SALE OF AGRICULTURAL PRODUCE RULES

SUBSIDIARY LEGISLATION 372.32

SALE OF AGRICULTURAL PRODUCE RULES

18th February, 2005

LEGAL NOTICE 49 of 2005, as amended by Legal Notices 409 of 2007,

316 of 2012 and 33 of 2025.

The title of these rules is the Sale of Agricultural Produce

Rules.

Substituted by

L.N. 316 of 2012.

(Rule 3)

In these rules, unless the context otherwise requires

"agricultural produce" means any item produced or derived from

farming and other agricultural activities;

"approved marketing centre" means a place where agricultural

produce is sold through the services of licensed brokers (pitkali)

and recognised as such by the Commissioner for the purposes of

these rules;

"guidelines" means guidelines published by the Commissioner

under the provisions of article 96(2) of the Income Tax Act;

"non-qualifying sales" means sales of agricultural produce other

than qualifying sales;

"payor" means -

(a) in the case of any sale of agricultural produce made on

or after 1 January 2004, whether it is a qualifying sale

or not, through the services of a licensed broker

(pitkal) in an approved marketing centre, the licensed

broker (pitkal) providing those services, and

(b) in the case of any qualifying sale other than a sale

made through the services of a licensed broker

(pitkal), the person to whom the sale is made

Provided that to the extent necessary for the purposes of

rule 10 "payor" also includes a representative or a bank to whom

that rule applies

Provided also that a person who is registered as a payor

shall continue to be treated as a payor by reason of his registration

and without reference to the other provisions of this definition until

his registration is cancelled;

"qualifying sale" means a sale made on or after 1 January 2004

of agricultural produce grown and cultivated in Malta in the course

of an agricultural activity carried on by or in the name of the

vendor and which is

(a) a sale of agricultural products, as defined in the

Agriculture Act, that are produced, grown or cultivated in

Malta, that is made through the Malta Food Agency; or

(b) a sale of fresh fruit and/or fresh vegetables to a hotel

operator; or

(c) a sale of tomatoes to a tomato processor for processing

in Malta; or

(d) a sale of grapes to a vintner for processing in Malta; or

(e) a sale of olives to an olive processor for processing in

Malta; or

(f)

a sale of fresh fruit and/or fresh vegetables to a food

processor for processing in Malta; or

(g) a sale designated as a qualifying sale for the purpose

of these rules by means of guidelines; or

(h) a sale of fresh fruit or fresh vegetables to a Producer

Organisation (PO) or a Producer Group (PG) where

such PO or PG is approved by the Director of

Agriculture and upon recommendation by the said

Director.

Substituted by

L.N. 316 of 2012.

(Rule 3)

SCHEDULE C (Rule 5)

(1) Every payor shall register with the Commissioner by

not later than fifteen days from the date of the first sale in respect

of which he is the payor.

(2) The registration shall be made by the delivery to the

Commissioner of the registration form, duly filled in, set out in

Schedule A.

(3) Every payor shall give notice in writing to the

Commissioner of any material change in the circumstances shown

on the registration form.

(4) When a person who is registered as a payor under these

rules ceases to carry on the activity in respect of which he was so

registered, he shall give notice to the Commissioner within fifteen

days on the deregistration form set out in Schedule B and the

Commissioner shall, upon being satisfied that that person is not

required to remain registered, cancel his registration.

(5) The Commissioner shall give notice of every registration

and deregistration to the person concerned.

(6) The deregistration of a person shall be without prejudice to

the obligation of that person to register again in the event that he is

the payor in accordance with these rules in respect of a subsequent

sale.

(Regola 5)

BEJGĦ TA’ PRODOTTI TAL-BIEDJA

(1) A payor shall deduct tax from the price of every

qualifying sale in respect of which he is the payor, at a rate of three

cents (0.03) for every euro of such price.

(2) A deduction of tax as aforesaid shall be made whenever a

qualifying sale is made regardless of the time when and the manner

in which the payment is made and regardless of the tax status of the

vendor and of any exemption or relief from tax to which he may be

entitled.

(3) For the purposes of these rules a qualifying sale is deemed

to be made at the time when the agricultural produce in question is

delivered to the purchaser or to his representative.

Amended by

L.N. 409 of 2007.

