a provision in these regulations or in the Act refers

to a qualifying company such company shall, except for a company

the activities of which include the activities referred to in

regulation 4(3)(h), include a company which qualifies for the

incentives provided by regulations 4 or 5, and such company shall

be entitled to the benefit provided by any such provision.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 26 Examination of records. — BUSINESS PROMOTION REGULATIONS Open official source

Where a benefit has been provided in terms of these

regulations or the Act to a company or enterprise, the Corporation

may -

(a) from time to time make or cause to be made such

examination of books, documents, premises and all

other things and matters of that company or enterprise

whatsoever as may be necessary to ensure that the

assistance is being applied for the purpose for which it

had been made; and

(b) request such financial statements from the company or

the enterprise as it may require, to be submitted

quarterly or at shorter intervals at the discretion of the

Corporation.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 27 Deferment of tax investment incentives. — BUSINESS PROMOTION REGULATIONS Open official source

A company which is entitled to the benefit provided by

regulation 5 may, at its option, defer the claiming of the benefit, or

part thereof, to which it may be entitled in any year of assessment,

to one or more subsequent years of assessment and in such case the

benefit so deferred and claimed in any such subsequent year of

assessment shall be deemed to be part of the benefit, or the benefit,

to which such company is entitled to for that year; provided that

any benefit provided by regulation 5 which is so deferred shall not

be increased by the percentage referred to in the proviso to

regulation 5(12).

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 28 Entitlement in case of waiver of certain incentives. — BUSINESS PROMOTION REGULATIONS Open official source

(1) A qualifying company, as defined in the Act, whose

activities are not qualifying activities as set out in regulation 4(3)

and

(a) which, in any one of the five consecutive years of

assessment including and ending with year of

assessment 2002 benefited from the provisions of

articles 4, 5, or 5A of the Act, such that at least 10% of

its chargeable income derived from its trade or

business, for any of those years of assessment,

reckoned before taking into consideration the

provisions of the said articles, has been exempted

from, or subjected to reduced rates of income tax in

terms of those articles; or

(b) which is constituted in terms of Maltese law, or

registered as an oversea company with the Registrar of

Companies, on or after the 1st November 2000 but

before the 12th June 2001, and which would have been

entitled to the benefits provided by articles 4, 5 or 5A

of the Act but for the provisions of articles 4(6), 5(7)

and 5A(6) of the Act, and which, had it so qualified,

would have had at least 10% of its chargeable income

derived from its trade or business for years of

assessment 2002 or 2003, reckoned before taking into

consideration the provisions of the said articles,

exempt from, or subjected to reduced rates of income

tax in terms of those articles,

shall qualify for the benefits provided by regulations 4 and 5 if it

satisfies the other relevant conditions to qualify for the benefits

provided by those regulations and if, where applicable, it revokes,

by 30 April 2003 in terms of article 34(2) of the Act, its right to be

eligible for the benefits provided by articles 4, 5 and 5A of the Act

with effect from year of assessment 2004 or any previous year of

assessment; and the trading activities of such a qualifying company

shall, as regards such company only, be deemed to be activities

referred to in regulation 4(3)

Provided that the provisions of this regulation shall not be

applicable in respect of a qualifying company for a year of

assessment if, in the accounting period ending in the year preceding

that year of assessment, there has been a material change in the

trading activities of such qualifying company

Provided further that a company which would have been

entitled to benefit for the aforementioned incentives in the manner

set out in this sub-regulation in any of the aforementioned years of

assessment but did not so benefit, or would not have so benefited,

solely due to the fact that it did not have any chargeable income or

did not claim the benefit, shall be deemed to be a company to which

this regulation refers

Provided further that for the purpose of this sub-regulation

the base period profits referred to in article 5(2) of the Act shall be

deemed to be zero.

