Income Tax Management Act (Cap. 372), article 48

48. Such provisional tax shall be separate and distinct from that paid or payable under the provisions of article 42 except for persons who have gains or profits from immovable property falling under article 4(1)( a) of the Income Tax Act : Provided that the tax paid and referred to in paragraph ( b) of this sub-article shall not b e set off or refunded as aforesa id unless the person who has paid t he tax has declared the relativ e INCOME TAX MANAGEMENT [CAP. 372. 47 gains or profits from the transf er in a return of income furnis hed in accordance with article 10 for the year of assessment following that during which the gains or profi ts from the said transfer were derived. (5) If any person fails to pay any provisional tax, as the case may be, as provided under this article he shall be chargeable w ith the tax which should have been so paid and, in addition, with further tax as provided for in article 44(1)( a), and such tax and additional tax shall be recovered from such person in the same manner as other tax assessed and charged upon him. (6) For the purposes of sub-article (5) a notice by the Commissioner to any person showing the tax which should have been paid and any additional tax to which he is liable for havi ng failed to pay the tax shall, unl ess the contrary is proved, be sufficient evidence that the amount shown in the said notice is the amount due to be paid to the Commissioner by the said person. (7) The powers conferred upon the Commissioner by sub- articles (5) and (6) shall be in addition to any right conferre d upon him to commence proceedings in respect of any offence under sub - article (8). (8) Any person who contravenes or fails to comply with the provisions of this article shall be liable on conviction to a f ine (multa ) of not less than one hundred and sixteen euro (116) and not exceeding one thousand and one h undred and sixty euro (1,160) o r to imprisonment for any term not exceeding six months or to bot h such fine and imprisonment, and to a further fine ( multa ) of not less than four euro (4) but not exceeding twenty-three euro (23) for every day during which the offe nce continues af ter conviction: Provided that the Commissioner may compound any offence under this article and may before judgment stay or compound any proceed ings thereunder. (9) ( a) The tax or provisional tax, as the case may be, payable under this article shall be paid in such manner as may be prescribed. Cap. 364. (b) Notwithstanding anything that may be provided for in the rules where immovabl e property or any rights annexed thereto are transferred by means of a public deed the notary publishing such deed shall have the same duties and liability in connection with the collection and payment of the tax or provisional tax, as the case may be, payable on such deed in accordance with this article as are by the Duty on Documents and Transfers Act imposed on notaries publishing such deeds, in connection with the duty chargeable and collected on transfers in accordance with that Act. Any failure by a notary in connection with the collection and payment of tax or provisional tax, as the case may be, under this article shall for all purposes of the Duty on Documents and Transfers Act , b e d e e m e d t o b e a failure of his duties under that Act. 48 CAP. 372.] INCOME TAX MANAGEMENT Cap. 123. Cap. 364. (c) Where any assets the transfer of which is subject to tax on capital gains under article 5 of the Income Tax Act , is sold in a judicial auction, the Registrar of Courts shall have the same duties with regard to the withholding and payment of the tax or provisional tax, as the case may be, under this article as are under article 66 of the Duty on Documents and Transfers Act imposed on him in relation to the duty leviable on transfers causa mortis under the said Act. Additional tax and interest for non- payment of tax, and enforcement of payment. Amended by: XXIII. 1995.5; IX. 1999.9; II. 2003.47; II. 2004.53; II. 2009.30; I. 2010.52; XII. 2014.65; XV . 2016.30. VII.2018.63; VII.2019.48; XII.2023.40. Cap. 123. 44. (1) Where any tax payable within the periods provided for in article 42(1) or (2) or in article 43(1)( b) of this Act or in article 9A(8) of the Income Tax Act , is not settled within the relevant period - (a) additional tax equal to one per cent of the unpaid tax for each calendar month or p art thereof during which such tax remains unpaid sha ll be added thereto, and the provisions of the Income Tax Acts relating to the collection and recovery of tax shall apply to the collection and recovery of such additional tax; (b) the Commissioner shall serve a demand note upon the person assessed, and if payment is not made within thirty days from the date of the service of such demand note, the Commissioner may proceed to enforce payment in virtue of the executive title referred to in article 40 after two days from the service on the debtor of an intimation, for payment made by means of a judicial act, or as hereafter provided; Cap. 123. (c) additional tax charged under this sub-article shall not be deemed to be part of any tax paid or payable for the purposes of articles 59, 73, 76 or 89 of the Income Tax Act, or articles 23, 43, 51 or 52, or any rules made thereunder. (2) The Commissioner may, in his discretion, remit wholly or in part any additional tax char geable under sub-article (1): Provided that no such remission shall be effected by the