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Malta Enterprise Act (Cap. 463) Investment Aid Regulations, 2008 (L.N. 68 Of 2008 )

MALTA ENTERPRISE ACT (CAP. 463)Investment Aid Regulations, 2008

IN exercise of the powers conferred upon him by article 5 of the Malta Enterprise Act, the Prime Minister and Minister of Finance and the Minister for Investment, Industry and Information Technology have made the following regulations:

Title and commencement.

Interpretation.

Regulations, 2008.
(2) These regulations shall be deemed to have come into force with effect from 1st January 2008.

“the Corporation” means the Malta Enterprise Corporation established under the Malta Enterprise Act;
“disadvantaged or disabled person” has the meaning assigned to it by the Guidelines;
“Guidelines” means such guidelines as may be published by the Corporation from time to time in terms of the Act;
“large undertaking”, “medium-sized undertaking”, “small undertaking” and “micro undertaking” shall have the meaning attributed to them by Commission Recommendation 2003/361/ EC;
“qualifying expenditure” means that expenditure that may qualify for assistance in terms of these regulations and in accordance with the Guidelines;
“undertaking” means an undertaking as defined in the Act except for the purposes of regulations 4 and 6 where undertaking shall mean:
(a) a partnership constituted under the Companies Act, being a partnership en nom collectif , en nom commandite or a limited liability company; or
(b) a body of persons constituted, incorporated or registered outside Malta, and of a nature similar to the aforesaid partnerships and registered as an oversea company in accordance with the Companies Act; or
(c) a co-operative society duly registered as such under the Co-operative Societies Act.

4(1)(a) of the Income Tax Act, carried on or intended to be carried out by an undertaking in Malta which consists solely of any one of
the following activities –
(a) (i) the production, manufacture, improvement, assembly, preservation, processing of any goods, materials, commodities, equipment, plant, machinery;
(ii) the rendering of any industrial services analogous to the activities referred to in paragraph (i) of this subregulation;
(iii) the repair, overhaul or maintenance of pleasure crafts, yachts not having more than thirty berths, aircraft, engines or equipment incorporated or used in such vessels or aircraft;
(b) Information and Communications Technology (I.C.T.) developmental activities, software development, Information Technology (IT) enabled services including call centres and Information Technology (IT) solutions as may be prescribed in the Guidelines, but excluding telecommunications service providers;
(c) research and development, and innovative start-ups as may be prescribed in the Guidelines;
(d) eco-innovations, waste treatment and environmental solutions as may be prescribed in the
Guidelines;
B 1173

Cap. 386.

Cap. 442.

Qualifying activities.

Cap. 123.

B 1174

Cap. 334.

