Income Tax Act (Cap. 123), article 56

56. (1) Saving the other provisions of this article, the tax upon the chargeable income of every person shall be determined as follows: (a)** in the case of a married couple resident in Malta in the year immediately preceding the year of assessment and to whom articl e 49 applies, saving where an election has been made for a separate return for the purposes of article 49A o r where the responsible spouse has opted for a separate computation for the purposes of article 50 : (i) where the provisions of subparagraphs (ii) and (iii) do not apply, the tax shall be determined as follows: (a) where the chargeable income does not exceed €15,000, the tax shall be determined by multiplying the chargeable income by 0%; (b) where the chargeable income exceeds €15,000 but is less than €2 3,000, the tax shall be determined by multiplying the chargeable income by 15% and then subtracting €2,250 from the result; (c) where the chargeable income exceeds €23,000 but is less than €60,000, the tax shall be determined by multiplying the chargeable income by 25% and then subtracting €4,550 from the result; (d) where the chargeable income exceeds €60,000, the tax shall be determined by multiplying the chargeable income by 35% and then subtracting €10,550 from the result; (ii) subject to sub-paragraph (iii) where, in the year immediately preceding the year of assessment: (A) the married couple maintained under its custody a child who was not over eighteen (18) years of age, or not over twenty-three (23) years of age if receiving full-time education at any university, college or other educational establishment; and INCOME TAX [CAP. 123. 167 S.L. 217.05. (B) at least one of the spouses was a national of a European Union or European Economic Area Member State (EEA) or had a long-term resident status in accordance with the Status of Long-term Residents (Third Country Nationals) Regulations ; and (C) in the case where none of the spouses was a national of a European Union or European Economic A r e a ( E E A ) M e m b e r S t a t e , t h e s a i d c h i l d w a s b o r n i n Malta and was resident in Malta, the tax shall be det ermined as follows: (a) where the chargeable income does not exceed €17,500, the tax shall be determined by multiplying the chargeable income by 0%; (b) where the chargeable income exceeds €17,500 but is less than €26,500, the tax shall be determined by multiplying the chargeable income by 15% and then subtracting €2,625 from the result; (c) where the chargeable income exceeds €26,500 but is less than €60,000, the tax shall be determined by multiplying the chargeable income by 25% and then subtracting €5,275 from the result; (d) where the chargeable income exceeds €60,000, the tax shall be determined by multiplying the chargeable income by 35% and then subtracting €11,275 from the result; (iii) where in the year immediately preceding the year of assessment: (A) the married couple maintained under its custody at least two (2) children each of whom was not over eighteen (18) years of age, or not over twenty-three (23) years of age if receiving full-time education at any university, college or other educational establishment; and *Applicable from year of assessment 2019. †Applicable from year of assessment 2020. ‡Applicable from year of assessment 2021. §Applicable from year of assessment 2026. **Applicable from the year of assessment 2027. Vide Article 13(2) of Act III of 2026 . 168 CAP. 123.] INCOME TAX S.L. 217.05. (B) at least one (1) of the spouses was a national of a European Union or European Economic Area (EEA) Member State or had a long-term resident status in accordance with the Status of Long-term Residents (Third Country Nationals) Regulations ; and (C) in the case where none of the spouses was a national of a European Union or European Economic Area (EEA) Member State, the children so maintained were born in Malta and were resident in Malta, the tax shall be determined as follows: (a) where the chargeable income does not exceed €22,500, the tax shall be determined by multiplying the chargeable income by 0%; (b) where the chargeable income exceeds €22,500 but is less than €32,000, the tax shall be determined by multiplying the chargeable income by 15% and then subtracting €3,375 from the result; (c) where the chargeable income exceeds €32,000 but is less than €60,000, the tax shall be determined by multiplying the chargeable income by 25% and then subtracting €6,575 from the result; (d) where the chargeable income exceeds €60,000, the tax shall be determined by multiplying the chargeable income by 35% and then subtracting €12,575 from the result: Provided that an individual who is a national of a European Union or Europ ean Economic Area (EEA) Member State may qualify for the rates specified in sub- paragraphs (i) or (ii) or (iii) even where his spouse is not resident in Malta if the other conditions referred to in the relevant sub-paragraph are satisfied and the Commissioner is satisfied that at least ni nety per cent (90%) of the couple’s world-wide income is derived from Malta; (b)* in the case of any other individual resident in Malta in the year immediately preceding the y ear of assessment, including ea ch spouse where an election has been made for a separate return fo r the purposes of article 49A or where the responsible spouse has opt ed for a separate computation for the purposes of article 50: (i) where the provisions of the other sub-paragraphs *Applicable from the year of assessment 2027. Vide Article 13(2) of Act III of 2026 . INCOME TAX [CAP. 123. 