COTTAGE INDUSTRY RULES

COTTAGE INDUSTRY

SUBSIDIARY LEGISLATION 372.13

COTTAGE INDUSTRY RULES

24th October, 1995

LEGAL NOTICE 150 of 1995, as amended by Legal Notices 177 of 1995

and 425 of 2007.

The title of these rules is the Cottage Industry Rules.

Where a VAT registered person engages outworkers on a

part-time basis in activities mentioned in article 48A of the Income

Tax Act, he shall pay tax to the Commissioner at the rate of 15

cents in the euro on the grossed-up annual remuneration paid to

every outworker for any tax which may be due by such outworkers

in respect of such activities, worked out in accordance with the

following formula

Net-annual payment

X

0.85

The tax due under rule 2 shall be paid to the Commissioner

by not later than the 15th January of each year of assessment, and

shall be regulated by the relevant provisions of Part VII of the

Income Tax Management Act.

The VAT registered person shall furnish the Commissioner

with a list containing details of all outworkers falling under this

rule and including the remuneration paid to each outworker. This

list is to accompany the remittance made in accordance with rule 3.

Where the Commissioner is satisfied that the requirements

of rules 3 and 4 have been complied with, the VAT registered

person shall be entitled, in computing his profits for income tax

purposes, to deduct

(a) the net amount paid as remuneration to the outworkers

falling within the provisions of these rules;

(b) the tax remitted to the Commissioner in terms of rule 3

in respect of the relevant year of assessment; and

(c) an additional amount equivalent to thirty per cent of

the total sum resulting from paragraphs (a) and (b).