(2) A certificate issued by the Corporation confirming that a

company satisfies the provisions of sub-regulation (1) or that there

has been no material change in a company's trade or business, shall

be conclusive evidence of those facts.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 29 Dates from which certain provisions of the Act are no longer applicable. — BUSINESS PROMOTION REGULATIONS Open official source

(1) The date referred to in -

(a) the proviso to article 3(2) of the Act;

(b) the fourth proviso to article 3(8) of the Act;

(c) article 4(6) of the Act;

(d) article 5(7) of the Act;

(e) article 5A(6) of the Act;

(f)

the third proviso to article 15 of the Act;

(g) article 16(11) of the Act;

(h) article 23(6) of the Act, but only as regards paragraphs

(a) and (b) thereof; and

(i)

article 24A(6) of the Act,

shall be the 1 November, 2000.

(2) The date referred to in article 18(7) of the Act shall be the

22nd March 2001.

(3)

The year of assessment referred to in -

(a) article 11(5) of the Act;

(a) article 12(4) of the Act;

(b) the third proviso to article 13 of the Act; and

(c) the proviso to article 14 of the Act,

shall be year of assessment 2002.

(4)

The date referred to in -

(a) article 10(3) of the Act;

(b) article 19(8) of the Act;

(c) article 20(4) of the Act; and

(d) article 23(6) of the Act, but only as regards paragraph

(c) thereof,

shall be the 1 January, 2002.

(5) The year of assessment referred to in article 8(8) of the Act

shall be year of assessment 2002.

(6) Notwithstanding the provisions of sub-regulation (3), the

year of assessment referred to in article 11(5) of the Act shall be

year of assessment 2001.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 30 Privatisations. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where a company was, on or after the 1st November,

2000, controlled at least as to fifty per cent, directly or indirectly,

by Government and not less than fifty per cent of the shares of the

company were owned, directly or indirectly, by Govemment, if all

such shares are acquired by any person or persons not under

Government control, and such company is entitled to the benefits

provided by regulations 4 and 5

(a) the company shall be deemed to be a company to

which regulation 4(2)(b) refers and regulation 4(8)

shall not apply in its regard; and

(b) assets owned by the company as at the date on which

the said shares are acquired, shall be deemed to

constitute qualifying expenditure incurred by such

company as on that date at a value which shall be

determined by the Corporation

Provided that the provisions of this sub-regulation shall not

apply where the provisions of sub-regulation (2) are applicable

Provided further that the provisions of this sub-regulation

shall only apply where the company, the shares of which are

acquired from Government, has closed or ceased its operations, or

would have closed or would have ceased its operations, had its

shares not been acquired from Government, and provided that the

company is not a firm in difficulty.

(2) Where a company (hereinafter referred to as the "first

company") which was entitled to an exemption from income tax,

was, on or after the 1st November, 2000, fully controlled and

owned, directly or indirectly, by Government and for the purpose of

privatising the operations carried out by such company, the

business of such company together with such assets, liabilities,

rights and obligations as is expedient, are transferred to another

company (hereinafter referred to as the "second company") which

is also fully controlled and owned by Government, and the second

company is a company that is entitled to the benefits provided by

regulations 4 and 5

(a) the second company shall be deemed to be a company

to which regulation 4(2)(b) refers and regulation 4(8)

shall not apply in its regard; and

(b) the cost at which the second company acquired the

assets from the first company shall be deemed to

constitute qualifying expenditure

Provided that the provisions of this sub-regulation shall

also apply where any assets, liabilities, rights and obligations, are

for the purpose of privatisation, transferred to the second company

by any entity or corporation which is fully owned, directly or

indirectly, by the Government, so long as the second company is

entitled to the benefits provided by regulations 4 and 5.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 31 Tax credit for large company. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where a qualifying company -

(a) does not qualify as a small or medium-sized

enterprise; and

(b)