169 do not apply, the tax shall be determined as follows: (a) where the chargeable income does not exceed €12,000, the tax shall be determined by multiplying the chargeable income by 0%; (b) where the chargeable income exceeds €12,000 but is less than €16,000, the tax shall be determined by multiplying the chargeable income by 15% and then subtracting €1,800 from the result; (c) where the chargeable income exceeds €16,000 but is less than €60,000, the tax shall be determined by multiplying the chargeable income by 25% and then subtracting €3,400 from the result; (d) where the chargeable income exceeds €60,000, the tax shall be determined by multiplying the chargeable income by 35% and then subtracting €9,400 from the result; (ii) where in the year preceding the year of assessment the said individua l was a parent and maintained under his custody a child, or paid maintenance in respect of hi s child as provided in article 12(1)(t), and such child was not o ver eighteen (18) years of age, or not over twenty-three (23) years of age if receiving full-time education at any university, coll ege or other educational establishmen t, then unless the provisions of sub-paragraphs (iii), (iv) or (v) apply to such a parent, th e tax shall be determined as follows: (a) where the chargeable income does not exceed €13,000, the tax shall be determined by multiplying the chargeable income by 0%; (b) where the chargeable income exceeds €13,000 but is less than €17,500, the tax shall be determined by multiplying the chargeable income by 15% and then subtracting €1,950 from the result; (c) where the chargeable income exceeds €17,500 but is less than €60,000, the tax shall be determined by multiplying the chargeable income by 25% and then subtracting €3,700 from the result; (d) where the chargeable income exceeds €60,000, the tax shall be determined by multiplying the chargeable income by 35% and then subtracting €9,700 from the result; (iii) where in the year immediately preceding the year 170 CAP. 123.] INCOME TAX of assessment the said individual was unmarried or a widower, or was a spouse separated de jure or de facto , or was divorced, and the said individual: (A) wholly maintained under his sole custody a child who was not over eighteen (18) years of age, or not over twenty-three (23) years of age if receiving full- time education at any university, college or other educational establishment or serving an apprenticeship with a view to qualifying in a trade or profession, or who was incapacitated by infirmity from maintaining himself, and who, in any case, was not in receipt of income, in his own right, in excess of three thousand and four hundred euro (€3,400); and Cap. 318. (B) where a children’s allowance is payable in respect of that child under the Social Security Act was recognised by the Director General (Social Security) as the sole beneficiary of the children’s allowance payable in respect of the said child; and (C) was not in receipt of any financial assistance in respect of the ma intenance of the said child from the other parent of the said child; and (D) was not living or residing at the same house with the other parent of the said child, the tax shall be determined, unless that individual qualifies for a more beneficial tax rate in accordance with sub-paragraphs (iv) or (v), in accordance with the table set out in paragraph (a)(i); (iv) subject to sub-paragraph (v) where, in the year immediately preceding the year of assessment: (A) the said individual: Cap. 614. (a) maintained under his custody a child who is his child or a child of his spouse or a child of a person who is that individual’s cohabitant as certified by a certificate of cohabitation issued in accordance with the Cohabitation Act; or (b) paid maintenance as provided in article 12(1)(t) in respect of his child; and INCOME TAX [CAP. 123. 171 S.L. 217.05. (B) the said individual or his spouse was a national of a European Union or European Economic Area (EEA) Member S tate or had the status of a long- term resident in accordance with the Status of Long- term Residents (Third Country Nationals) Regulations ; and (C) the said child was not over eighteen (18) years of age, or not over twenty-three (23) years of age if receiving full-time education at any university, college or other educational establishment; and (D) in the case where neith er the said individual nor his spouse was a national of a European Union or European Economic Area (EEA) Member State, the said child was born in Malta and was resident in Malta, the tax shall be det ermined as follows: (a) where the chargeable income does not exceed €14,500, the tax shall be determined by multiplying the chargeable income by 0%; (b) where the chargeable income exceeds €14,500 but is less than €21,000, the tax shall be determined by multiplying the chargeable income by 15% and then subtracting €2,175 from the result; (c) where the chargeable income exceeds €21,000 but is less than €60,000, the tax shall be determined by multiplying the chargeable income by 25% and then subtracting €4,275 from the result; (d) where the chargeable income exceeds €60,000, the tax shall be determined by multiplying the chargeable income by 35% and then subtracting €10,270 from the result; (v) where in the year immediately preceding the year of assessment: (A) the said individual: Cap. 614. (a) maintained under his custody at least two (2) children each of whom is his child or a child of his spouse or a child of a person who is that individual’s cohabitant as certified by a certificate of cohabitation issued in accordance with the Cohabitation Act ; or 172 CAP. 123.] INCOME TAX (b) paid maintenance as provided in article 12(1)(t) in respect of at least two (2) children who are his children; or (c) satisfied the condition in clause A(a) in respect of one (1) child and satisfied the condition in clause A(b) in respect of another child; and S.L. 217.05. (B) the said individual or his spouse was a national of a European Union or European Economic Area (EEA) Member State or had a long-term resident status in accordance with the Status of Long-Term Residents (Third Country Nationals) Regulations ; and (C) each of the said two (2) children was not over eighteen (18) years of age, or not over twenty-three (23) years of age if receiving full-time education at any university, college or other educational establishment; and (D) in the case where neit her the said individual nor his spouse was a national of a European Union or European Economic Area (EEA) Member State, the said two (2) children were born in Malta and were resident in Malta, the tax shall be determined as follows: (a) where the chargeable income does not exceed €18,500, the tax shall be determined by multiplying the chargeable income by 0%; (b) where the chargeable income exceeds €18,500 but is less than €25,500, the tax shall be determined by multiplying the chargeable income by 15% and then subtracting €2,775 from the result; (c) where the chargeable income exceeds €25,500 but is less than €60,000, the tax shall be determined by multiplying the chargeable income by 25% and then subtracting €5,325 from the result; (d) where the chargeable income exceeds €60,000, the tax shall be determined by multiplying the chargeable income by 35% and then subtracting €11,325 from the result. (c) in the case of any individual who is not resident in Malta during the year immed iately preceding the year INCOME TAX [CAP. 123. 