Commissioner unless he is satisfied that the person liable for the payment of the tax was prevented from making payment within the respective periods owing to his absence from Malta or serious sickness or for such other cause as the Minister responsible fo r finance may prescrib e from time to time. (2A) When any tax is not paid by the date on which it is payable in terms of the relevant provi sions of the Income Tax Acts - (a) interest at the rate of one per cent of the unpaid tax shall be charged thereon from the tax settlement date for each calendar month or part thereof during which such tax remains unpaid and the provisions of the Income Tax Acts relating to the collection and recovery of tax shall apply to the collection and recovery of such interest: Provided that for any period o r part thereof commencing INCOME TAX MANAGEMENT [CAP. 372. 49 on or after 1st January 2009, interest shall be calculated at the rate of point seven five percent (0.75%) per month or part thereof and the total interest shall not exceed the amount of the said tax: Provided further that, for any period or part thereof commencing on or after 1st January 2014, interest shall be calculated at the rate mentioned in the preceding proviso or at such lower rate as the Minister may, from time to time, prescribe by rules and the total interest shall not exceed the amount of the said tax: Provided further that when the date by which the tax shall be payable in terms of the relevant provisions of the Income Tax Acts is the 31 August 2022 or a later date, interest shall be charged at the rate of zero point six percent (0.6%) for every month or part thereof during which the tax remains unpaid or at such other rate as the Minister may, from time to time, prescribe by rules and the total interest shall not exceed the amount of the said tax; (b) an amount of tax shown as payable for a year of assessment by a person in a determination or an assessment made under article 31 shall unless and until it is substituted by another amount by means of a subsequent determination o r assessment be deemed to be the tax payable for that year of assessment for the purpose of paragraph ( a) regardless of the date when the said determination is m ade or when the assessment becomes final and conclusive; (c) the Commissioner shall serve a demand note upon the person by whom any tax is due and if payment is not made within thirty days from the date of the service of such demand note, the Com missioner may proceed to enforce payment in virtu e o f t h e e x e c u t i v e t i t l e referred to in article 40 aft er two days from the service on the debtor of an intimation for payment made by means of a judicial act. (2B) Notwithstanding the provisions of sub-article (2A): (a) no interest shall run on any tax payable by a person for any year of assessment if the Commissioner has determined and directed by notice in writing given to a payor in accordance with rules made pursuant to article 23 that deductions be made from emoluments payable to that person to cover the said tax and if that notice has not been revoked by a notice in writing given by the Commissioner to that person; Cap. 123. (b) no interest shall run on any additional tax charged pursuant to the provisions of article 56(12) of the Income Tax Act ; 50 CAP. 372.] INCOME TAX MANAGEMENT Cap. 123. (c) no interest shall run on any tax payable in circumstances where a person has taken action under a Mutual Agreement Pro cedure in terms of an arrangement referred to in article 76 of the Income Tax Act 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, for the period between the date when the said action under the Mutu al Agreement Procedure is initiated and the date when the issue is concluded under the said procedure; Cap. 123. (d) No interest shall run on any tax payable by any person to the Commissioner when the non-payment of that tax renders that person liable to additional tax as provided for in sub-article (1) of this article or in article 73(4) of the Income Tax Act . (2C) Interest charged under sub-article (2A) shall not be deemed to be part of any tax or additional tax paid or payable for any of the purposes of the Income Tax Acts. (2D) The Commissioner may, at h is discretion, remit wholly or in part any interest chargeable under sub-article (2A) in accor dance with rules issued for this purpose by the Minister responsible for finance. (3) No opposition other than that specifically provided for in this Act shall stay the issue or execution of any executive act obtained thereunder or the paying out of the proceeds of any warrant or sale by auction car ried out in pursuance thereof. (4) The provisions of sub-article (3) shall not prejudice the amount of tax that may be finally determined under the other provisions of the Income Tax Acts. Collection of tax after determination of objection or appeal. Amended by: IX. 1999.10; XII.2023.41. 45. Where payment of tax is kept in abeyance in accordance with the provisions of article 41 pending the result of a notic e of objection or of an appeal, the tax outstanding under the assess ment as determined on such objection or appeal, as the case may be, shall be payable within the period ending on the last day of the cale ndar month immediately following that during which service of the notification of tax payable has been made, and if such tax is n ot paid within such period the provisions of the last preceding ar ticle shall apply: Provided that nothing in this article or in article 41 shall be construed as suspending the running of interest on the tax outstanding as aforesaid and for the purposes of article 44(2A) the said tax shall be treated as tax that was payable by not later than the relevant tax settlement date. Payment of tax by persons about to leave Malta. Amended by: IX. 1999.11. 