(i)

is entitled to any of the benefits provided by

articles 4, 5 or 5A of the Act subsequent to year

of assessment 2003 and waives, in terms of

article 34(2) of the Act its right of entitlement to

benefit from the provisions of these articles with

effect from year of assessment 2004; or

(ii) is entitled to any of the benefits provided by

articles 18 or 20 of the Malta Freeports Act in

any year of assessment subsequent to year of

assessment 2004 and waives, in terms of article

27(5) of the said Act its right of entitlement to

benefit from the said provisions of article 18 of

that Act with effect from year of assessment

2004 and its right of entitlement to benefit from

the provisions of article 20 of that Act with

effect from 1st January 2003; or

(c)

(i) had waived its entitlement to the benefits

provided by articles 4, 5 and 5A of the Act and

as a result of such waiver became entitled to the

benefits provided by regulations 4 and 5; or

(ii) pursuant to a change in legislation is no longer

entitled to benefit from the provisions of articles

4, 5 or 5A of the Act or of articles 18 or 20 of

the Malta Freeports Act,

such company shall, subject to the approval of the Corporation, be

entitled to the benefits provided by regulations 4 and 5 and to

utilize the tax credits provided by regulations 32 to 35, as reduced

by regulation 36, in accordance with the provisions of regulation

37; and for the purpose of regulation 4, such company shall, for the

years of assessment in respect of which it can utilize the

aforementioned tax credits in accordance with regulation 37, be

deemed to be a company to which regulation 4(2)(b) refers.

(2) A company shall be eligible to qualify for the benefits

provided by any of the regulations referred to in sub-regulation (1)

if it has been determined that it is so eligible by the Corporation.

(3) On being satisfied that a company is eligible to any of the

said regulations, the Corporation shall provide the said company

with a certificate setting out therein the tax credits and their

respective amounts to which the company is so entitled.

(4) A certificate issued by the Corporation in terms of sub-

regulation (3) shall, without prejudice to any other proof available

to the company, be conclusive evidence of the matters stated

therein.

(5) A company wishing to avail itself of the said regulations

shall apply for a determination referred to in sub-regulation (2) by

submitting an application to the Corporation.

(6) The provisions of article 25 of the Act shall, as far as is

applicable, apply to the incentives provided by this regulation and

to regulations 32 to 37.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 32 Investment credits. — BUSINESS PROMOTION REGULATIONS Open official source

(1) A company which has been determined by the

Corporation as having satisfied the conditions set out in regulation

31(1) and in this regulation shall be entitled to an investment credit

which shall be equal to a percentage of the expenditure incurred by

such company on qualifying expenditure on or after the 1st January

1995 up to 31st December 2006 and for this purpose the qualifying

expenditure incurred up to 31st December 2001 shall be multiplied

by 1.07 n (1.07 to the power of "n") where "n" is a number arrived at

by deducting from 2002 the year in which the expenditure was

incurred

Provided that the qualifying expenditure shall be that which

is incurred under a programme approved by the company by the

31st December 2002 and notified to the Corporation by such date as

it shall determine.

(2)

The percentage referred to in sub-regulation (1) shall be

(a) 75%, where the company was entitled to any of the

benefits provided by articles 4, 5, or 5A of the Act or

by articles 18 or 20 of the Malta Freeports Act on or

before the 31st December 1999;

(b) 50%, where the company became entitled to any of the

benefits provided by articles 4, 5 or 5A of the Act or

by articles 18 or 20 of the Malta Freeports Act on or

after the 1st January 2000.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 33 Research and development credits. — BUSINESS PROMOTION REGULATIONS Open official source

(1) A company which has been determined by the

Corporation as having satisfied the conditions set out in regulation

31(1) and in this regulation shall be entitled to a research and

development tax credit which shall be equal to a percentage of the

eligible expenditure incurred by such company on or after 1st

January 1995 up to 31st December 2006 and for this purpose the

eligible expenditure incurred up to 31st December 2001 shall be

multiplied by 1.07 n (1.07 to the power of "n") where "n" is a

number arrived at by deducting from 2002 the year in which the

expenditure was incurred

Provided that the eligible expenditure shall be that which is

incurred under a programme approved by the company by the 31st

December 2002 and notified to the Corporation by such date as it

shall determine.

