Budget Measures Implementation Bill
13 October 2021
All provisions in the Bill are still subject to Parliament approval and changes are expected prior to the eventual enactment. Unless otherwise stated, all articles come into effect with the enactment of the Budget Measures Implementation Act.
Changes to Income Tax Act
- Wear and tear allowances on the industrial building category of car parks is extended to be available to persons whose operation involves substantial activity, having regard to the capital employed, the organisation of the operation and the income that it generates, from such activities.
- The exemption from capital gains on transfers of securities is extended to the transfer of securities listed on EU and EEA stock exchanges.
- All previous references to shares listed on a stock exchange recognised under the Financial Markets Act are replaced to shares listed on exchanges recognised by the Commissioner.
- The deduction for capital expenditure on intellectual property (IP) spread over the useful life of such IP (subject to minimum of 3 years) is being restricted. When the IP or IP rights were transferred to the said person ("the acquirer") by a company ("the transferor") in terms of an exempt intra group transfer, the total deduction that may be claimed by the acquirer shall be the lower of the cost of acquisition and the market value of the said property or rights as at the time of that transfer, reduced, in either case, by the amount, if any, that the transferor had originally claimed as a deduction in respect of the IP rights that have been transferred.
- The reduced 15% flat tax rate on employment income in terms of a contract requiring the individual to carry out the activities wholly or mainly outside of Malta will include new conditions. The reduced rate will not apply to emoluments payable under a contract of employment for a period of less than twenty-four (24) months or that lasts less than twenty-four (24) months. Moreover, the benefit shall not apply for a year of assessment if, during the year immediately 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, disregarding any period during which that individual was present in Malta on vacation leave or sick leave and disregarding any period preceding the commencement or following the termination of the contract. This article would be applicable from year of assessment 2023 (basis year 2022).
The Income Tax Act provides for an optional tax rate of 7.5% on income derived from full-time or part-time sports activity, either as a registered player or athlete or as a licensed coach. Such tax, if opted for, shall be final with no option of set-off or refund.
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