46. (1) If in any particular case, the Commissioner has reason to believe that a person who has been assessed to tax may leave Malta before such tax becomes payable under the provisions of the Income Tax Acts without having p aid such tax, he may by notice in writing to such person demand payment of such tax within a time to INCOME TAX MANAGEMENT [CAP. 372. 51 be limited in such notice. Such tax shall thereupon be payable at the expiration of the time so limited and shall in default of payme nt, unless security for payment thereof be given to the satisfactio n of the Commissioner, be recovered forthwith in the manner provided by article 44. (2) If in any particular case, t he Commissioner has reason to believe that tax upon any chargeable income may not eventually be recovered, he may at any time a nd as the case may require - (a) forthwith by notice in writing require any person to make a return and to furnish particulars of any such income within a time to be specified in such notice; (b) make an assessment upon such person in the amount of the income returned or, if default is made in making such return or the Commissioner is dissatisfied with such return, in such amount as the Commissioner may think reasonable; (c) by notice in writing to the person assessed require that security for the payment of the tax assessed be forthwith given to his satisfaction. (3) Notice of any assessment made in accordance with the provisions of sub-article (2) shall be given to the person asse ssed, and any tax so assessed (in accordance with the provisions of s ub- article (2)) shall be payable on demand made in writing under t he hand of the Commissioner and shall in default of payment, unles s security for the payment thereof be given to the satisfaction o f the Commissioner, be recoverable forthwith in the manner provided b y article 47. (4) Any person who has paid the tax in accordance with a demand made by the Commissioner or who has given security for such payment under sub-article (2) shall have the rights of objection and appeal conferred by articles 33, 35 and 37 and th e amount paid by him shall be ad justed in accordance with the res ult of any such objection or appeal. (5) The provisions of sub-article (2) shall not affect the power s conferred upon the Commissioner by articles 30 and 31. Suit for tax by Commissioner. Amended by: IX. 1999.12; II. 2004.54; IV . 2007.30. 47. (1) Tax may be sued for and recovered, as the case may require, in the Civil Court, First Hall, or in the Court of Mag istrates (Malta) in its civil jurisdiction or in the Court of Magistrate s (Gozo), also in its civil jurisdiction by the Commissioner in h is official name with full costs of suit from the person charged therewith, from the person by whom it is payable or from the person responsible for its deduction as a debt. (2) Save as otherwise expressly provided in the Income Tax Acts and saving in particular the provisions article 30(5) and of article 31(7), action for the pa yment of tax, additional tax, i nterest or any penalty may be taken during any time from the date on which it becomes due and payable up to eight years from that date or, where an assessment in respect thereof has been made, from the date on which that assessment b ecomes final and conclusive. 52 CAP. 372.] INCOME TAX MANAGEMENT (3) The running of the period refe rred to in sub-article (2) sha ll be interrupted by a demand note served through registered post by the Commissioner or by any judicial act filed by the Commission er before the expiration of such period demanding the payment of t he amount claimed. (4) Where the action referred to in sub-articles (2) and (3) has not been taken within the time specified therein, and such time expires on or before the 31st D ecember 2003, then, notwithstand ing the provisions of the said sub-articles, action for the payment of the said tax, additional tax, interes t or penalty may be taken unti l the 31st December 2005. Assistance in the collection of taxes. Added by: IV . 2011.62. Cap. 123. 47A. (1) The Commissioner shall le nd assistance to foreign tax authorities in the collection of revenue claims in accordance w ith the provisions of applicable arr angements referred to in articl e 76 of the Income Tax Act where these exist. (2) For the purposes of sub-article (1), a notice by the Commissioner to any person showing the amount of a revenue claim by a foreign tax authority to which he is liable for havi ng failed to pay the said amount shall be sufficient evidence that the amount shown in the said notice is the amount due to be paid to the foreign tax authority by the said person. (3) For the purposes of this artic le, the arrangements in relati on to the collection of taxes shall determine the meaning of "taxe s" and "revenue claims". PART VIII Refunds Repayment of tax. Amended by: XX. 1996.21; V . 1998.7; IX. 1999.13; II. 2003.48; II. 2004.55; II. 2007.25; IV . 2007.31; IX. 2007.7; II. 2009.31; I. 2010.53; IV . 2011.63; XII. 2014.66; XIII. 2015.123; VII.2019.49; VIII.2020.58;* XII.2023.42. 