(2)

The percentage referred to in sub-regulation (1) shall be

(a) 75% where the expenditure has been incurred on

fundamental research activities;

(b) 60% where the expenditure has been incurred on

industrial research activities;

(c) 35% where the expenditure has been incurred on

development activities;

(d) 75% where the expenditure has been incurred on

studies preparatory to industrial research activities;

(e) 60% where the expenditure has been incurred on

studies preparatory to development activities.

(3)

In this regulation

(a) "fundamental research activities" means an activity or

activities designed to broaden scientific and technical

knowledge not linked to industrial or commercial

objectives;

(b) "industrial research activities" means an activity or

activities consisting of critical investigation aimed at

the acquisition of knowledge with the objective that

such knowledge may be useful in developing new

products, processes or services or in bringing about a

significant improvement in existing products,

processes or services;

(c) "development activities" means an activity or

activities consisting of the shaping of the results of

industrial research into a plan, arrangement or design

for new, altered or improved products, processes or

services, whether they are intended to be sold or used -

including the creation of initial prototypes which could

not be us ed commercially and the conceptual

formulation and design of products, processes or

services and initial demonstration projects or pilot

projects provided that such products cannot be

converted or used for industrial applications or

commercial exploitation - but excluding the routine or

periodic changes made to products, production lines,

manufacturing processes, existing services and other

operations in progress even if such changes may

represent improvements.

(4)

The eligible expenditure shall consist of

(a) personnel expenses comprising all emoluments paid

for services rendered by researchers, technicians and

other employees attributable to such employees’ time

spent on the research activity and including the

employer’s share of social security contributions

attributable to such emoluments;

(b) the costs of instruments, plant and machinery and land

and buildings used solely for the research activity;

(c) the cost of renting instruments, plant and machinery

and land and buildings for the period of time used for

the research activity;

(d) the cost of consultancy and equivalent services used

exclusively for the research activity, including the

research, technical knowledge and patents bought from

outside sources;

(e) additional overheads incurred directly as a result of the

research activity;

(f)

other expenses, including costs of materials, supplies

and similar products, incurred directly as a result of

the research activity.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 34 Training credits. — BUSINESS PROMOTION REGULATIONS Open official source

(1) A company which has been determined by the

Corporation as having satisfied the conditions set out in regulation

31(1) and in this regulation shall be entitled to a training credit

which shall be equal to a percentage of the eligible costs incurred

by such company on or after 1st January 1995 up to 31st December

2006 and for this purpose the eligible costs incurred up to 31st

December 2001 shall be multiplied by 1.07 n (1.07 to the power of

"n") where "n" is a number arrived at by deducting from 2002 the

year in which the expenditure was incurred

Provided that the qualifying expenditure shall be that which

is incurred under a programme approved by the company by the

31st December 2002 and notified to the Corporation by such date as

it shall determine.

(2) The percentage referred to in sub-regulation (1) shall be

one of the percentages set out in regulation 14(1)(b) depending on

whether the training qualifies as general training.

(3) The eligible costs referred to in sub-regulation (1) shall be

the costs set out in regulation 14(2).

(4) For the purpose of calculating the training credit provided

by this regulation, the term "general training" shall have the

meaning assigned to it by regulation 14(3).

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 35 Environmental investment credits. — BUSINESS PROMOTION REGULATIONS Open official source

(1) A company which has been determined by the

Corporation as having satisfied the conditions set out in regulation

31(1) and in this regulation shall be entitled to an environmental

credit which shall be equal to 60% of the eligible expenditure

incurred by such company on or after 1st January 1995 up to 31st

December 2006 and for this purpose the eligible expenditure

incurred up to 31st December 2001 shall be multiplied by 1.07 n

(1.07 to the power of "n") where "n" is a number arrived at by

deducting from 2002 the year in which the expenditure was

incurred

Provided that the eligible expenditure shall be that which is

incurred under a programme approved by the company by the 31st

December 2002 and notified to the Corporation by such date as it

shall determine.

