Following the Budget speech by the Minister of Finance on the 11th October 2021, a Bill has been presented in order to implement Budget Measures for the financial year 2022 and other administrative measures.
The following are the main highlights of the said Bill:
Amendments to the Income Tax Law
- Exemption on the transfer of securities listed on the Stock Exchange
The Bill proposes that the exemption currently applicable to the transfer of shares listed on the Malta Stock Exchange is extended to the transfer of shares listed on stock exchanges in the EU and EEA countries. In fact, the Bill proposes that the wording under A. 5 regulating this exemption be amended from ‘stock exchange recognised under the Financial Markets Act’ to stock exchange ‘established under the laws of a Member State of the European Union or of the European Economic Area’.
- Exempt Transfers by non-Residents
The exemption applicable to non-residents upon the transfer of any units in a collective investment scheme, of any units and such like instruments relating to linked long term business of insurance, including the surrender or maturity of linked long-term policies of insurance, of any interest in a partnership which is not a property partnership and of any shares or securities in a company has been extended to include also the transfer of any rights over such assets.
- Deductions with respect to Capital Expenditure on Intellectual Property
The Income Tax Act provides that a capital expenditure incurred on intellectual property (‘IP’) or intellectual property rights, where such IP is used in the production of the income, such expenditure can be deducted from the taxable income of the acquirer over a minimum period of 3 years.
A new proviso has been proposed stating that when such IP or IP rights is acquired from a group company and the said transfer was exempt, the total deduction that can be claimed by the acquirer is the lower of the cost of acquisition /market value of the said IP or IP rights at the time of transfer, less any expenditure that the transferor had already claimed as a deduction under this provision.
- Overseas Employment
Maltese tax law provides for a tax beneficial rate of 15% on employment income derived from a contract of employment requiring the performance of work or duties mainly outside of Malta, with certain exceptions.
A new proviso is being proposed whereas with effect from year of assessment 2023 :
- the pertinent contract of employment should at least last 24 months and the qualifying emoluments should be for a period of at least 24 months and
- if during the pertinent year, the individual was present in Malta for a period that exceeds or for periods that in aggregate exceed 30 days, (disregarding any period during which that individual was present in Malta on vacation leave or sick leave and disregarding any period preceding thecommencement or following the termination of the contract), the 15% option will not apply.
- Income from Sports Activity
The Income Tax Act provides for a tax beneficial rate of 7.5% on emoluments derived from a sports activity, either derived by a registered player or athlete or as a licensed coach.
A new proviso has been proposed to clarify that the 7.5% shall apply to the gross amount of emoluments derived and that the so tax chargeable shall be final and no set-off or refund shall be granted to any person in respect of the tax so charged.
Amendments to the Value Added Tax Act
Goods of a non-commercial nature imported in the personal luggage of travellers
The law provides that goods are exempt from VAT, provided that their total value does not exceed Eur430 per person.
The Bill has amended this provision, removing the value of Eur430 and instead requiring that reference is made to the value limitations provided in the Excise Duty (Goods Imported by Persons Travelling from Third Countries) Regulations. S.L. 382.02. The latter provides the value limitations on tobacco products, alcoholic beverages, fuel used for motor transport and any other goods the importation of which is exempt from tax.