173 of assessment - For every euro of the first €700............................... .......... 0c For every euro of the next €2,400.............................. .... 20c For every euro of the next €4,700.............................. ..... 30c For every euro of th e remainder ............................... ..... 35c: Provided that - (i) in the case of an individual who is a national of a European Union or Eur opean Economic Area Member State (hereinafter "EU/EEA individual"), where the Commissioner is satisfied that at least 90% of the said individual’s worldwide income is derived from Malta, the rates specified in paragraph (b) of this sub-article shall apply; (ii) the EU/EEA individual may alternatively qualify for the rates specified in paragraph ( a) of this sub-article even where his or her spouse is not resident in Malta if the other conditions mentioned in paragraph ( a) are satisfied and the Commissioner is satisfied that at least 90% of the couple’s worldwide income is derived from Malta; (iii) where the rates sp ecified in paragraphs ( a) or ( b) are applicable, the provisions of the Income Tax Acts that are applicable with regards to exemptions, deductions , credits and refunds shall be the same as those applicable to persons resident in Malta; (iv) in the case of an EU/EEA individual who does not qualify for the treatment under sub- paragraphs (i) to (iii) of this proviso, the tax resulting after applying the rates under this paragraph shall not be higher than the amount that results after dividin g the income charged to tax at the rates under this paragraph by the individual’s worldwide income and multiplying the result thereof by the amount of tax that would result by charging the said individual’s worldwide income at the rates under paragraph (a) or ( b), as applicable; (d) in the case of any other person - For every euro of the first €2,400 ........................... ...... 15c For every euro of the next €2,400.............................. ..... 20c For every euro of the next €3,500.............................. ..... 30c For every euro of th e remainder ............................... ..... 35c. (2) Notwithstanding the provisions of sub-article (1), the tax upon the chargeable income of individuals referred to in the sa id sub-article shall be charged a t the following special rates: (a) In the case of an individual born outside Malta who was resident in Malta in the year immediately preceding the year of asse ssment and who proves to 174 CAP. 123.] INCOME TAX the satisfaction of the Commissioner that he has received in Malta at one or more times during the year immediately preceding the year of assessment an amount of income of not less than one thousand and eight hundred and seventy euro (1,870) arising outside Malta and chargeable to tax under the provisions of this Act - (i) being a married individual to whom article 49 applies - For every euro of the first €5,900 .......................... 0 c For every euro of the remainder.......................... 15c; (ii) being any other such individual - For every euro of the first €4,200 .......................... 0 c For every euro of the remainder ......................... 15c: Provided that subject to the provisions in the next following paragraph, the rates laid down in sub- paragraphs (i) and (ii) hereof will not apply if the individual was domiciled in Malta or ordinarily resident in Malta before the first day of January, 1958. (b) The Minister responsible for finance may in his discretion authorise the application of paragraph ( a) in regard to any individual born outside Malta, notwithstanding that he was domiciled and/or ordinarily resident in Mal ta before the first day of January, 1958, if the Minister is satisfied that the said individual was absent from Malta in the period between the said date and the thirty-first day of December, 1963, saving occasional visits. (c) In the case of an individual born in Malta who was resident in Malta in the y ear immediately preceding the year of assessment and who proves to the satisfaction of the Commissioner that he has actually resided outside Malta for an aggregate period of not less than twenty years after the first day of January, 1938 and that he has receive d in Malta at one or more times during the year immediately preceding the year of assessment an amount of income of not less than one thousand and two hundred euro (1,200) arising outside Malta and chargeable to tax under the provisions of this Act, the rates laid down under paragraph ( a)(i) or (ii) hereof, as the case may be, shall apply: Provided that - (i) no such rates shall apply unless the Commissioner is satisfied that the individual was ordinarily resident and domiciled in Malta in the year immediately preceding the year of assessment; (ii) in computing the said aggregate period of twenty years there shall be excluded all calendar years during which the individual was ordinarily INCOME TAX [CAP. 123. 175 resident in Malta, and all periods prior to a date which precedes by thirty years the first day of the year of assessment in which the individual first satisfies all the other conditions stipulated in this sub-article. (d) In paragraphs ( a), (b) and ( c) - "individual born outside Malta" means an individual not born in Malta whose pare nts were not domiciled in Malta or not ordinarily resid ent in Malta on the date of his birth or at any time during the ten years previous to such date; "received in Malta" means the excess of the amount of income arising outside Malta and received in Malta over any sum transferred out of Malta. (e) The rates mentioned in paragraphs ( a), (b) and (c) shall apply only to any individual who was entitled to a further personal deduction of one thousand and one hundred and sixty euro (1,160) in any year of assessment up to the year o f assessment 1972, and, in the event of his demise, to the surviving spouse. (f) Notwithstanding the provisions of article 49 the responsible spouse shall for the purpose of this article be the spouse in whose name the residence permit has been issued. (3) Nothing in sub-article (2) sha ll in any way be considered as overriding the provisions of sub-article (13). (4) The tax shall be charged at the rate of twenty cents (0.20) on every euro of the ch argeable income of - (a) every entity to which article 30 applies; and (b) any foundation, bequest, trust, institution, or other organization or body of persons the income whereof is specifically due to be wholly applied in providing income to members of the clergy: Provided that where the Commissioner is