(2) The eligible expenditure shall consist of the expenditure set

out in sub-regulation (3)

(a) where such expenditure is incurred for the purpose of

reducing pollution and nuisances or to adopt

production methods with a view to protecting the

environment; and

(b) to the extent that the company did not incur such

expenditure for the purpose of it complying with any

applicable laws or regulations.

(3)

The expenditure referred to in sub-regulation (2) shall be

(a) the acquisition of land which is strictly necessary to

meet environmental objectives;

(b) the acquisition, development or construction of

buildings or structures, plant and machinery;

(c) the acquisition or development of technology or know-

how, which is -

(i)

a depreciable asset in accordance with generally

accepted accounting principles;

(ii) acquired on market terms from a person in which

the company has no direct or indirect control;

(iii) included in the assets of the company which

retains ownership or use or both such ownership

and use of the intangible asset for a period of

five years or a shorter period if the intangible

assets are technically out of date before the

expiry of this five year period

Provided that should such intangible assets be sold before

the expiration of five years from the date of their acquisition or

development completion the sales proceeds shall be deducted from

the amount of the eligible expenditure.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 36 Deductions from tax credits. — BUSINESS PROMOTION REGULATIONS Open official source

(1) The aggregate of the tax credits a company may be

entitled to in terms of regulations 32 to 35 shall be reduced by the

benefits accruing to that company, on or after the 1st January, 2001,

as a consequence of it having availed itself of any of the benefits

provided by articles 4, 5, 5A, 6, 7, 16, 19, 20 or 24C of the Act or

by regulations 5, 8, 9 or 14 or by articles 18 or 20 of the Malta

Freeports Act and the benefits accruing to such company shall be

calculated as follows

(a) in the case of an income tax benefit provided by

articles 4, 5, 5A, 6 and 7 of the Act and by regulations

5 and 14 and by article 18 of the Malta Freeports Act,

the benefit accruing shall be the amount of income tax

that would have been borne by the company for a year

of assessment in the absence of the provisions of the

above mentioned articles and regulations, less the

amount of income tax actually borne by the company

for that year of assessment and the result of this

subtraction shall, for each year of assessment, be

multiplied by 1.07 n (1.07 to the power of "n") where

"n" is a positive number arrived at by deducting from

2002 the year of assessment in which the benefit was

availed of

Provided that where the profits brought to charge

to tax in year of assessment 2002 or 2003 relate to an

accounting period which commenced prior to the 1st

January 2001, the benefit accruing from the 1st

BUSINESS PROMOTION

January 2001 up to the end of that accounting period

shall be determined by dividing the result of the

calculation hereinabove described for that accounting

period by the total number of days comprised in that

accounting period and multiplying the result by the

number of days in that accounting period which are in

2001and 2002 as applicable;

(b) in the case of a benefit provided by article 16 of the

Act, the benefit shall be arrived at by multiplying the

after-tax interest saved from the soft loan facility in

each year up to 31 st December 2002 by 1.07 n (1.07 to

the power of "n") where "n" is a number arrived at by

deducting from 2002 the year in which the after-tax

interest saving was obtained and discounting the after-

tax interest saving to be obtained in each year after

31st December 2002 by the discount factor 1/1.07 n (1

divided by 1.07 to the power of "n") where "n" is a

number arrived at by deducting 2002 from the year in

which the after-tax interest saving is to be obtained;

and the after-tax interest saved shall be calculated by

multiplying the interest saved by the percentage

(100%- x%) where x% is the rate of income tax

applicable to the company in the absence of the

provisions of the articles and regulations referred to in

paragraph (a);

(c) in the case of a grant provided by articles 19, 20 and

24C of the Act and by regulation 14, the benefit shall

be the amount of the grant received in each year up to

31st December 2002, which amount shall be

multiplied by 1.07 n (1.07 to the power of "n") where

"n" is a number arrived at by deducting from 2002 the

year in which the grant was received;