(e) biotechnology, comprising the production or development of intellectual property or goods or the rendering of services resulting from, or related to, the study, research, discovery application, modification or development of living organisms or materials derived from them as may
be prescribed in the Guidelines;
(f) the provision of facilities directly required in the development or production of feature films, television programmes or commercials as may be prescribed in the Guidelines;
(g) the provision of science and technology private tertiary education as may be prescribed in the Guidelines;
(h) the provision of private health-care services through the setting up of new projects carrying out an investment of not less than 2.5 million Euro in medical equipment, excluding land or buildings as may be prescribed in the Guidelines;
(i) the provision of logistics services that include part- transformation that adds value by undertakings employing not less than 250 full-time employees or their equivalent as may be prescribed in the Guidelines;
(j) activities set out in Article 11 of the Malta Freeports Act and carried on mainly in a freeport as defined by that Act by an undertaking licensed under that Act:
Provided that an undertaking shall not qualify for any of the benefits provided by these regulations if –
a) the undertaking sells by retail and, for this purpose, an undertaking 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 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; or
(ii) a person, other than an individual, who uses those goods or services for the purpose of an undertaking carried on by such person;
(iii) a person through e-commerce activities resulting in online transactions effected by means of a secure payment system;
b) the undertaking’s trade or business includes any one of the following activities:
(i) dividing, sorting, packaging, mixing without changing the character of the good, drying, labelling, or other similar processes or any combination of such processes to goods which are acquired in bulk merely to prepare those goods for sale or distribution, excluding goods in respect of which the said undertaking carries on any other activity referred to in subregulation (1)(a);
(ii) the assembly of any goods where–
1. the final assembled good is clearly recognisable from the individual components or parts from which it is assembled without regard being had to any exterior casing of the good; and
2. the components and parts from which the good is assembled are such that the good is nearly complete and the assembly work and the supervision of such assembly work only require the employment of almost exclusively unskilled workers, such that the assembly operation is of a spurious nature when considered in the light of manufacturing activities;
(iii) without prejudice to any exception as may be provided in the Guidelines, the installation, commissioning or assembly of goods on site, where the said goods have not been manufactured by the undertaking which is installing, commissioning or assembling the goods on site:
Provided that the provisions of this paragraph shall not be applicable to an undertaking which carries on only any one or more of the activities set out in subregulation (1)(b) to (j);
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(c) the trade or business of the undertaking includes the preparation or production of “food in the course of catering” including -
(i) meals or snacks including -
(1) hot and cold dishes including antipasto and dessert;
(2) sandwiches, toast, potato chips, sausage rolls, pizza, pastizzi, qassatat and similar snacks;
(3) biscuits, cakes, confectionery and similar items but excluding those sealed in a package by the manufacturer and supplied in that original sealed package, and those items which individually weigh 500 grams or more;
(4) food supplied in restaurants, cafeterias, canteens, bars and other similar establishments;
(5) food prepared or produced for parties, functions, weddings and similar events;
(6) food prepared or produced for consumption by persons pertaining to a particular location or organisation, including patients in hospitals or homes, residents of hotels or guest houses, workers in a particular workplace and the preparation or production of food in similar circumstances.
(ii) milk, milkshake, tea, coffee and chocolate supplied in liquid form, excluding milk and milkshake supplied by the manufacturer thereof in bottles and containers for distribution to retail outlets but including any form of drink which is merely produced by adding liquid to powder or substance and where such drink is produced in order that it may be served in a bar, restaurant, canteen, cafeteria or other establishment or place to individuals for consumption.

(a) as a percentage of the qualifying expenditure incurred by such undertaking in the year preceding the year of assessment in question; or
(b) as a percentage of wage costs for jobs directly created by the investment project in accordance with the provisions of subregulations (4) to (7):
Provided that the total amount of investment tax credits that may be granted in terms of this regulation for a specific investment project shall not exceed:
(i) in the case of an undertaking which qualifies as a small undertaking, fifty per cent of the qualifying expenditure;
(ii) in the case of an undertaking which qualifies as a medium undertaking, forty per cent of the qualifying expenditure;
(iii) in the case of an undertaking which qualifies as a large enterprise, thirty per cent of the qualifying expenditure:
Provided further that in the case of large investment projects, the investment tax credit to be granted in terms of this subregulation shall never exceed:
(i) fifteen per cent (15%) of the qualifying expenditure for that amount in excess of 50 million Euro; and
(ii) ten point two per cent (10.2%) of the qualifying expenditure for that amount in excess of
100 million Euro.
(2) In the case of an investment project that may make a substantial contribution to the economic development of Malta, the Corporation may convert the investment tax credit referred to in
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Investment tax credit.

