Income Tax Act (Cap. 123), article 18

18. (1) ( a) If in the year preceding a year of assessment the surrendering company has incurred an allowable loss, the amount of the loss may be set off for the purposes of tax against the total income of the claimant company for the corresponding year of assessment and, where applica ble, for subsequent years of assessment provided that in the year in which the surrendering company incurs the loss both companies have accounting periods which begin and end on the same dates: Provided that where the surrendering company makes up accounts and pays tax in a currency other than that of the clai mant company any loss surrendered shall be set off against the total income of the claimant company as aforesaid, after such amount is converted to the curren cy in which the claimant company makes u p accounts and pays tax. Such conversion shall be carried out by reference to the mean rate or rates of exchange between such currency or currencies and the euro ruling on the last day of the accounting period to which such loss refers as issued by the Ce ntral Bank of Malta. (b) A surrendering company may surrender allowable losses by way of group relief in excess of the total income of the claima nt company in the year preceding a y ear of assessment, in which ca se the claimant company may carry f orward and set off those losses in accordance with the provisions of article 14(1)( g) as if they were losses of its own trade. (c) Where the allowable loss, had it been a profit, would have been allocated to the immovable property account or the Maltese taxed account of the surrendering company, the claimant company may deduct such loss from its income which stands to be allocat ed to either its immovable property account or its Maltese taxed account, and such loss may only be carried forward against the claimant company’s total income arising in subsequent years as would stand to be allocated to any of these taxed accounts. (d) Where the allowable loss, had it been a profit, would have been allocated to the foreign income account of the surrenderin g company, the claimant company ma y only deduct such loss from it s total income as would stand to be allocated to its foreign inco me account and such loss may only be carried forward against the claimant company’s total income arising in subsequent years as would stand to be allocated t o its foreign income account. S.L. 123.101 (e) For the purposes of paragraphs ( c) and ( d) any election made in accordance with rule 9(a) of the Tax Accounts (Income Tax) Rules shall be ignored. (2) Notwithstanding the provisions of sub-article (1), a company which is either - INCOME TAX [CAP. 123. 107 (a) newly incorporated an d at all times after its incorporation satisfies the conditions to be deemed a member of the same group of companies as another company in the year preceding a year of assessment and has the same accounting period end date as that other company in that y ear preceding the year of assessment, or (b) wound up part way through its accounting period and until it is so wound up satisfied the conditions to be deemed a member of the same group as another company in the year preceding a year of assessment and has the same accounting period start date as that other company in that y ear preceding the year of assessment, will be deemed for the purposes of sub-article (1)( a) to have an accounting period which begins and ends on the same date as tha t of the other company and group relief shall be available in ful l for that year. Group relief anti- avoidance. Added by: XVII. 1994.13.