(Rule 6)

SCHEDULE E (Rule 7)

A payor shall for every sale in respect of which he is the

payor furnish the vendor with a document, in these rules referred to

as a purchase note, giving the particulars of the sale including, as a

minimum, the tax deducted, if any, in accordance with these rules

and the other particulars specified in Schedule C.

(Regola 7)

BEJGĦ TA’ PRODOTTI TAL-BIEDJA

(1) The tax deducted or that ought to be deducted from the

Government and shall be remitted to the Commissioner not later

than the last working day of the month following that in which the

sale was made, or any other date approved by the Commissioner,

and shall be recoverable as such.

(2) Every payor shall make a monthly return of all sales of

agricultural produce in respect of which he is the payor and of tax

deducted in accordance with these rules.

(3) The monthly return shall be prepared on the form set out in

Schedule D and contain the particulars required by that form and

such form shall be delivered by not later than the last working day

of the month following that to which it refers, or any other date

approved by the Commissioner.

(4) The obligation to furnish the monthly return shall arise

even when a payor has not made any deductions of tax or has no

relevant transactions to report.

(5) A person whose registration as a payor is cancelled shall

furnish a monthly return for the month during which he was still

registered as a payor even though he is no longer registered as a

payor on the date on which the return is due to be filed.

Amended by

L.N. 409 of 2007.

(Rule 8)

SCHEDULE G (Rule 8)

(1) Every payor shall furnish to the vendors of sales of

agricultural produce in respect of which he was the payor an annual

statement showing the tax deducted in accordance with these rules

and the other particulars specified in Schedule E.

(2) The annual statements shall be delivered to the vendors by

not later than the last working day of January of the year

immediately following that to which it refers.

(3) A person whose registration as a payor is cancelled shall

prepare an annual statement as aforesaid for the year during which

he was still registered as a payor and shall furnish that statement to

the respective vendors by not later than the date set out in sub-rule

(2) or, where his registration is cancelled before the end of the year

to which the statement refers, by not later than the last working day

of the month following that in which his registration is cancelled.

(Regola 8)

BEJGĦ TA’ PRODOTTI TAL-BIEDJA

(1) Every payor shall prepare an annual transaction

reconciliation giving the details of the sales made during each year

in respect of which he was the payor and the other particulars

specified in Schedule F. The annual transaction reconciliation shall,

unless the Commissioner otherwise approves in any particular case,

be drawn up in such electronic format as would enable such

detailed analysis as may be specified in guidelines, including an

analysis of the price of sales and of the tax withheld on sales by

reference to the vendor, the payor and the type of produce. The

annual transaction reconciliation required to be furnished by a

payor who is a licensed broker (pitkal) shall contain such further

details and breakdowns as may be required by guidelines.

(2) Every payor shall also prepare an annual reconciliation of

remittances giving the details of the deductions and remittances of

tax made in respect of those sales and the other particulars

specified in Schedule G.

(3) The annual transaction reconciliation and the annual

reconciliation of remittances shall be furnished to the

Commissioner by not later than the last working day of January of

the year following that to which they refer.

(4) The obligation to furnish the annual transaction

reconciliation and the annual reconciliation of remittances shall

arise even when a payor has not made any deductions of tax or has

no relevant transactions to report.

(5) A person whose registration as a payor is cancelled shall

fu rn i sh an an nu al t r an sact io n reco nc il ia ti on and a n an nu al

reconciliation of remittances as aforesaid covering the period of the

respective calendar year up to the month during which he issued the

last purchase note as a payor.

Amended by

L.N. 409 of 2007.

(Rule 17)

Additional Tax

Default

I m p o s i t i o n o f A d d i t i o n a l Ta x

(subject to a maximum of €450 for

each default per regulation)

Payor Registration AS 1

Payor fails to register or re-register

€100 for default in registering or

under these regulations

reregistering as a Payor, as the case

may be

Certificate of deduction

Payor fails to issue a certificate of

€23 for every transaction that is not

deduction to vendor or fails to

supported by a certificate of

deduct tax

deduction

Monthly statement AS 5

Payor fails to submit to the

€23 for every month, or part thereof,

Commissioner, form AS 5

during which form AS 5 has not been

forwarded to the Commissioner

Monthly payment

Payor fails to remit to the

1% per month, or part thereof, during

Commissioner the monthly total

which the default continues

amount of withholding tax deducted

calculated on the tax due when the

payment is effected

OR

€45 whichever is the greater.