satisfied that any part of such income has in fact been so applied in respect of members of the clergy resident in Malta or of ecclesiastical communities so resident, such part of the said income shall be exempt from the tax in the hands of the foundation, bequest, trust, institution, or other organization or body of persons aforesaid, even where such foundation, bequest, trust, institution or other organization or body of persons is one to which article 30(2) applies. (5) Notwithstanding the provisions of sub-article (3), no tax charged under the provisions of that sub-article shall be deeme d to be part of any tax available for set-off for the purpose of col lection in accordance with article 60. (6) The tax shall be charged at the rate of thirty-five cents (0.35) on every euro of the chargeable income of every - 176 CAP. 123.] INCOME TAX (a) company; (b) body corporate established by law; and (c) undertaking required by article 30(7)( d) to be dealt with as a separate body of persons. (7) Deleted by Act II. 2002.53. (8) Notwithstanding the provisions of this article, a person in receipt of a dividend distribut ed by an international trading company out of profits derived b y the company while it was an international trading company, s hall be charged to tax in respe ct of such dividend at a rate of twent y-seven and a half per cent (27 .5%) of such amount as if such dividend constitutes separate chargea ble income, where such person is either: (a) not resident in Malta and who is, where applicable, not owned and controlled, directly or indirectly by, nor acts on behalf of, an individual or individuals ordinarily resident and domiciled in Malta; or (b) a company resident in Malta which is wholly owned by a person or persons not resident in Malta, provided that such person or persons are not owned and controlled by, directly or in directly, nor acts on behalf of, an individual or individuals ordinarily resident and domiciled in Malta: Provided that with effect from 1 January 2011 and up to 31 December 2014, as regards divi dends paid by a company which was an international trading c ompany as at 31 December 2010: (i) the provisions of this sub-article shall continue to apply after 31 December 2010 with respect to the distribution of profits earned by such company while it was an international trading company, and Cap. 372. (ii) the conditions set out in paragraphs ( a) and ( b) above shall not apply in respect of such dividends paid to any recipient shareholder who is registered for the purpose of article 48(4) or article 48(4A) of the Income Tax Management Act . Maximum rate of tax in certain cases. (9) Saving the provisions of sub- article (12), the tax chargeabl e under the other provisions of this article shall in no case exc eed the rate of - (a) ten cents (0.10) on every euro of the chargeable income of every trade union; and (b) thirty cents (0.30) on every euro of the chargeable income of every club or other similar non-proprietary institution if the Commissioner is satisfied that no part o f t h e i n c o m e i s d i s t r i b u t a b l e t o , o r i s o t h e r w i s e available for the personal benefit of any proprietor or member thereof in his capacity as such; and (c) thirty cents (0.30) on every euro of the chargeable income in respect of a tran sfer of property in the INCOME TAX [CAP. 123. 177 circumstances referred to i n article 31C(1), provided that such income shall be deemed to constitute the last part of the person’s total income for the year. Special rates of tax and minimum tax liability. Cap. 217. (10) Notwithstanding the provisio ns of sub-articl es (1) and (2) - (a) in the case of an individual who has been granted a residence permit under article 7 of the Immigration Act before the first day of May, 2004 or who satisfies the conditions that may be prescribed by the Minister, the tax upon the chargeable income, other than income mentioned in paragraph ( b) shall be charged - (i) in the case of an individual who has been granted such residence permit on or after the fourteenth day of November, 1972, but before the first day of January, 1988, at the rates laid down in sub-paragraph (i) or (ii), as the case may be, of sub-article (2): Provided that the minimum tax payable by such individual in respect of any year of assessment shall be two thousand and three hundred and twenty- five euro (2,325); (ii) in the case of an individual who has been granted such residence permit on or after the first day of January, 1988 but before the first day of May, 2004 or who satisfies the conditions that may be prescribed by the Minister, at 15 cents (0.15) on every euro: Provided that the minimum amount of income which shall be chargeable to tax in respect of any year of assessment shall be deemed to be twenty-seven thousand and nine hundred and fifty euro (27,950) and the resulting tax thereon, after taking into account any double taxation relief to which such individual may be entitled, shall not be less than the tax which would result from applying the said rate on the deemed minimum chargeable income; (b) income derived from Malta and chargeable to tax under articles 4 or 5, shall be deemed to constitute chargeable income to be taxed separately at the rates laid down in sub-article (1)( a) or ( b) and such income shall be deemed to constitute the last part of the individual’s total incom e for the relative year; Cap. 217. (c) Where income has been deemed to be derived directly under the provisions of article 27D(3)( b) by an individual who has been granted a residence permit u n d e r a r t i c l e 7 o f t h e Immigration Act , such income shall be charged to tax at the rate of 15 cents (0.15) on every euro as if such income constitutes separate chargeable income. (11) (a) (i) The tax upon the chargeable income other than income mentioned in sub-paragrap h (ii) of this paragraph, of an y 178 CAP. 123.] INCOME TAX individual born in Malta who, after emigrating has returned as a resident in Malta after the first day of January 1988, shall be charged at the rates laid down in sub-article (1), or if he so elects, and until such election is not renounced by him, at the rates l aid down in sub-article (2)(i) or (ii) thereof. The said election m ay not be availed of again once it is renounced: Provided that the provisions of this sub-article shall only apply where such an individual proves to the satisfaction of th e Commissioner that either: (a) he had actually resided outside Malta for an aggregate period of 20 years falling within a period