By means of Legal Notice 411 of 2018, Malta has like all other EU Member States implemented the EU Anti-Tax Avoidance Directive. The regulations will be applicable as from 1st January 2019 with the exception of those relating to Exit Taxation which will be applicable as from 1st January 2020.
The following is a brief summary of Rule 6 of the regulations which deal with GAAR.
Rule 6 of the Legal Notice provides for a new anti-avoidance provision that overlaps with that found in Article 51 of the Income Tax Act.
The new GAAR provides that for the purposes of calculating the income tax liability, any arrangements or a series of arrangements shall be ignored if such arrangements have been put in place where the main purpose or one of the main purposes of such arrangements is to obtain a tax advantage that defeats the object or the purpose of the main applicable tax law and are not genuine having regard to all relevant facts and circumstances. An arrangement or a series of arrangements are regarded as non-genuine if they are put in place for non-valid commercial reasons which do not reflect economic reality.