48. (1) If it be proved to the satisfaction of the Commissioner that any person for any year of assessment has paid tax, by deduction or otherwise, in excess of the amount with which he is properly chargeable, such person shall be entitled to have the amount so paid in excess refunded by the Commissioner. Every claim for repayment under this article should be made within fo ur years from the date on which the assessment in respect of the y ear of assessment to which it relate s becomes final and conclusive: Provided that in the case of a person making a claim for repayment for any year of assessm ent in respect of which he has no chargeable income, such claim shall be made within four years from the end of the year of asse ssment to which t he claim relat es: P r o v i d e d a l s o t h a t w h e r e t h e c l a i m r e l a t e s t o t a x p a i d f o r the year of assessment 1999 or any subsequent year of assessmen t *Applicable as from year of assessment 2021. INCOME TAX MANAGEMENT [CAP. 372. 53 it shall be made within five years from the relevant tax return date or, where an assessment in resp ect thereof has been made from t he date on which that assessment b ecomes final and conclusive: Provided further that in no cas e shall any refund be made in respect of - (a) any tax which a company has deducted or is entitled to deduct from any dividend paid to any person who in virtue of any exemption granted by or under any law is not chargeable to tax thereon; and Cap. 123. (b) any tax charged on any body of persons under article 56(4) of the Income Tax Act , or under article 27(3) and (4); and (c) any tax which a company has deducted or is entitled to deduct from any dividend paid to a collective investment scheme. For the purposes of this proviso - "company" includes a collective investment scheme; and "dividend" includes any distribution made by a collective investment scheme. S.L. 372.14. (1A) Notwithstanding the provisions of sub-article (1), in no case shall any refund be made to any person in respect of the y ear of assessment 1999 or any subsequent year of assessment unless and until such person has filed all tax returns, which are required to be furnished under this Act, in r espect of the ye ars of assessm ent 1999 up to and including the year of assessment preceding the y ear in which the refund would have been payable but for the application of this sub-article and, in the case of a person wh o is a payer as defined in the Final Settlement System (FSS) Rules, he has, moreover, submitted all the Pa yer’s Annual Reconciliation State ments together with the Payee Statem ents of Earnings in accordance wi th the said rules in respect of the year 1998 and all subsequent years for which the submission date precedes the d ate on which the refund would have been payable but for the application of this sub-article.. Cap. 406. (1B) Notwithstanding the provisions of sub-article (1), in no case shall any refund be made under this Act to any person registered for the purpose of the Value Added Tax Act, unless a nd until such person has filed all tax returns or declarations req uired to be furnished for the purpose of the Value Added Tax Act in resp ect of tax periods up to and including the last complete tax period in the year preceding that in which the refund would have been payable but for the appli cation of this sub-article. (2) Except as regards sums repaya ble on an objection or appeal, no repayment shall be made to any person in respect of any year of assessment as regards which that person has failed or neglected to deliver a return or has been assessed in a sum in excess of the amount contained in his return, provided he has received notice of the assessment made upon him fo r that year; unless that person has made an election under article 1 2 for that year or it is proved to the satisfaction of the Commissioner that such failure or neglect t o 54 CAP. 372.] INCOME TAX MANAGEMENT deliver a true and correct retu rn did not proceed from any frau d or wilful act or omission on the part of that person. Cap. 123. (2A) Subject to the provisions of sub- sub-article (2B) any tax determined as repayable to a person for a year of assessment un der article 31(1) or (2) shall become due or shall be deemed to hav e become due, as the case may be, in the case of a person to whom article 11(2) of the Income Tax Act applies, on the first of April, and, in the case of any other per son, on the first of March, of the year immediately following tha t year of assessment or on such other date or dates, not being later than the dates aforesaid, as may be prescribed. (2B) * (i) When the tax repayable has been determined under article 31 following a return furnished after the relevant tax return date it shall become due or shall be deemed to have become due, as the case may be, on the later of - (a) the last day of the sixth (6th) month following that in which the said return was furnished, and (b) the last day of the sixth month following the date on which it would have otherwise become due in terms of sub-article (2A). (ii) In the case of a person to whom sub-articles (1A) or (1B) apply, any refund which would have been payable but for the provisions of the said sub-articles, shall become due or shall be deemed to have become due, as the case may be, on the last day of the sixth (6th) month following that in which the tax returns referred to in the said sub-articles were furnished. (2C) The Commissioner shall be entitled to deduct from any repayment due to a person as sta ted in sub-articles (2A) and (2 B) any tax, additional tax or interest that may be due by that per son under the Income Tax Acts. (2D) Interest shall be payable by the Commissioner on any repayment of tax that becomes du e under sub-article (2A) or (2B ) after any deduction made in term s of sub-article (2C) as from t he date it becomes due as aforesaid at the rate of one per cent fo r every month or part thereof for which it remains unpaid: Provided that for any period or part thereof commencing on or after 1st January 2009, interest shall be calculated at the rat e of point seven five percent (0.75%) per mo nth or part thereof and the to tal interest shall not exceed the am ount of the said repayment: Provided further that for any period or part thereof commencing on or after 1st January 2014, interest shall be calc ulated at the rate established by the pr ovisions of article 44(2A) and the total interest shall not exceed the am ount of the said repayment: Provided further that for any period or part thereof commencing on or after 1 September 2022, interest shall be calc ulated *Applicable as from year of assessment 2021. INCOME TAX MANAGEMENT [CAP. 372. 55 at the rate of zero point six per cent (0.6%) or at such other r ate as may be prescribed, and the total amount of interest shall not excee d the amount of the said repayment. (2E) For the purposes of this article where the repayment of tax is made by means of a cheque or a draft, the tax shall be deeme d to have been repaid to a person on t he day on which the cheque or the draft is posted to that pe rson’s last known address. (2F) The provisions of sub-articl es (2B) to (2E) shall not apply to refunds to which sub-articles (4) or (4A) or the provisos to sub- article (7)( a) refer. (3) Any person who is aggriev ed by the decision of the Commissioner as to the amount to be repaid under the provisions of this article shall have the same right to appeal against such d ecision as if he were aggrieved by a n assessment made upon him: Provided that such appeal shall not reopen any question with respect to which a right of appeal under the provisions of article 35 and 37 has lapsed or wh ich has already been decided on appeal. (4) ( a) A person, in receipt of a dividend paid to him from profits allocated to the f oreign income account or any profits distributed by an international trading company, as the case may be, may claim a refund of two-thirds of the Malta tax paid by the company in respect of those profits distributed to him by way of such dividend, where such person is either: ( i ) n o t r e s i d e n t i n M a l t a a n d w h o i s , w h e r e applicable, not owned and controlled by, directly or indirectly, nor acts on behalf of, a person who is ordinarily resident and domiciled in Malta; or (ii) 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 n o t o w n e d a n d c o n t r o l l e d b y , d i r e c t l y o r indirectly, or act on behalf of a person or persons ordinarily resident and domiciled in Malta: Provided that the conditions set out in paragraphs (i) and (ii) shall not apply in respect of dividends paid by any company registered in Malta to any recipient shareholder who is registere d for the purpose of this article 48(4) or article 48(4A). (b) Subject to the provisions of paragraph ( a), where profits distributed as aforesaid out of the foreign income account derive from a participating holding or from the disposal of such holding, a claim may be made for a refund of all of the Malta tax paid in respect of those profits: Provided that with respect to a claim for refund relative to dividends derived from a participating holding acquired on or after 1 January 2007, the refund contemplated by this parag raph shall only be due when 56 CAP. 372.] INCOME TAX MANAGEMENT the conditions set out in either paragraph (i) or paragraph (ii) below are satisfied: (i) where the body of persons in which the participating holding is held satisfies any one of the following conditions, that is to say: (1) it is resident or incorporated in a country o r t e r r i t o r y w h i c h f o r m s p a r t o f t h e European Union; (2) it is subject to any foreign tax of at least fifteen per cent (15%); (3) it does not have more than fifty per cent (50%) of its income derived from passive interest or royalties; (ii) where none of the conditions set out in paragraph (i) are satisfied then both of the following two conditions must be satisfied: (1) the equity holding by the company registered in Malta in the body of persons not resident in Malta is not a portfolio investment and for this purpose the holding of shares by a company resident in Malta in a body of persons not resident in Malta which derives more than fifty per cent of its income from portfolio investments shall be deemed to be a portfolio investment; and (2) the body of persons not resident in Malta or its passive interest or royalties have been subject to any foreign tax at a rate which is not less than five per cent (5%): Provided further that the provisions of the immediately preceding proviso shall, w ith effect from 1 January 2011, also be applicable to a claim for refund in respect of the Malta tax paid on distributed profits comprised in dividends received from a participating holding acquired before the 1 January 2007. (c) For the purposes of this sub-article, the expression "Malta tax paid" shall mean the tax actually paid by the company to the Commissioner on the profits distributed out of the foreign income account or on any profits derived and distribut ed by a company while it was an international trading company, as the case may be: INCOME TAX MANAGEMENT [CAP. 372. 