Annual statement to vendor AS 3

Payor fails to furnish the vendor with €45 for every statement not furnished

the annual statement AS 3

by Payor

Annual Reconciliation statements AS 6 and AS 7

P a y o r f a i l s t o s u b m i t t o t h e 1% per month, or part thereof, during

Commissioner forms AS 6 and AS 7

which the default continues

calculated on the tax deducted for the

year

OR

€100 whichever is the greater

Where a purchase note has been issued in accordance with

rule 5 it shall be presumed, in so far as the tax liability of the

vendor is concerned, that that any amount of tax shown in the note

as having been deducted from a qualifying sale has been duly

deducted and remitted in accordance with rules 4 and 6.

(1) A payor who is a licensed broker (pitkal) may make

arrangements with a representative under which the representative

will assume the obligation to prepare and furnish the documents

referred to in rules 5, 6, 7 and 8 and any other documents and

information requested by the Commissioner.

(2) A payor who is a licensed broker (pitkal) may make

arrangements with a bank under which the bank will assume

obligation for the payments to vendors for sales effected through

his services and for the remittance of the tax deducted from the said

payments to the Commissioner.

(3) When arrangements to which sub-rules (1) or (2) apply

have been approved in writing by the Commissioner and accepted

by the representative or the bank, as the case may be, they shall

bind the said representative or bank to assume in lieu of the

licensed broker (pitkal) those obligations of the payor to which the

arrangements refer and the liability to the relative additional tax

imposed under these rules for a default.

(4) The obligations to register and to apply for deregistration as

provided in rule 3 shall not apply to any such representative or

bank but shall continue to apply to the licensed broker (pitkal) who

makes the said arrangements.

When tax has been deducted in accordance with these rules

from the price of a qualifying sale and where a purchase note has

been issued in accordance with these rules in respect of that sale,

the deduction of the tax shall be deemed to be in final settlement of

the tax due by the vendor on the income derived from that sale and

no further tax shall be due by the vendor on the said income. The

tax deducted as aforesaid shall not be available as a credit against

the vendor’s tax liability and shall not be available for a refund to

the vendor or, where the vendor is a company, to any shareholder

thereof, or to any other person.

(1) A person whose income consists of, or includes

income from qualifying sales, shall deliver together with his

income tax return for any year of assessment the annual statement

or annual statements furnished to him by a payor or by payors as

required by rule 7 and, when so requested, the purchase notes

referred to in rule 5. He shall also deliver with his income tax

return such attachments as may be prescribed by rules with respect

to returns filed by vendors of agricultural produce.

(2) Save as provided in this rule and subject to the provisions

of rules 15 and 16, a vendor of qualifying sales other than a

company shall not be required to produce to the Commissioner any

other records or documents relating to qualifying sales.

(3) Nothing in these rules shall be construed as exempting any

person from the obligation to keep records and other documents

and to furnish information, including records and information

relating to qualifying sales, that may be required in terms any

provision of the Income Tax Acts for the purpose of determining

and ascertaining the total income from sources of income other

than from qualifying sales, including the determination of the

deductions in accordance with rule 14(3)(b).

The amount that is deemed, in accordance with rule 14(1),

to be the total income derived by a company (including a co-

operative society) from qualifying sales, net of the tax deducted

therefrom in accordance with these rules, shall be allocated to its

Maltese taxed account and shall be treated for all purposes of the

Income Tax Acts as income that has been taxed at 5%.

(1) The total income derived by a person from qualifying

sales for any year of assessment shall be deemed to amount to sixty

per cent of the total price of those sales for that year before

deductions and shall be reported in the relative tax return

accordingly.

(2) In the calculation of the total income in accordance with

sub-rule (1) all deductions otherwise available for that year of

assessment with respect to income from qualifying sales, including

any unabsorbed capital allowances and/or losses relating to that

income that may have been brought forward from any previous

year, shall be deemed to have been set off and absorbed, and no

deduction shall be allowed against that income except as provided

in sub-rule (1).

