Income Tax Act (Cap. 123), article 4

4. (1) Subject to the provisions of this Act, income tax shall be payable at the rate or rates specified hereafte r for the yea r of assessment commencing on 1st January, 1993 but only with respec t to any capital gains made on or after the 25th November, 1992 a nd for each subsequent year of assessment upon the capital gains a s defined in article 5 accruing or d erived from Malta or elsewher e, and whether received in Malta or not, and for the year of assessment commencing on 1st January, 1949 and for each subsequent year of assessment upon the income of any person accruing in or derived from Ma lta or elsewhere, and whether received in Malta or not in respect of - (a) gains or profits from any trade, business, profession or vocation, for whatever period of time such trade, business, profession or vocation may have been carried on or exercised including the profit arising from the sale by any person of any property acquired by him for the purpose of profit-making by sale, or from the carrying on or carrying out of any profit- making undertaking or scheme; (b) gains or profits from any employment or office, including the value of any benefit provided by reason of any employment or office; and - *Applicable from year of assessment 2019. INCOME TAX [CAP. 123. 15 (i) for the purpose of this paragraph the Minister responsible for finance may by regulations prescribe the circumstances in which a person shall be treated as receiving a benefit from another person provided by reason of an employment or office and the value of any such benefit; (ii) where in terms of the said regulations a person is treated as receiving a bene fit provided by virtue of an employment or office after the termination thereof and that benefit has the nature of a pension the benefit shall be treated as a pension and the value determin ed in accordance with the said regulations shall constitute income chargeable to tax under paragraph ( d). Cap. 371. (c) dividends, premiums, interest (which includes any gains from any sum of money in whatever currency deposited with a person carrying on the business of banking under the Banking Act in any account whatsoever) or discounts: Provided that, notwithstanding any other provision of this Act, such income of a company from an offshore banking subsidiary company shall constitute income chargeable to tax under paragraph (a) and the provisions of article 56(6) s hall apply to such income; (d) any pension, charge, annuity or annual payment; (e) rents, royalties, premiums and any other profits arising from property; (f) Repealed by Act XX of 1996 ; (g) gains or profits not falling under any of the foregoing paragraphs: Provided that: (i) in the case of income arising outside Malta to a person who is not ordinarily resident in Malta or not domiciled in Malta, the tax shall be payable on the amount received in Malta; (ii) no tax shall be payable on capital gains arising outside Malta to a person who is not ordinarily resident in Malta or not domiciled in Malta or to a person who is charged to tax at the rate of fifteen cents (0.15) in the euro as laid down in article 56(11); (iii) in the case of any person who is charged to tax at the rate of fifteen cents (0.15) in the euro as laid down in article 56(11), the tax shall be payable only on any income or capital gains arising in Malta and on any amount of income arising outside Malta and received in Malta; 16 CAP. 123.] INCOME TAX Cap. 625. (iv) in the case of income or capital gains arising from activities carried out in an exclusive economic zone area, only activities which are licensed or otherwise authorised to be undertaken in accordance with the Exclusive Economic Zone Act shall be deemed to be carried out in Malta and the provisions of the Income Tax Acts shall apply accordingly. For the avoidance of doubt, transfers of assets situated within the exclusive economic zone area shall be deemed to have taken place in Malta and the provisions of articles 5 and 5A of this Act shall apply accordingly. Added by: VII.2018.15* S.L.217.05 S.L. 460. 17 Sohowever that items (i) and (ii) of this proviso shall not apply to an individual who is a long-term resident, or who holds a permanent residence certificate or a permanent residence card, in respect of any income derived by such individual in the year of being granted long-term resident status or the right of permanent residence and in subsequent years. The terms "long-term resident", "permanent residence certificate" and "permanent residence card" shall have the meaning assigned to them respectively in the Status of Long-Term Residents (Third Country Nationals) Regulations and the Free Movement of European Union Nationals and their Family Members Order. Sohowever also that paragraphs (i) and (ii) of this proviso shall not apply to an individual whose spouse is ordinarily resident and domiciled in Malta. (2) Any sum realized under any insurance against a loss of profits shall be taken into account in the ascertainment of any profits or income. (3) Where a person carries on in Malta an agricultural, manufacturing or other productive undertaking, the following provisions shall have ef fect, that is to say: (a) if such person sells any product of the undertaking, in a wholesale market, outsi d e M a l t a o r f o r d e l i v e r y outside Malta, whether the contract is made within Malta or outside Malta, the full profits arising from the sale shall be deemed to be income of such person accruing in or der ived from Malta: Provided that if it is shown to the satisfaction of th e Commissioner that the profit has been increased through treatment of the product outside Malta other than handling, grading, blending, sorting, packing or disposal, such increase of p rofits shall not be deemed to be income accruing in or derived from Malta; (b) if such person otherwise disposes of, uses or deals with any product of the undertaking, outside Malta, the *Applicable from the year of assessment 2019. INCOME TAX [CAP. 123. 17 profit which might have been obtained if such person had sold the product to the best advantage in a wholesale market outside Malta shall be deemed to be the profit arising from such disposal, dealing or use, and to be the income of such person accruing in or derived from Malta. (4) Where a body of persons carries on a club or similar institution and receives from its members not less than one hal f of its gross receipts on revenue acco unt (including entrance fees and subscriptions), it shall not be d eemed to carry on a business; but where less than one half of its g ross receipts are received fro m members, the whole of the income from transactions both with members and others (including entrance fees and subscriptions) shall be deemed to be receipts from a business, and the body of persons shall be chargeable either in respect of the profits therefrom or in respect of the income which would be assessable if it were not deemed to carry on a business whichever is the grea ter. In this sub-article ''members'' in relation to a body of persons means those pe rsons who are entitled to vote at a gener al meeting of the body at which eff ective control is exercised ove r its affairs. Nothing in this sub-article sh all operate to a nnul or reduce an exemption granted in article 12, save as provided in sub-art icle (1)(l) thereof. ( 5 ) W h e r e u n d e r t h e p r o v i s i o n s o f a r t i c l e 2 4 , a b a l a n c i n g charge falls to be made, the amount thereof shall be deemed to be income chargeable with tax under this Act. (6) Subject to the provisions of su b-article (7), on the winding up, in full or in part, of any pension, saving, provident or ot her society or fund approved by the Commissioner for the purposes o f article 53(1)( b)(ii), the following provisions shall have effect: (a) any refund, reimbursement, gratuity, bonus, payment, compensation or other return or benefit paid or accruing to any person as a c onsequence of winding up shall, notwithstanding anything to the contrary contained in this Act or in any law, document, deed, contract, agreement or other instrument, be deemed to constitute income chargeable to tax in the hands of the said pension, saving, provident or other society or fund in the year of assessment in which it is granted or so accrues, and not to constitute income chargeable to tax in the hands of the person to whom it is paid or accrues; and (b) no refund, reimbursement, gratuity, bonus, payment, compensation or other return or benefit shall be paid as aforesaid before payment has been effected of the tax chargeable in accordance with the provisions of this sub-article. (7) Sub-article (6) shall not apply - (i) to any benefit, or value thereof, chargeable with 18 CAP. 123.] INCOME TAX tax under sub-article (6) and which is paid or payable to members of the said pension, saving, provident or other society or fund, or other beneficiaries claiming through or under them, in accordance with the conditions under which the said pension, saving, provident or other society or fund was approved by the Commissioner; (ii) to any capital sum exempt from tax under article 12(1)( g). Profits or income prior to a change in residence or domicile. Added by: I. 2010.11.