57 Cap. 123. Provided that as regards claims made relative to the payment of dividends from profits allocated to the foreign income account and brought to charge to tax in year of assessment 2008 and subsequent years of assessment the expression "Malta tax paid" shall, for the purpose of determining the amount of the refund, mean the tax actually paid by the company to the Commissioner on the profits so allocated plus the amount, if any, by which such tax has been reduced by a claim of relief of double taxation under the articles referred to in articles 74(a), ( b) and ( c) of the Income Tax Act : Provided further that, notwithstanding the previous proviso, a tax refund payable in terms of this sub-article shall in no case exceed the amount of tax actually paid by the company to the Commissioner on the profits distributed out of the foreign income account or on any profits derived and distributed by a company while it was an international trading co mpany, as the case may be: Provided that the following provisos shall also apply to the whole of sub-article (4): (i) with effect from 1 January 2011 and up to 31 December 2014, as regards dividends paid by a company which was an international trading company as at 31 December 2010, the provisions of this 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; (ii) a person resident in Malta, registered for the purpose of making a claim in terms o f this sub-article in such manner as may be prescribed, may also claim a tax refund contemplated by this sub-article with respect to dividends paid from profits allocated to the foreign income account when such dividend is paid: 1. by a company which wa s a company registered in Malta on or after 1 January 2007 but was not resident in Malta before that date; and 2. by any company which has exercised its option in terms of paragraph (i) of the proviso to article 48(4A)( b); and 3. by any other company registered in Malta out of profits derived by the said company in respect of accounting periods which commenced on or after 1 January 2011. (4A) (a) With effect from 1 January 2007 a person, in receipt of a dividend paid to him by a company registered in Malta from profits allocated to its Maltese taxed account or its foreign income account, may claim a refund of six-sevenths of the Advance Company Income Tax pertaining to those profits distributed to 58 CAP. 372.] INCOME TAX MANAGEMENT him by way of such dividend, provided that such person is for such purpose registered in such manner as may be prescribed: Provided that where the dividend is paid out of profits: Cap. 123. (i) consisting of passive interest or royalties or of dividends received from a participating holding in a body of persons which does not satisfy the conditions referred to in the proviso to article 12(1)( u) of the Income Tax Act , the rate of refund shall be of five-sevenths of the said Advance Company Income Tax; (ii) allocated to the fore ign income account and in respect of which profits the company has claimed relief of double taxation no claim for refund may be made under this sub-article: Provided further that, notwithstanding the provisions of article 42B(2), a tax refund payable in terms of this sub-article shall in no case exceed the amount of tax actually paid by the company to the Commissioner on the profits distributed out of the Maltese taxed account or foreign income account. (b) During the period from 1 January 2007 to 31 December 2010, any refund contemplated in this sub- article may only be claimed by a person in receipt of a dividend from a company which was a company registered in Malta on or after 1 January 2007 but was not resident in Malta before that date: Provided that: (i) a person in receipt of a dividend from a company referred to in any of sub-paragraphs (1) or (2) and paid after the said company has informed the Commissioner as contemplated in the said paragraphs (1) or (2) below, may also claim a tax refund in terms of this sub-article during the aforementioned period if the conditions of paragraph ( a) are satisfied: 1. a company which qualifies as an international trading company and which informs the Commissioner that it has opted to cease to be an international trading company which option shall be approved by an extraordinary resolution of the members of such company; INCOME TAX MANAGEMENT [CAP. 372. 59 Cap. 123. 2. a company which has informed the Commissioner that it has opted to be treated as a company which was registered in Malta on or after 1 January 2007 but was not resident in Malta before that date, where such company had, in the three accounting periods immediately preceding t h a t i n w h i c h i t h a s s o i n f o r m e d t h e Commissioner, in the aggregate more than 50% of its profits allocated to the foreign income account or consisting of income in respect of which the exemption provided by article 12(1)( u) of the Income Tax Act is applicable and has been applied, which option shall be approved by an extraordinary resoluti on of the members of such company: Provided that: (aa)w h e r e t h e c o m p a n y w a s n o t i n existence or was not resident or registered in Malta during the whole of the above mentioned three year period the condition relating to the nature of its income set out in paragraph (2) above shall be determined by reference