(3) Where the person who derives income from qualifying

sales also derives income from other sources

(a) for the purpose of calculating the tax due on the

income derived from such other sources, and without

prejudice to rule 11, the income from qualifying sales,

determined in accordance with these rules, shall be

deemed to constitute the first part of the total income

from all sources;

(b) if the income from those other sources consists of or

includes income from non-qualifying sales the

deductions that that person may claim and that are

allowable for the purpose of ascertaining the total

income derived from non-qualifying sales shall be the

lower of

(i) D x NQS / S

where

-

D is the amount that would be allowable as

deductions for the year of assessment in

question, had this rule not been applicable to

that year of assessment, in determining the total

income derived from qualifying and non-

qualifying sales

-

NQS is the total receipts before deductions

derived from non-qualifying sales

-

S is the total receipts before deductions derived

from non-qualifying sales and from qualifying

sales gross of tax deductible in accordance with

these rules

and

(ii) the amount allowable in accordance with the

other relevant provisions of the Income Tax Acts

without reference to this rule.

(1) Subject to the other provisions of this rule and to rule

16, a vendor may, by means of an irrevocable notice in writing, opt

to have his tax liability for a year of assessment determined without

reference to rule 14.

(2) An option for the purpose of sub-rule (1) shall be made in

writing on the applicable form prescribed for the tax return for each

year of assessment in respect of which it is exercised, and shall not

be valid unless the said form is delivered to the Commissioner by

the relative tax return date

(3) An option under this rule shall apply to income from all

qualifying sales for the relative year of assessment and any

restriction, exclusion or reservation shall be disregarded.

Notwithstanding the other provisions of these rules, when

the option referred to in rule 15(1) has been validly exercised for a

year of assessment

(a) the total income of that person for that year shall be

computed without reference to rule 14: provided that

where any amount of losses or capital allowances has

been deemed as set off and absorbed in accordance

with rule 14(2) in a particular year of assessment for

which the option was not exercised, it shall not be

treated as unabsorbed and carried forward to a

subsequent year, even though an option as aforesaid is

exercised for that subsequent year;

(b) the amount of tax withheld in accordance with these

rules, as evidenced by the delivery of the annual

statement and, if so requested, the relative purchase

notes, shall be available against the taxpayer’s tax

liability and where any tax so withheld is in excess of

such liability, the difference shall be refunded;

(c) rule 12(2) shall not apply to records and documents

relating to qualifying sales made for that year;

(d) where the taxpayer is a co-operative society, the

income from its qualifying sales for that year shall be

allocated to its untaxed account.

The failure by any person to comply with any obligation

imposed by these rules shall constitute a default against these rules

and shall render that person liable to additional tax as prescribed in

Schedule H.

(1) Without prejudice to rule 12 and subject to the

provisions of article 20 of the Income Tax Management Act, the

Commissioner may require any person to allow him access to any

place where an agricultural activity is carried on or where

agricultural produce is sold and to give such information about

such activity or sale as he may consider relevant for the proper

application of the Income Tax Acts in general and of these rules in

particular to income from the sale of agricultural produce.

(2) When, as a direct or indirect result of any disposition, any

sale of agricultural produce is reported for the purpose of these

rules as a sale made by a person other than the person who would

be the vendor were it not for that disposition, and if that disposition

was made for the sole or main purpose of avoiding, reducing or

postponing liability to tax or of obtaining any refund or set-off of

tax, the Commissioner may, by order in writing, determine the

person who should or should not be treated as the vendor in that

sale and the rules shall apply to that sale according to that order.

(3) In sub-rule (2) "disposition" includes any agreement, deed,

arrangement, renunciation or declaration.

(4) An order made under sub-rule (2) shall be subject to

objection and appeal in accordance with the provisions of the

Income Tax Acts.

Notwithstanding the other provisions of these rules, where

a person derives income from a qualifying sale but also qualifies, in

respect of such income, under the provisions of the Part-time Work

Rules, the tax liability in respect of such income shall be

determined without reference to rules 12(1) and 14, and such

person may, by means of a notice in writing on the form as may be

prescribed under the said rules, opt to -

(a) have the tax withheld under the provisions of rule 4 to

be considered as final; or

(b) declare the said income on the form prescribed under

the Part-time Work Rules, in which case the provisions

of the said rules shall apply thereto, with the tax

withheld under the provisions of rule 4 being credited

against the tax so charged, and any excess shall be

available as a credit against the individual’s tax

liability as resulting from the tax return submitted in

accordance with article 10 of the Income Tax

Management Act, and where any tax so paid is in

excess of such liability, it shall be refunded.