of 25 years preceding the first day of the year of assessment in which the individual returns as resident in Malta after the first day of January 1988, and that he has received in Malta at one or more times during the year immediately preceding the year of assessment an amount of income of not less than fourteen thousand euro (14,000) arising outside the island and chargeable to tax under the provisions of this Act, provided that in the case of a married person the said amount of income of fourteen thousand euro (14,000) shall be increased by two thousand and four hundred euro (2,400) in respect of every dependant relative including a spouse; or Cap. 217. (b) h e i s n o t a M a l t e s e n a t i o n a l a n d d o e s n o t s a t i s f y t h e period of residence outside Malta referred to in paragraph ( a) of this proviso, and that he satisfies conditions similar to those established by the Minister responsible for immigration under article 7 of the Immigration Act , for the issue of a residence permit as existing at the time such an individual returns to Malta: Provided further that the minimum liability of any such individual for any y ear of assessment in which the individual elects to pay at the rates laid down in sub-article (2)(a)(i) or (ii) hereof shall, after taking into account any double taxa tion relief to which such individual may be entitled, be two thousand and three hundred and twenty-five euro (2,325). (ii) In the case of inc ome derived from Malta and chargeable to tax under articles 4 or 5, such income shall be deemed to constitute chargeable i ncome to be taxed separately a t the rates laid down in sub-article (1)( a) or ( b) and such income shall be deemed to constitute the last part of the individual’s total income for the relative year. (b) In the event of the demise of any individual to which paragraph ( a) applies and who is charged to tax at the rates laid down in sub-article (2)( a)(i) hereof, the surviving spouse shall be entitled to elect to be charged to tax in the same manner and u nder the same conditions as the deceas ed individual and charged at t he rates laid down in sub-article (2)( a)(ii) hereof, and until such INCOME TAX [CAP. 123. 179 election is not renounced, the surviving spouse shall be consid ered to have satisfied in his own right the qualifying period of abs ence from Malta stipulated therein. (12) Any person who - (a) makes default in furnishing a return in respect of any year of assessment precedin g the year of assessment 1999, shall be chargeable for such year of assessment with a tax of treble the amount of tax for which he is liable for that year under the other sub-articles of this article or with such lesser amount of tax as may be determined by the Commissioner but which shall in no case be less than twenty-three euro (23) or one-half per cent of the said amount of tax for which he is liable whichever is the greater; or (b) o m i t s f r o m h i s r e t u r n f o r a n y y e a r o f a s s e s s m e n t preceding the year of assessment 1999 any amount which should have been included therein, shall be chargeable with an amount of tax equal to twice the difference between the tax as calculated in respect of the income returned by him and the tax properly chargeable in respect of his income as determined after including the amounts omitted, and shall be required to pay such amount of tax in addition to the tax properly chargeable in re spect of his true income; or (c) makes default in furnishing a return in respect of the year of assessment 1999 or any subsequent year of a s s e s s m e n t o r o m i t s f r o m h i s r e t u r n f o r t h e y e a r o f assessment 1999 or any subsequent year of assessment any amount which should have been included therein o r m a k e s a d e f a u l t i n f u r n i s h i n g a f o r m r e q u i r e d t o b e submitted in accordance with a ny of the provisions of the Income Tax Acts, shall be chargeable for such year of assessment with additional tax in the amount or amounts specified in the Schedule to this Act, and shall be required to pay such amount of tax in addition to the tax properly chargeable on the total income for that year. (d) Where a person has taken action under a Mutual Agreement Procedure in terms of an arrangement referred to in article 76 including Convention 90/436/ EEC of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises, any additional tax chargeable in terms of paragraph (c) shall not apply for the period between the date when the said action under the Mutual Agreement Procedure is initiated and the date when the issue is concluded under the said procedure: Provided that if the Commissioner is satisfied that the default in rendering the return or any such omission as referre d to in paragraphs ( a) and ( b) was not due to any fraud, art, contrivance 180 CAP. 123.] INCOME TAX or gross or wilful neglect, he shall remit the whole of the tre ble or additional tax and in any other case may remit such part or all of the said treble or additional tax specified in the said paragra phs as he may think fit: Provided further that in the case of a body of persons the Commissioner shall not reduce any tax chargeable under paragrap h (a) to less than two euro (2) or ten per cent of the total tax chargeable under the other sub-articles of this article for the relative year of assessment, whichever is the greater: Cap. 372. Where the Commissioner has sent to any person a notice referred to in article 12(3) of the Income Tax Management Act , such person shall be r equired to pay, in r espect of each such n otice, an additional tax as may be speci fied in such notice for the ye ar of assessment in respect of which the default has occurred but whi ch shall in no case exceed twenty-three euro (23). The Commissione r may only remit this additional tax where he is satisfied that o wing to absence from Malta, sickness or other reasonable cause such person was prevented from submitting a return in accordance wit h the provisions of article 10 or 11 of the Income Tax Management Act: Provided further that: Cap. 372. (i) the powers conferred upon the Commissioner by this sub-article shall be in addition to any right conferred upon him to commence proceedings in respect of an offence under Part IX of the Income Tax Management Act; (ii) any person who in determining his total income and the tax liability thereon, as disclosed by his return, deducts or sets off any amount, the deduction or set-off whereof is not allowed under the provisions of the Income Tax Acts, or shows as an expenditure or loss any amount which he has not in fact expended or lost, or provides or withholds information the result of which is a reduction of the amount of tax payable by him or an increase in the amount of tax repayable to him, shall be deemed for the purposes of this sub-article to have made an omission from his return; Cap. 372. (iii) any tax charged under the provisions of this sub- article shall be deemed not to be part of any tax paid or payable for the purposes of the preceding sub-articles of this article, or of articles 59, 76 and 89, or of articles 51 and 52 of the Income Tax Management Act ; (iv) where the default or omission has been made in connection with a return required by the provisions of the Income Tax Acts to be furnished by another person on behalf of a company, such company shall be liable for the additional tax chargeable under the provisions of INCOME TAX [CAP. 123. 