to the p e r i o d t h a t s u c h c o m p a n y w a s i n existence, resident or registered in Malta as the case may be; (bb) The Commissioner may, in his discretion, determine that paragraph 2 above applies to a company if he is of the opinion that it is likely that in the foreseeable future more than half o f t h e d i s t r i b u t a b l e p r o f i t s o f t h e company will consist of any or all of the following categories of income: - profits that will be allocated to the foreign income account; - profits which are not subject to tax but which would otherwise be allocated to the foreign income account; - dividends received from an international trading company, including, where applicable, dividends paid after that company has exercised the option under paragraph 1 of proviso (i); 60 CAP. 372.] INCOME TAX MANAGEMENT S.L. 234.43 - income derived from the ownership and, or chartering of any tonnage tax ship as defined in the Merchant Shipping (Tax- ation and Other Matters Relating to Shipping Organisat- ions) Regulations ; S.L. 234.43 S.L. 234.42 - income derived from the ownership and, or chartering of any ship, yacht, boat and any other vessel (in each case not being a tonnage tax ship as defined in the Merchant Shipping (Taxation and Other Matters Relating to Shipping Organisations) Regulations) , provided that the aforesaid income is derived by a company which was originally incorporated in terms of and subject to the Merchant Shipping (Shipping Organis- ations - Private Companies) Regulations , and whose objects were restricted as required under such Regulations; S.L. 325.06 - income of any company qualifying for benefits in terms of regulation 4, 5 or 6 of the Business Promotion Regu- lations : Provided further that a company to which paragraph (2) above applies shall not be entitled to claim a refund in respect of the Malta tax paid on profits allocated to its Maltese taxed account in years of assessment prior to year of assessment 2008. (ii) such company did not derive any of its profits, (even if such profits are not comprised in the said dividend) directly or indirectly, from a trade, business or other activity (hereinafter referred to as "the new activity") which is in whole or in part the same or an expansion, replacement or duplication of a trade, business or other activity which was carried on in Malta, prior to the 1 January 2007, by any person (hereinafter referred to a s the "old activity"); and the foregoing shall be int erpreted in the light of the following: (1) where the human, tangible or intangible resources of the new activity are substantially the same as those which were INCOME TAX MANAGEMENT [CAP. 372. 61 utilised by old activity, it shall be presumed, unless the contrary is proved, that the new activity is the same or an expansion, replacement or duplication of an old activity; (2) where the new activity is carried on directly or indirectly by any person in any way directly or indirectly connected or associated with the persons which carried on the old activity through shareholding, voting or other ownership or controlling rights it shall be presumed, unless the contrary is proved, that the new activity is the same or an expansion, replacement or duplication of an old activity; (3) a new activity shall not be presumed to be the same or an expansion, replacement or duplication of an old activity merely because the new activity is similar to an old activity because, inter-alia, it provides the same type of goods or services or because the new activity operates in the s a m e m a r k e t a s t h e o l d a c t i v i t y a n d competes with the old activity: Provided that where the old activity had been carried by a company to w hich proviso (i) to this paragraph ( b) may be applied the new activity shall not be considered in whole or in part the same or an expansion, replacement or duplication of the old activity. Cap. 123. (c) For the purpose of paragraph ( b)(ii) where the Commissioner is of the opinion that any activity carried out by any company which consists of any part of any administrative, management or other activity carried on by any person as part of his business activities prior to the 1 January 2007, and any other activity forms part of a scheme the sole or main purpose of which is the avoidance of the provisions of paragraph ( b) shall be a trade, business or activity which was carried on in Malta, prior to the 1 January 2007, by any person; and for this purpose the word "scheme" shall have the meaning assigned to it by article 51(5) of the Income Tax Act . (d) Without prejudice to proviso (i) of paragraph ( b) a claim for refund pursuant to paragraph ( a) in respect of dividends paid from profits allocated to the Maltese taxed account by companies which were resident in Malta prior to the 1 January 2007 may only be made in respect of the tax paid on profits derived by the said company in respect of accounting periods which commenced on or aft er 1 January 2011: Provided that a claim for refund may be made pursuant to 62 CAP. 372.] INCOME TAX MANAGEMENT paragraph (a) in respect of dividends distributed from profits allocated to the Maltese taxed account of companies which were resident in Malta prior to the 1st January, 2007, which profits were derived by t hose companies in accounting periods which commenced prior to the 1s t January, 2011, where those dividends fall within the purport of pr oviso (i) to sub-article (4) of this article but do not result