On Friday 27th April, LN 140 of 2018 was enacted, providing for a new preferential tax rate applicable to non-domiciled individuals employed by a Malta company to carry out maritime activities and services in the Offshore Oil and Gas Industry.
Please find below a summary of the main provisions:
- The rules provide for a beneficial tax rate of 15% on the qualifying employment income derived from an eligible office, subject to a minimum annual salary (excluding fringe benefits) of €65,000. This results in a minimum annual tax of €9,750 without the possibility to claim any relief, deduction, credit or set off of any kind.
- The employee must be employed by an undertaking that:
a) holds a Document of Compliance (DOC) issued in terms of the International Safety Management (ISM) Code or a Seafarer Recruitment and Placement Services Licence issued in terms of the Maritime Labour Convention, 2006; or
b) engages the particular individual for work on board any ship, excluding ships operating on regular services as well as ships whose use or operation requires certification in terms of the Commercial Vessels Regulations and which are berthed or anchored within the territorial waters of Malta or any port in Malta for at least a period of one month over a calendar year
(referred to in the Rules as "Maritime activities"). For the purposes of the Rules, the term "regular services" shall have the meaning assigned to it in terms of the Merchant Shipping (Safe Operation of Regular Ro-Ro Ferry and High-Speed Passenger Craft Services) Regulations; or
c) carries on mainly a trade or business consisting in the Servicing of the offshore oil and gas and ancillary services industry (referred to in the Rules as "Servicing of the offshore oil and gas and ancillary services activities").
- The conditions to be adhered to are:
(a) the beneficiary is an individual who derives employment income, being emoluments payable under a qualifying contract of employment, and received in respect of work or duties carried out in Malta, or in respect of any period spent outside Malta in connection with such work or duties, or on leave during the carrying out of such work or duties;
(b) he is protected as an employee under Maltese law, irrespective of the legal relationship, for the purpose of exercising genuine and effective work for, or under the direction of, someone else, is paid, and has the required adequate and specific competence, as proven to the satisfaction of the competent authority (Transport Malta);
(c) he proves to the satisfaction of the competent authority that he is in possession of professional qualifications or experience;
(d) he fully discloses for tax purposes and declares emoluments received in respect of income from a qualifying contract of employment and all income received from a person related to his employer (25% or greater relationship) paying out income from a qualifying contract as chargeable to tax in Malta;
(e) he proves to the satisfaction of the competent authority that he performs activities of an eligible office (Refer to attached list); and
(f) he proves to the satisfaction of the competent authority that:
(i) he is in receipt of stable and regular resources which are sufficient to maintain himself and the members of his family without recourse to the social assistance system in Malta;
(ii) he resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta;
(iii) he is in possession of a valid travel document;
(iv) he is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself and the members of his family; and
(v) he is not domiciled in Malta.
- The beneficial tax rate is available from year of assessment 2017 for eligible offices in the Servicing of the Offshore Oil and Gas and Ancillary Services Industry, and from year of assessment 2018 for eligible offices in Maritime activities. The beneficial tax rate is available for a period of 5 years for EEA and Swiss nationals and for a period of 4 years for third country nationals which can be renewed for a further 5 years and 4 years respectively.
BDO Malta will be continue to keep abreast of all developments, in order to be in a prime position to assist clients with any queries which might arise in respect thereto.
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