181 this sub-article. (13) (a) The tax upon the chargeable income of any person referred to as a Contractor i n article 23 shall be levied at the rate of 35 cents (€0.35) on every euro of the chargeable income in so far as such income is to be computed in accordance with the provisions of the said article 23(1) and (2). Other income arising to a Contractor shall be charged at the appropriate rate or rates. (b) The rate at which tax shall be withheld by a Contractor from payments made to a sub-contractor in accordance with the provisions of article 23(5) shall be at 10 cents (€0.10) of every euro of the payments made as aforesaid. (14) (Deleted by Act IV . 2011.20). (15) (Deleted by Act IV . 2011.20)). (16) (Deleted by Act IV . 2011.20)). (17) Where, during the year imm ediately preceding any year of assessment, any individual deri ves income subject to tax under article 4(1)( b), being emoluments payable under a contract of employment requiring the performance of work or of duties mainl y outside Malta, excluding however any service on board a ship, aircraft or road vehicle owned, chartered or leased by a Maltese company and any service for the Government of Malta, and received in respect of work or duties carried out outside Malta , or in respect of any period spent in Malta in connection with such work or duties, or on leave during the carrying out of such wor k or duties, notwithstanding anything to the contrary contained in t his Act, and unless such individual opts to have the said income ch arged to tax at the rates laid down in sub-article (1)( a) or (1)( b), such income shall be deemed to constitute the first part of that individual’s total income for th at year and shall be charged to tax at 15 cents (€0.15) on every euro: *Provided that: (a) this sub-article shall not apply to emoluments payable under a contract of employment for a period of less than twelve (12) months or that lasts less than twelve (12) months; (b) this sub-article shall not a pply for a year of assessment if, during the year immedia tely preceding that year of assessment, the individual was present in Malta for a period that exceeds or for periods that in aggregate exceed thirty (30) days, dis regarding any period during which that individual was present in Malta on vacation leave or sick leave and disregarding any period preceding the commencem ent or following the termination of the contract. *Applicable from year of assessment 2023. 182 CAP. 123.] INCOME TAX (18) The tax on the income referred to in article 4(6) shall be at the rate of ten cents (€0.10) on every euro thereof, and, notwithstanding anything to the contrary contained in this Act, no set-off or refund shall be grant ed to any person in respect of the tax so charged. (18A) Notwithstanding any other provisions of this article, whe re a non-resident derives income f rom entertainment activities exercised in Malta for a period not exceeding fifteen days in t he year preceding a year of assessment, the tax shall be charged a t the rate of ten cents (0.10) on every euro of the gross payment receivable in respect of the said activities, and no set-off or refund shall be granted to any person in respect of the tax so charged : Provided that where the said activities are exercised in Malta for a period exceeding fift een days, the non-resident per son shall declare his inco me from entertainment activities in a ret urn made in accordance with the Income Tax Acts and he will be charged on such income at the rates laid down in sub-article (1)(c), and in any such case any tax paid on such income in accordance with this article shall be available as a credit against that p erson’s tax liability and where any tax so paid is in excess of such li ability it shall be refunded. (19) Notwithstanding the other provisions of this article, but without prejudice to those of sub-article (12), the Minister responsible for finance may, in the interests of economic expediency, direct by notice published in the Gazette, that: (a) in the case of small assessments charging tax not exceeding an amount specifi ed in the said notice, the assessment shall not be raised; and (b) in determining the chargeable income and the amount of tax due by any person and in allowing any set-offs, the Commissioner may round up or down any amount to the nearest euro. (20) ( a) Where a member of a company resident in Malta is a resident of a State or territory with which Malta has made an arrangement under the provisions of this Act for the grant of relief from double taxation, and under that arrangement a dividend, or part thereof, distributed by such a company is subject to income tax in Malta at a rate lower than that chargeable on the income out of which the dividend is distributed, such company shall be entitled to require that the gains or profits, or part thereof, derived by it from its trade or business for the year of assessment 2001 and for subsequent years of assessment and which are distributable by way of dividend subject to tax at a lower rate as aforesaid shall, notwithstanding that the dividend, or part thereof has not been distributed, be taxed at the said reduced rate and not at the rate properly chargeable under this Act on the gains or profits of the company: INCOME TAX [CAP. 123. 