CHAPTER 123 INCOME TAX ACT - Education

1 INCOME TAX [CAP. 123. 1 CHAPTER 123 INCOME TAX ACT To impose a Tax upon Incomes. Amended by: XVII. 1st January, 1949 ACT LIV of 1948, as amended by Acts: VI of 1953, XX of 1955, V of 1958; EmergencyOrdinance XV of 1958; Ordinances: VIII and XVI of 1959, XXV of 1960, XXIV and XLI of1961, XXV of 1962; Legal Notice 4 of 1963; Acts: X and XIV of 1963; V of 1964; Legal Notice46 of 1965; Acts: XXXI of 1966, XXVII of 1967, VIII of 1969, XXVIII and XXXV of 1972, Xand XX of 1973, XLIX and LVIII of 1974; Legal Notice 148 of 1975; Acts: XLII of I975, XXII,XXIV and XXXIX of 1976, XXVI of 1977, XXVIII of 1978, XXI of 1980, IX and XL of 1981, IXand XIII of 1983; XIV of 1984, VIII of 1987.]

2 XXXI of 1988, XIX of 1989, XXXVI of 1990, VIIIof 1991, XIII of 1992, XVIII of 1993, I and XVII of 1994, XXII of 1995, XX of 1996, V, XVII of1998, IX of 1999 and XI of 2000; Legal Notice 238 of 2000; Acts IV and IX of 2001, II of 2002,II of 2003, II, III and XIII of 2004, II and IX of 2005, II of 2006, and II, IV, IX, XIII and XXXIIof 2007; Legal Notice 409 of 2007; Acts II and XVII of 2009; Legal Notice 98 of 2009; Acts Iand XIX of 2010; Legal Notice 336 of 2010; Acts IV, XVI and XXII of 2011, and V of 2012;Legal Notice 218 of 2012; and Acts III of 2013, XII, XXII, XXIII and XXXVII of 2014, XIII,XXI and XXXIII of 2015, XV of 2016 , XVI of 2017, VII of 2018 , VII of 2019 and VIII of OF ACT ArticlesPart 1-3 Part II.

3 Imposition of INCOME Tax 4-11 Part III. Exemptions 12-13 Part IV. Deductions 14-26 Part V. Special Provisions 27-52 Part Deductions53-55 Part of Tax 56 Part Rebate 57-58 Part IX. Persons Assessable 59-73 Part X. Relief of Double Taxation 74-95 Part to make Rules 96 2 CAP. 123.] INCOME TAX PART I PRELIMINARYS hort short title of this Act is the INCOME Tax Amended by:V. ; ; XXV. ; ,4,5; 46 of 1965; ; ; ; ; ; ; XXVIII. ; ; ; ; XVII. ; 2; ; ;IX. ;II. ;II. ;II. ;IV. ;IX. ; 409 of 2007;I. ;IV. ;XXII. ;V. ;III. ;XIII. ;XV. ; ; (1) In this Act, and in any rules made under this Act,unless the subject or context otherwise requires - "a company registered in Malta" shall mean a company which isresident in Malta or a company which, although not resident inMalta, carries on any activity in Malta and in the case of a companywhich is neither incorporated nor resident in Malta shall mean acompany that is registered for this purpose with the Commissionerin such manner as may be prescribed.

4 "body of persons" means any body corporate, including acompany, and any fellowship, society or other association ofpersons, whether corporate or unincorporate, and whether vestedwith legal personality or not;"bonus shares" means and includes the paid-up value of sharesdistributed by a company to its shareholders to the extent to whichthe paid-up value represents a capitalization of profits;"certified public auditor" means an individual who holds awarrant to act as auditor issued under the Accountancy ProfessionAct, or a partnership of auditors duly registered under the said Act,provided such individual is not disqualified and in the case of apartnership none of the partners is an individual who is disqualifiedfor appointment as auditor or from holding such appointment onany of the grounds mentioned in article 153 of the Companies Act;"chargeable INCOME " means the total INCOME of any person forany year;Cap.

5 370."collective investment scheme" means any scheme orarrangement which is licensed under the Investment Services Actor notified in terms of the Investment Services Act (List of NotifiedAIFs) Regulations;"Commissioner" means the Commissioner for Revenue;"Commonwealth" has the same meaning as is assigned to it inarticle 124 of the Constitution of Malta; "company" means - Cap. 168.(a) (i) a limited liability company constituted under theCompanies Act or under the CommercialPartnerships ordinance ; or(ii) any other company constituted as such under anyother law in force in Malta;(iii) (1) any partnership en nom collectif and anypartnership en commandite constitutedunder the Companies Act or under theCommercial Partnerships ordinance ; INCOME TAX [CAP.]

