New tax guidelines issued in connection with business interests outside Malta

The Inland Revenue Department has recently issued new tax guidelines in connection with the stamp duty determinations given to companies in terms of Article 47 of the Duty on Documents and Transfers Act (hereinafter referred to as ‘the Act’).  The new guidelines have clarified that the following will not be considered to constitute business interests […]

Written By ACT Team

On December 5, 2016
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The Inland Revenue Department has recently issued new tax guidelines in connection with the stamp duty determinations given to companies in terms of Article 47 of the Duty on Documents and Transfers Act (hereinafter referred to as ‘the Act’). 

The new guidelines have clarified that the following will not be considered to constitute business interests outside Malta whether they are carried on by the applicant company or by any company or partnership of which it holds at least 25% of the capital, voting rights and rights to profits available for distribution to shareholders or partners as the case may be: 

  1. turnover derived from any activities carried on with customers/clients who are resident in Malta and who do not fall within the purport of sub-article (3) of article 47 of the Act;
  2. turnover derived from any activities carried on directly or indirectly with customers/ clients who are not resident in Malta but who operate in Malta through a permanent establishment situated in Malta, where the particular business activities are effectively connected with such permanent establishment and where such persons do not fall within the purport of sub-article (3) of article 47 of the Act;
  3. turnover derived from any retail, catering, on-land entertainment, manufacturing and other related productive activities, transport, agricultural or fishing activities which are carried on in Malta or any activities the income derived from which is referred to in paragraph (3) of Rule 5 of the Tax Accounts (Income Tax) Rules, irrespective of the residence status of the particular customer/ client.  

Any determinations are given by the Commissioner before 1 December 2016 shall continue to be valid for a further period of three years from the date of publication of these guidelines.  Determinations made on or after 1 December 2016 shall be valid for a period of three years from the date of the determination. Determination made by the Commissioner may, at the option of the applicant, be renewed for further periods of three years. 

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].