183 Provided that the provisions of this paragraph shall only be applicable with respect to companies which do not sell by retail and a person shall be deemed not to sell by retail if its sales of goods or services are made to: (i) a person who carries on a trade, business, profession or vocation and the goods or services so sold to such person are either resold by such person or are used by such person for the purpose of his trade, business, profession or vocation; or (ii) a person, other than an individual, who uses those goods for the purposes of an undertaking carried on by such person: Cap. 372. Provided further that where a company has opted to be taxed at a reduced rate of income tax as provided by this paragraph, no person in receipt of a dividend paid by such company out of profits which have been subject to tax at such reduced rate of tax shall be entitled to claim a refund under the provisions of the Income Tax Acts in respect of that dividend other than a refund in terms of article 48(4A) of the Income Tax Management Act : Provided also that where a company has opted to be taxed at a reduced rate of income tax as provided by this paragraph and such company distributes gains or profits derived by it from its trade or business which have been subject to tax at the rate properly chargeable under this Act to the member resident in the said state or territory, such member shall not be entitled to claim a refund under the provisions of the Income Tax Acts in respect of any dividend paid by such company out of the said gains or profits: Provided also that where a company has opted to be taxed at a reduced rate of income tax as provided by this paragraph and such company distributes gains or profits derived by it from its trade or business which have been subject to tax at such reduced rate of tax to any person not entitled to a reduced rate of tax under any arrangement as aforesaid, such gains or profits shall be taxed at a rate being the difference between the rate referred to in article 56(6) and the rate actually applied and such tax sha ll be tax payable by the company in the year of assessment in which such profits are distributed. (b) Where the provisions of paragraph ( a) have been applied and subsequently there is a change in the shareholding of the company in consequence of which the new shareholders will not be entitled to a reduced rate of tax under any arrangement as aforesaid or if so entitled the rate applicable in such arrangement is more than the rate applicable to the outgoing 184 CAP. 123.] INCOME TAX shareholder, then any profits which have been subject to tax at such lower rate as aforesaid and which have not been distributed at the end of the last financial year of the company preceding the date of change in shareholding less any of such profits distributed to the outgoing shareholder in the current financial year shall be taxed at a rate being the difference between the rate o f t a x w h i c h w o u l d b e a p p l i c a b l e h a d t h e n e w shareholder held the shares when such profits were earned, and the rate actually applied, and such tax shall be a tax payable by the company in the year of assessment in which such profits are distributed: Provided that where a member of a company is also a company incorpor ated under Maltese law, the provisions of this article shall apply to the same extent as if the members of the latter company had owned the shares directly in the company. (c) The provisions of this sub-article shall apply where a member of a company resident in Malta is a resident of a State or territory with which Malta has made an arrangement under the provisions of this Act for the grant of relief from double taxation, and under that arrangement the said company is entitled to require that the gains or profits, or part thereof, derived by it and which are distributable by way of dividend, be subject to tax at a lower rate as aforesaid, notwithstanding that the dividend, or part thereof has not been distributed. (21) Where, during the year imme diately preceding the year of assessment 2011 or any subseq uent year of assessment, an individual derives income subject to tax under article 4(1)( b), being emoluments payable under a qualifying contract of employment, and received in resp ect of work or duties carried out in Malta, or in respect of any period spent outside Malta in connection with su ch work or duties, or on leave during the carrying out of such wor k or duties, then, notwithstanding anything to the contrary containe d in this Act, that individual may opt to have the said income charg ed to tax at the rate of 15 cents on every euro: Provided that: (a) where the said option is exercised, the income that is charged to tax at the said rate shall be deemed to constitute the first part of that individual’s total income for the year of assessment in question and the tax on the remaining income shall be calculated at the rate or rates that would have been applicable to that remaining income had the option not been exercised; (b) where the said option is exercised, the minimum amount of income which shall be chargeable to tax at the said rate in respect of the year of assessment in question shall be deemed to be such amount as may be p r e s c r i b e d a n d t h e t a x t h e r e o n s h a l l n o t b e l e s s t h a n the tax which results from applying the said rate on the INCOME TAX [CAP. 123. 185 deemed minimum amount; (c) the applicability of this sub- article shall be subject to such conditions and restrictions as may be prescribed, including: (i) the conditions under which a contract of employment is to be deemed as a qualifying contract of employment fo r the purposes of this sub-article; (ii) the maximum period or number of years for which, the said option may be exercised; (iii) the procedure to be used for the exercise of the said option; (iv) such other conditions and restrictions as the Minister may deem fit. (22) Deleted by: XVI of 2017. (23) Notwithstanding the provisions of sub-articles (1) and (2) in the case of an individual who, after 1 January 2011, has bee n granted a special tax status under such terms and conditions as the Minister may prescribe, the tax upon the chargeable income of t hat individual, other than income mentioned in sub-article (10)( b) shall be charged at the rate of fifteen cents (0.15) or such other ra te or rates as the Minister may prescribe and the Minister may prescr ibe different rates or rates depen ding on the special tax status applicable to the particular individual: Provided that the Minister shall prescribe the minimum tax payable by such individual in re spect of any year of assessment . (24) In the case of an individual or individuals who, after 1 January 2011, has or have been g ranted a special temporary tax status under such terms and conditions as the Minister may prescribe, the tax upon the