6 123. 3 Cap. 16.(2) any partnership regulated by the applicableprovisions of the Civil Code and registeredin such manner as may from time to time beprovided in terms of the Second Scheduleto the Civil Code; (3) any European Economic Interest Grouping(EEIG) formed pursuant to the provisionsof the Companies Act (European EconomicInterest Grouping) Regulations;Cap. which partnership or EEIG as the case maybe, has elected to be treated as a company interms of article 27(6) of the INCOME TaxManagement Act and for as long as such electionremains in force:Cap. that in the case of a cell company asdefined in any regulations made in terms of theCompanies Act (hereinafter in this proviso referredto as "the Regulations") as these may be amendedfrom time to time, or in any other law or regulationsreplacing the Regulations, for all intents andpurposes of the INCOME Tax Acts, every cell of a cellcompany and that part of a cell company in whichnon-cellular assets are held, shall each be deemed tobe a separate company and any words andexpressions in the INCOME Tax Acts which arerelevant to a company shall be construedaccordingly.

7 The interpretation of such words andexpressions insofar as applicable to a cell companyshall be made on the basis of the relevant provisionsof the Companies Act and of the Regulations:Cap. further that a partnership en commandite with itscapital divided into shares constituted prior to the 1st ofJanuary, 2015 shall be deemed to have elected to betreated as a company in terms of article 27(6) of theIncome Tax Management Act and for as long as suchelection remains in force;(b) (i) any body of persons constituted, incorporated orregistered outside Malta, and of a nature similarto a company referred to in sub-paragraphs (i) or(ii) of paragraph (a) above;Cap.

8 372.(ii) any body of persons constituted, incorporated orregistered outside Malta and of a nature similarto any partnership referred to in sub-paragraph(iii) of paragraph (a) above, where such body ofpersons has elected to be treated as a company interms of article 27(6) of the INCOME TaxManagement Act and for as long as such electionremains in force;(c) any co-operative society duly registered as such underthe appropriate law for the time being in force inMalta; 4 CAP. 123.] INCOME TAX Cap. 535. "continental shelf" has the same meaning as is assigned to it inthe Continental Shelf Act; "debenture interest" means interest payable by a company underor by virtue of a debenture or a debenture trust deed, whether in theform of a mortgage or any other instrument or documentacknowledging indebtedness.

9 "distributable profits" shall mean the total profits which areavailable for distribution by a company registered in Malta underthe laws for the time being in force in Malta, and the distributableprofits shall, for the purposes of this Act, be allocated to thefollowing accounts, that is to say, final tax account, immovableproperty account, foreign INCOME account, Maltese taxed account,and untaxed account, and for the purposes of this definition theseaccounts shall comprise the distributable profits as set out in therespective definitions:Provided that in the case of a company which is neitherincorporated nor resident in Malta the distributable profits shall bethe profits attributable to the activities of such company in Maltaand in respect of which it has registered with the Commissionerless any of such profits which the company has distributed inprevious years;"dividend" includes - (a) bonus shares(b) any distribution made by a company, to its partners orshareholders, as the case may be, and any amountcredited to them as partners or shareholders as the casemay be.

10 And(c) any distribution made by a co-operative society to itsmembers and any amount credited to them asmembers, including any patronage refund, bonuscertificate or bonus share, made, paid or allotted inaccordance with the law regulating such societies forthe time being in force in Malta;"equity holding" shall mean a holding of the share capital in acompany which is not a property company, when the shareholdingentitles the shareholder to at least any two of the following rights(hereinafter referred to as "equity holding rights"):(i) a right to votes;(ii) a right to profits available for distribution toshareholders; and(iii) a right to assets available for distribution on awinding up of that company,and "equity shares", "equity shareholder" and "equityshareholding" shall be construed accordingly:Provided that the Commissioner shall be entitled todetermine that an equity holding exists even where such holding isnot a holding of the share capital in a company or does not consistsolely of such a holding of share capital, but where it can bedemonstrated that in substance there is at any time an entitlement to INCOME TAX [CAP.]