in an entitlement for refund in terms of the said proviso merely due to the expiratio n of the deadline of the 31st December, 2014. (5) A claim for refund pursuant to sub-article (4) or sub-articl e (4A) shall be made not later tha n four years from the date from which the amount of tax i s eligible for refund. Cap. 123. (6) The Commissioner shall make payment of the refund under sub-article (4) or sub-article ( 4A) on being satisfied as to th e correctness of the claim made a nd upon receipt of a certificate issued by the company paying the dividend under the provisions of article 59(5) of the Income Tax Act . Such refund, unless otherwise provided for in the Income Tax Acts, shall not be taxable: Provided that notwithstanding anything contained in the Income Tax Acts the Commissioner shall not make such payment unless any tax due under the investment income provisions in respect of investment income referred to in article 41( a)(viii)(2) or (4) comprising the distributed profits the tax paid on which is the tax in respect of which the claim pursuant to this sub-article is made, has been paid. (7) ( a) Where a claim for refund has been made under the provisions of sub-article (4) or sub-article (4A) in respect of Malta tax paid on distributed profits as properly shown in the relevant dividend certificate, no person shall be entitled to a further refund under those sub-articles or to a refund under any other provisions of the Income Tax Acts in relation to the Malta tax paid on such distributed profits: Provided that a person entitled to such refund as set out under sub-article (4) in respect of profits distributed by an international trading company shall also be entitled to a refund of the difference between the Malta tax paid by the international trading company and the tax char geable on such person on such income in accordance wi th the provisions of this Act: Provided further that the provisions of the immediately preceding proviso shall during the period 1 January 2011 to 31 December 2014 also apply in the case of any profits distributed by a company which was an international trading comp any as at 31 December 2010 where such profits were earned by such company while it was an international trading company. INCOME TAX MANAGEMENT [CAP. 372. 63 Cap. 123. (b) W h e r e a c l a i m f o r r e f u n d h a s b e e n m a d e u n d e r t h e provisions of sub-article (4) or sub-article (4A) in r e s p e c t o f M a l t a t a x p a i d o n d i s t r i b u t e d p r o f i t s a s properly shown in the rele vant dividend certificate, notwithstanding the provisions of article 60 of the Income Tax Act , such Malta tax paid which a company had deducted or is entitled to deduct under article 59 from such dividend, shall, when such dividend is included in the chargeable income of any person, including a company receiving the said dividend or a person holding directly or indirectly shares in such company which receives a dividend out of such profits, be set off, for the purposes of collection, only against the tax charged on that dividend. (c) Where a claim for refund of the Malta tax paid has been made under sub-article (1) in respect of Malta tax paid on distributed profits as properly shown in the relevant dividend certificate, no person shall be entitled to a further refund under the provisions of sub-article (4) or sub-article (4A) in relation to the Malta tax paid on such distributed profits. (8) A refund due by the Commissioner as aforesaid shall constitute a debt due by the Co mmissioner to the claimant which shall be payable not later than the fourteenth day following th e day on which the refund becomes due and shall be recoverable as suc h: Provided that the said period of fourteen (14) days may be extended by another period of twelve (12) months if the Commiss ioner requires to carry out further v erifications for due diligence p urposes. ( 9 ) W h e r e a r e f u n d o f t a x b y t h e C o m m i s s i o n e r i s w h o l l y o r partly not due to a person, it sh all be the duty of such person to make a repayment thereof to the Commissioner within thirty days from the date of receipt of such refund, and where such repayment is not paid as aforesaid interes t shall be charged according to the provisions of article 44. (10) If any person claims a refund in terms of sub-article (4) o r sub-article (4A) when that person was not entitled to the said refund such person shall be liable to pay a penalty equal to the amount of the refund claimed and if the refund was in fact paid to him that person shall in addition be liable to repay the tax so refunded and to additional tax of seven per cent per month or part thereof commencing from the month in which the said refund was paid to him up to the month in which he repaid the tax refunded and any payment made by the said person in respect of the tax repayable by him in terms of this paragraph shall first be appl ied against any additional tax due thereon: Provided that the provisions of this sub-article shall not be applicable when the person referred to therein proves that he d id not know and could not reasonably have known that he was not entitled to such a tax refund. (11) The Minister responsible for finance may from time to time make rules in relation to the carrying out of the provisions of this 64 CAP. 372.] INCOME TAX MANAGEMENT article. PART IX Offences and Penalties General provisions regarding offences. Amended by: L.N. 425 of 2007; XII. 2014.67.