(d) in the case of the duty exemption provided by article

20 of the Malta Freeports Act, the benefit shall be the

amount of duty exempted, which amount shall be

multiplied by 1.07 n (1.07 to the power of "n") where

"n" is a number arrived at by deducting from 2002 the

year in which the exempted duty would have been

payable;

(e) in the case of a benefit provided by regulations 8 and

9, the benefit shall be arrived at by multiplying the

tax-free benefit obtained in each year up to 31st

December 2002 by 1.07 n (1.07 to the power of "n")

where "n" is a number arrived at by deducting from

2002 the year in which the tax free benefit was

obtained and discounting the tax-free benefit to be

obtained in each year after 31 st December 2002 by the

discount factor 1/1.07 n (1 divided by 1.07 to the power

of "n") where "n" is a number arrived at by deducting

2002 from the year in which the tax-free benefit is to

be obtained.

(2)

Where the sum of the deductions set out in this regulation

exceeds the amount of the tax credits calculated in accordance with

the provisions of regulations 32 to 35, the amount of the tax credits

shall be deemed to be zero.

(3) A deduction in respect of benefits availed of pursuant to

articles 19 or 20 of the Act or regulation 14 shall only be made if

the relevant company claims training credits pursuant to regulation

34. (4) A deduction in respect of the benefits availed of pursuant to

articles 6, 7 or 16 of the Act or regulations 5, 8 or 9 shall only be

made if the relevant company claims credits pursuant to regulations

32, 33 or 35 in respect of expenditure on which it was granted

benefits under articles 6, 7 or 16 of the Act or regulations 5, 8 or 9.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 37 Utilization of tax credits. — BUSINESS PROMOTION REGULATIONS Open official source

(1) With effect from year of assessment 2004, a company

which is entitled to any of the benefits provided by regulations 32

to 35 as reduced by regulation 36 (hereinafter in this regulation

collectively referred to as the "tax credits") shall be entitled to

utilise the tax credits only as described below

(a) where the company became so entitled by virtue of it

having been entitled to the incentive provided by

article 4 of the Act, it shall be entitled to deduct from

the amount of income tax which is due on its

chargeable income, derived from its trade or business,

for the consecutive years of assessment, forming part

of the original ten consecutive years of assessment

referred to in article 4(1) of the Act, subsequent to

year of assessment 2003, the amount of the tax credits

and with effect from year of assessment 2004 and

subsequent years of assessment where the tax credits

exceed such income tax payable by such a company

for any of such years, the excess shall be increased by

the percentage referred to in the first proviso to

regulation 5(12) and the amount so increased shall be

the amount which the company shall be entitled to

deduct from the amount of income tax which is due on

its chargeable income, derived from its trade or

business, for the remaining consecutive years of

assessment above mentioned;

(b) where the company became so entitled by virtue of it

having been entitled to the incentive provided by

article 5 of the Act, it shall be entitled to deduct from

the whole or a proportion of the amount of income tax

due on its chargeable income, derived from its trade or

business for the remaining years of assessment, the

company is still entitled to benefit from the incentive

provided by the said article 5 subsequent to year of

assessment 2003, the amount of the tax credits and

with effect from year of assessment 2004 and

subsequent years of assessment where the tax credits

exceed such income tax payable by such a company

for any of such years, the excess shall be increased by

the percentage referred to in the first proviso to

regulation 5(12) and the amount so increased shall be

BUSINESS PROMOTION

the amount which the company shall be entitled to

deduct from the whole or a proportion of the amount of

income tax which is due on its chargeable income,

derived from its trade or business, for the remaining

years of assessment above mentioned; and the "whole

or a proportion of the amount of income tax due" shall

be determined by multiplying the total income tax due

on the company’s chargeable income, derived from its

trade or business, by a percentage which shall be

calculated by dividing the income tax due in any year

of assessment, as may be determined by the company,

between year of assessment 1995 and year of

assessment 2003, in respect of which the company

qualified for the incentive provided by article 5 of the

Act, by the income tax that would have been payable

by the company in the absence of that incentive, and

deducting the fraction so obtained from the integer one

(1), and multiplying the result by 100

Provided that where a company demonstrates to

the satisfaction of the Corporation that the percentage

as calculated in accordance with the above provisions

is materially different from that which the company

reasonably expects, the Corporation may approve a

different percentage based on the evidence provided

by the company;