B 1178
subregulation (1) into other forms of assistance, including cash grants.
(3) For the purposes of this regulation the terms ‘tangible assets’ and ‘intangible assets’ shall have the meaning attributed to them in the Guidelines.
(4) The amount of investment tax credit based on job creation which an undertaking may claim in a year of assessment in terms of subregulation (1)(b) shall be based on the wage cost incurred by that undertaking in the accounting period ending in the year preceding that year of assessment.
(5) An undertaking shall, subject to the terms and conditions of the Guidelines, be considered to have created a job as a result of an investment project for those individuals who are employed by the undertaking, if the job is directly connected with the activity to which the investment project relates and is created within three years from the completion of the investment project and as long as the employment of any such individual is not in replacement of another individual and provided that such employment is not terminated before the lapse of five years from the date of employment in the case of large undertakings and not before the lapse of three years from the date of employment in the case of small and medium sized undertakings:
Provided that for the purpose of determining whether jobs have been created, individuals who are employed by the undertaking on a part-time basis shall be deemed to be a number of full-time employees as is produced by dividing the number of hours worked by such part-time employees by one thousand and seven hundred and sixty:
Provided further that where the accounting period ending in the year preceding a year of assessment is more or less than twelve months, the number of hours worked by part-time employees shall be divided by an amount which shall be arrived at by dividing the amount of one thousand and seven hundred and sixty, by three hundred and sixty-five, and then multiplying the result by the number of days comprised in that accounting period.
(6) An undertaking which is entitled to an investment tax credit in respect of a year of assessment shall be entitled to deduct from the amount of income tax which is due on its chargeable income derived from its trade or business for that year of assessment the amount of the investment tax credit and, where the investment tax credit, for any year of assessment, exceeds the income tax payable
by such an undertaking for that year, the excess shall be added to the investment tax credit for the following year and deemed to be part of that investment tax credit, or if there is no such investment tax credit for that year, be deemed to be the investment tax credit for that year and so on for subsequent years:
Provided that so much of the investment tax credit which is not so utilised at the end of any year and which is therefore carried forward to be added to the investment tax credit of the following year of assessment and deemed to be the investment tax credit for that year, shall be increased by such rate as may be prescribed in the Guidelines; and where any part of the investment tax credit as so increased is again not utilised, so much of it as is not utilised shall be further increased by the said percentage and carried forward to the following year, and so on for subsequent years:
Provided further a tax credit shall not give rise to a right to a refund of tax.
(7) Where an undertaking has benefited from the provisions of this regulation, the investment tax credit shall be deemed to have relieved from tax so much of that undertaking’s chargeable income which, when multiplied by the rates of tax at which it was chargeable in that year, is equal to the investment tax credit; and where the undertaking or any subsequent undertaking distributes the income which is so deemed to have been relieved from tax, such undertaking or undertakings shall state in the dividend warrant pertaining to any such distribution that such income has been relieved from tax by an investment tax credit in accordance with this regulation; and the tax which has so been relieved shall not be available for refund for any purpose of the Income Tax Act.
(8) (a) The chargeable income which is deemed to have been relieved from tax in accordance with sub-regulation (7) shall, for the purposes of the Income Tax Act, be allocated to the Final Taxed Account of the company in question and any dividends (or part thereof) distributed from such income shall be exempted from income tax in the hands of the members of the company on receipt of such distribution.
(b) Where a dividend referred to in sub-regulation (1) is distributed to a member which is also a company (in this sub regulation is referred to as “the second company”), the said dividend shall likewise be distributed by the second company to its members in the form of dividends exempt from income tax in the hands of the recipients, and where a member of the
B 1179

Cap. 123.

B 1180

Cap. 325.

Employment of disadvantaged or disabled persons.

Investment aid cash grants to Gozo based undertakings.

second company is again a company, the preceding provisions shall apply mutatis mutandis as though references to the first company were references to the second company, and as though references therein to the second company were references to that member, and the principle set out in this sub-regulation shall continue to be applied for as long as such income or part thereof to which this regulation applies are distributed by way of dividends.
(9) Where for a year of assessment, an undertaking qualifies for a tax credit under the Business Promotion Act and also under the provisions of these regulations, it shall avail itself of the tax credit due under the Business Promotion Act before any set-off is made in respect of the tax credit due under these regulations.
(10) No tax credit shall be due to an undertaking under these regulations for a year of assessment unless it is claimed in the appropriate section of a tax return submitted by electronic means by not later than the relative tax return date.

(2) The cash grant to be provided in terms of subregulation (1) shall only be available to such undertakings established in Gozo that recruit at least five or more new employees.
(3) The cash grant to be provided in terms of subregulation (1) shall be in lieu of equivalent tax credits granted in terms of these regulations.

Ippubblikat mid-Dipartiment ta’ l-Informazzjoni (doi.gov.mt) — Valletta — Published by the Department of Information (doi.gov.mt) — Valletta

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press

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