Updates to the Guidelines on the Consolidated Group (Income Tax) Rules

On the 3rd of June 2020, the Commissioner for Revenue (CfR) issued updated guidelines to the Consolidated Group (Income Tax) Rules.  The original guidelines had been issued earlier on this year.  The first update concerns the fact that prior to the update, for a company to join or form part of a fiscal unit, it had […]

Written By Shanice Finch

On June 4, 2020
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On the 3rd of June 2020, the Commissioner for Revenue (CfR) issued updated guidelines to the Consolidated Group (Income Tax) Rules.  The original guidelines had been issued earlier on this year. 

The first update concerns the fact that prior to the update, for a company to join or form part of a fiscal unit, it had to be a 95% subsidiary of its parent company throughout the whole of the basis year.  This has now been changed so that a company need not be a 95% subsidiary of its parent company throughout the whole of the basis year to join or form part of a fiscal unit.  It would be sufficient for the company to be a 95% subsidiary of its parent company at the end of the year preceding the year of assessment in which an election to form part of a fiscal unit is made.  Furthermore the parent company and its 95% subsidiary must have the same accounting periods.

The second update refers to non-Maltese resident companies forming part of a fiscal unit.  Prior to the updates, where a non-Maltese resident company forms part of a fiscal unit, it should satisfy the definition of ‘a company registered in Malta’,  whether it is acting as the principal tax payer or as a transparent subsidiary.  This has now been changed so that only in cases where the non-resident company is acting as a principal tax payer, it must satisfy the definition of ‘a company registered in Malta’.

Furthermore, it has now been clarified that a non-resident company that registers to form part of a fiscal unit, would be required to register with the CfR in order to be granted a Maltese income tax registration number prior to being registered as forming part of a fiscal unit.

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].