(c) where the company became so entitled by virtue of it

having been entitled to the incentive provided by

article 5A of the Act, it shall be entitled to deduct from

the whole or a proportion of the amount of income tax

due on its chargeable income, derived from its trade or

business for the remaining years of assessment, the

company is still entitled to benefit from the incentives

provided by the said article 5A subsequent to year of

assessment 2003, the amount of the tax credits and,

with effect from year of assessment 2004 and

subsequent years of assessment, where the tax credits

exceed such income tax payable by such a company

for any of such years the excess shall be increased by

the percentage referred to in the first proviso to

regulation 5(12) and the amount so increased shall be

the amount which the company shall be entitled to

deduct from the whole or a proportion of the amount of

income tax which is due on its chargeable income,

derived from its trade or business, for the remaining

years of assessment above mentioned; and the "whole

or a proportion of the amount of income tax due" shall

be determined by multiplying the total income tax due

on the company’s chargeable income, derived from its

trade or business, by a percentage which shall be

calculated by dividing the income tax due in any year

of assessment, as may be determined by the company,

between year of assessment 1995 and year of

assessment 2004, in respect of which the company

BUSINESS PROMOTION

qualified for the incentive provided by article 5A of

the Act, by the income tax that would have been

payable by the company in the absence of that

incentive, and deducting the fraction so obtained from

the integer one (1), and multiplying the result by 100

Provided that where a company demonstrates to

the satisfaction of the Corporation that the percentage

as calculated in accordance with the above provisions

is materially different from that which the company

reasonably expects, the Corporation may approve a

different percentage based on the evidence provided

by the company

Provided further that the entitlement to the said

deduction shall be conditional on the company

satisfying the conditions set out in subarticle (1) of the

said article 5A for that year of assessment;

(d) for the purposes of paragraphs (b) and (c) -

(i)

a company which would have been entitled to

benefit for the incentives provided by the said

articles 5 and 5A in any year of assessment

between year of assessment 1995 to year of

assessment 2003 but did not so benefit solely

due to the fact that it did not have any

chargeable income, shall be deemed to be a

company which qualified for the incentive

provided by article 5 or 5A as the case may

require and its chargeable income for that year

of assessment shall be deemed to be €232.94;

(ii) for the purpose of determining the percentage

referred to therein, the income tax due in any of

the years of assessment between year of

assessment 1995 to year of assessment 2003

shall be calculated on the basis that the base

period profits referred to article 5(2) of the Act

are deemed to be zero;

(iii) the remaining years of assessment in respect of

which the company is entitled to benefit from

the provisions of article 5 of the Act subsequent

to year of assessment 2003 shall be consecutive

years of assessment commencing from year of

assessment 2004;

(iv) the remaining years of assessment in respect of

which the company is entitled to benefit from

the provisions of articles 5 and 5A subsequent to

year of assessment 2003 shall, in the case of a

company to which regulation 31(1)(c)(i) applies,

be computed after deducting any years of

assessment in respect of which such company

benefitted from the provisions of regulations 4

or 5;