chargeable income, other than incom e mentioned in sub-article (10)( b) shall be charged at the rate of fifteen cents (0.15) on every euro thereof: Provided that the Minister shall prescribe the minimum tax payable by such individual or individuals in respect of any yea r of assessment. (25) An individual who is established in a field of excellence and returns as an ordinary resident in Malta may opt to have hi s income from employment exercised in Malta charged to tax at the rate of 15 cents on every euro, provided that he has been ordin arily resident in Malta for at least twenty years but has not been ordinarily resident in Malta for the ten consecutive years prior to his return, and subject to such terms and conditions as may be prescribed, including the minimum income chargeable and the number of years over which the benefit may be availed of. (26)* An individual who derives income being emoluments from a full-time or part-time sports activity, either as a registere d player *Applicable from Year of Assessment 2025. Vide regulation 8 (2) (a) of Act XIII of 2024. 186 CAP. 123.] INCOME TAX or athlete or as a licensed coac h shall, unless he opts to have the said income charged to tax at the rates laid down in sub-articl e (1)( a) or (1)( b), be charged to tax on all such income at the rate of seven point five cents (€0.075) on every euro of the gross amou nt of the emoluments so derived. The tax chargeable in terms of this sub- article shall be final and no set -off or refund shall be grante d to any person in respect of the tax so charged: Provided that the Minister may, by rules, make this sub-article applicable also to other individuals involved in a sport activi ty in a full or part-time employment, includi ng match officials and sports administrators, subject to such limitations and conditions as m ay be prescribed. For the purposes of this sub-article: Cap.455. "Council" means SportMalta as established by the Sports Act ; "licensed coach" * means a person registered as a coach with a club or team registered with, or recognised by the Council and affil iated with the national regulatory body registered with and recognise d by the Council for that particula r sport, and whose licence to coa ch that particular sport is recognized b y the aforementioned national regulatory body; "registered player or athlete" †means a player or athlete being a member of a club or team a club or team registered with, or rec ognised by the Council and affiliated wi th the national regulatory body registered with and recognised by the Council for that particul ar sport; "sports activity" refers to a sp ort recognized by the Council a nd practised wholly or mainly in Malta. ‡(26A)§ (a) An individual who derives income from a full-time or part-time artistic activity shall, unless he opts to have th e said income charged to tax at the rates laid down in sub-article (1) (a) or (1)(b), be charged to tax on all such income at the rate of sev en point five cents (€0.075) on every euro of the amount of the income s o derived net of any deductions allowable in terms of article 14 in respect of expenses incurred in the production thereof. The tax chargeable in terms of this sub-article shall be final and no s et-off or refund shall be granted to any pe rson in respect of the tax so charged. Cap. 542. (b) For the purposes of this sub-article, income shall be deemed to have been income derive d from an artistic activity if it has been so certified by the Arts Council Malta established by the Arts Council Malta Act in a statement produced to the Commissioner on such form and in such manner and within such time as the Commissioner may approve. *Amendment applicable from the year of assessment 2027. Vide Article 13(2) of Act III of 2026 . †Amendment applicable from the year of assessment 2027. Vide Article 13(2) of Act III of 2026 . ‡Applicable from year of assessment 2023. §Applicable from year of assessment 2026. INCOME TAX [CAP. 123. 187 (c) This sub-article shall be subject to such limitations and conditions as the Minister may prescribe by rules. Added by: VII.2018.23.* Amended by: VII.2019.21.† (27) Any individual who during a ny year preceding the year of assessment: (i) is ordinarily resident in Malta but not domiciled in Malta (hereinafter "the non-domiciled individual") and to whom provisos (i) and (ii) of article 4(1) apply, and who is not taxable in accordance with any scheme under the Act effectively establishing a minimum tax payable; and (ii) derives income (includin g, in the case of a married couple whose income is chargeable to tax in terms of article 49 of the Act, the income derived by both spouses) amounting to not less than thirty five thousand euro (€35,000) or its equivalent in another currency, or such other am ount as may be prescribed, arising outside Malta and referred to in proviso (i) to sub-article (1) of article 4 of the Act, but which is not received or not fully received in Malta, shall, for any year of assessment, be subject to a tax liability on his income amounting to not less than five thousand euro (€5,000) per annum (hereinafter "the minimum tax"), and should the income (excluding income from transfers of immovable property that are chargeable in terms of article 5A) chargeable to tax in the hands of such individual for any year of assessment result in a tax liability (be fore taking into account any relief granted in terms of articles 76 to 89 of the Act) a m o un t in g to l e s s t ha n t he m in i mu m t a x , he s ha l l be deemed to have received in Malta additional income arising outside Malta as shall result in a total tax liability on his total income, wherever arising, amounting to the minimum tax: Provided that in computing the minimum tax, account shall be taken of tax paid under this Act, whether by withholding or otherwise, in respect of all income (excluding tax imposed in terms of article 5A of this Act), whether arising in Malta or outside Malta: Provided further that if the non-domiciled individual can prove to the satisfaction of the Commissioner that if he had been subject to tax without taking into account the provisions of provisos (i) and (ii) to sub-article (1) of article (4) of the Act, the total tax payable by him would have amounted to less than the minimum tax, his tax liability shall be capped accordingly at the said lower amount. *Applicable from year of assessment 2019. †Applicable from year of assessment 2020. 188 CAP. 123.] INCOME TAX Personal retirement schemes. Amended by: VII.2019.22.* Cap. 450. Cap. 403.