(e) where a company became so entitled by virtue of it

having been entitled to the incentives provided by

articles 18 or 20 of the Malta Freeports Act, it shall be

entitled to deduct from -

(i)

the amount of any duty payable by it in terms of

the Duty on Documents and Transfers Act on or

after the 1st January 2003, and which duty

would not have been payable in terms of article

20 of the Malta Freeports Act; and

(ii) the amount of income tax due on its chargeable

income, derived from its trade or business

exercised in a freeport pursuant to the provisions

of article 11 of the Malta Freeports Act, for the

years of assessment subsequent to year of

assessment 2003,

the amount of the tax credits and where the tax credits,

for year of assessment 2004 and subsequent years of

assessment, exceed such duty and/or such income tax

payable by such company in or for that year the excess

shall be increased by the percentage referred to in the

first proviso to regulation 5(12) and the amount so

increased shall be the amount which the company shall

be entitled to deduct from the amount of such duty

and/or such income tax payable by it in subsequent

years of assessments

Provided that a company shall be entitled to the

benefit provided by this paragraph for as long as it

remains a company licensed to operate in a freeport in

accordance with the Malta Freeports Act and provided

that it satisfies the conditions, as set out in that Act, it

would have been required to satisfy in order for it to

qualify for the exemptions provided by the said

articles 18 and 20 of the Malta Freeports Act;

(f)

the entitlement to set-off the tax credits against the

income tax payable by the company in the manner

provided herein, shall be exercised after the

application of any other benefits available to the

company in terms of the Act and these regulations.

(2) The provisions of regulation 5(14) and (15) shall apply

mutatis mutandis to the tax credits and references in those sub-

regu lat io ns to in vest m ent t ax cred it s sh all be co nstrue d a s

references to tax credits.

Laws of Malta — Subsidiary Legislation 325.6 — BUSINESS PROMOTION REGULATIONS

Reg. 38 Special incentives for small and medium-sized enterprises. — BUSINESS PROMOTION REGULATIONS Open official source

(1) Where a qualifying company -

(a) qualifies as a small or medium-sized enterprise;

(b) satisfies the conditions set out in regulation 31(1)(b) or

(c),

such company shall, subject to the approval of the Corporation, be

entitled to the benefits provided by this regulation in lieu of the

benefits provided by regulations 4, 5 or 6

Provided that a company that benefits from the provisions

of this regulation shall not be entitled to the benefits provided by

regulations 4, 5 or 6.

(2) A company which satisfies the conditions set out in sub-

regulation (1) by virtue of it having been entitled to the benefit

provided by article 4 of the Act shall, up to year of assessment

2012, be exempt from income tax due on its chargeable income,

derived from its trade or business, for the consecutive years of

assessment, forming part of the original ten consecutive years of

assessment referred to in article 4(1) of the Act, subsequent to year

of assessment 2003, subject to it satisfying the conditions of the

said article 4 other than the condition set out in paragraph (b) of

subarticle (1) of the said article 4.

(3) A company which satisfies the conditions set out in sub-

regulation (1) by virtue of it having been entitled to the benefits

provided by article 5 of the Act shall, for the remaining years of

assessment the company is still entitled to benefit from the

incentives provided by the said article 5 subsequent to year of

assessment 2003, be entitled, up to year of assessment 2012, to a

reduction of the whole or a proportion of the amount of income tax

due on its chargeable income derived from its trade or business;

and the "whole or a proportion of the amount of income tax due"

shall be determined by multiplying the total income tax due on the

company’s chargeable income, derived from its trade or business,

by a percentage which shall be calculated by dividing the income

tax due in any year of assessment, as may be determined by the

company, between year of assessment 1995 and year of assessment

2003, in which the company qualified for the incentive provided by

article 5 of the Act, by the income tax that would have been

payable by the company in the absence of that incentive, and

deducting the fraction so obtained from the integer one (1), and

multiplying the result by 100

Provided that where a company demonstrates to the

satisfaction of the Corporation that the percentage as calculated in

accordance with the above provision is materially different from

that which the company reasonably expects, the Corporation may

approve a different percentage based on the evidence provided by

the company.

(4) A company which satisfies the conditions set out in sub-

regulation (1) by virtue of it having been entitled to the benefits

provided by article 5A of the Act shall, for the remaining years of

assessment the company is still entitled to benefit from the

incentives provided by the said article 5A subsequent to year of