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The Budget Measures Implementation Act, 2005 (Bill No. 55)

entitled

AN ACT to implement various budget measures and other administrative measures.

BE IT ENACTED by the President, by and with the advice and consent of the House of Representatives, in this present Parliament assembled, and by the authority of the same, as follows:

Short title. 1. The short title of this Act is the Budget Measures

Implementation Act, 2006.

Amendment of the Pensions Ordinance. Cap. 93.

Amendment of article 7 of the principal Ordinance.

Amendment of article 8A of the principal Ordinance.

PART I

2. This Part amends the Pensions Ordinance, and shall be read and construed as one with the Pensions Ordinance, hereinafter in this Part referred to as "the principal Ordinance".

(2) This Part shall come into force on such date as the Minister responsible for finance may, by notice in the Gazette, establish.

3. Immediately after the first proviso of article 7(1)(g) of the principal Ordinance, there shall be added the following proviso:

" "Provided further that where an officer relinquished his office in the service of Malta after 31 December, 1978 to take up employment with the University of Malta, service with the University of Malta shall be deemed to be service with Government:".

4. In article 8A of the principal Ordinance, immediately after the last proviso there shall be added the following proviso:

" "Provided further that for the purpose of establishing the date of the termination of the service with the
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Government with a view to calculating the contribution due by the company or entity towards the cost of pension and, or gratuity, as the case may be, such date shall be deemed to be, and to have always been, either the date when an officer was detailed for service or otherwise commenced performing his duties with the company or entity from which he eventually retired, or the date when an officer took up full time employment with the company or entity, whichever is the earlier.".

5. In article 8E(2) of the principal Ordinance, immediately after paragraph (c) there shall be added the following new paragraph:

" "(d) Ambassador, High Commissioner or other principal representative of Malta in any other country, when appointed from the public service in terms of the proviso to article 111(1) of the Constitution of Malta and provided that, prior to such appointment, the holder of any of the said offices was eligible for appointment as a head of a department of Government in terms of article 92(4) of the Constitution of Malta.".

PART II

Amendment of article 8E of the principal Ordinance.

6. (1) This Part amends the Income Tax Act and shall be read and construed as one with the Income Tax Act, hereinafter in this Part referred to as "the principal Act".

(2) This Part shall be deemed to have come into force on 1st
November, 2005.

7. Immediately after article 5 of the principal Act there shall be added the following new article:

Amendment to the Income Tax Act.

Cap. 123.

Addition of new article to the principal Act.

"Property transfers.

5A. (1) Notwithstanding the provisions of article 5 or any other provision of the Income Tax Acts, tax shall be chargeable and payable on any transfer to which this article applies in such amount, at such rate and in such manner as provided herein.

(2) (a) In this article, unless the context otherwise requires -
"own residence" has the meaning assigned to it in article 5(5)(c);
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"property" means any immovable property situated in Malta and any right over such property;
"transfer" has the meaning assigned to it in article 5(1)(b) and includes any assignment or cession of any rights over property, and any occurrence that is deemed to be a transfer in terms of any provision of article 5. When property is transferred by means of a deed of exchange the parties shall be deemed to have made two separate deeds of transfer.
(b) Saving the provisions of subarticle (7), property assigned to a co- partitioner under a deed of partition shall be deemed to have been acquired by that co- partitioner at the time that he had acquired his undivided share before that partition and by virtue of the same transmission causa mortis or transfer inter vivos under which he had acquired that undivided share.
(c) In determining whether an owelty is due on a contract of partition, the provisions of article 5(2)(d) shall apply mutatis mutandis.
(3) This article applies to any transfer of property made on or after the 1st November 2005, excluding:
(a) a contract of partition of property where no owelty is due to any of the co-partitioners;
(b) a donation made, or deemed to have been made, in terms of article 5(18)(b) or 5(21)(b)(ii), by a person to a person or institution mentioned in article 5(2)(e)(i) or (ii);
(c) a transfer of the transferor’s own residence or part thereof that satisfies the conditions laid down in article 5(5)(b);
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(d) the assignment of property between spouses consequent to a judicial or consensual separation;
(e) the assignment of property, that formed part of the community of acquests between the spouses or was otherwise owned in common between them, to one of the spouses on the dissolution of the community, or the partition of such property between the spouses or the surviving spouse and the heirs of the deceased spouse;
(f) the transfer of property from one company to another company which falls within the provisions of article 5(9)(i)(a) or (b);
(g) the transfer of property upon the incorporation of a business or a partnership en nom collectif as a going concern into a limited liability company that satisfies the conditions laid down in article 5(15);
(h) the settlement of property on trust or the distribution or reversion of property settled on trust where, for the purposes of the provisions of article 5(18) to (25), it is deemed that no transfer has taken place, or that no loss or gain has arisen;
(i) except as may be otherwise prescribed, the transfer of property by a person whose income from the transfer of that property is exempt from tax in terms of article
12(1) or an exemption order made under article 12(2).
(4) (a) Where -
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Cap. 364.

Cap. 364.

(i) a notice of a promise of sale or transfer of immovable property or any real right thereon is given to the Commissioner in accordance with the provisions of article 3(6) of the Duty on Documents and Transfers Act or of rules made under the Act before the
22nd November 2005, and
(ii) a transfer of that property is made on or after the 1st November
2005 but not later than the 31st
December 2005 and the transfer is made pursuant to and for the consideration and at the same terms provided for in that promise of sale or transfer; and
(iii) a notice of that transfer is given to the Commissioner in accordance with the said Act by not later than fifteen working days after the date of the publication of the said deed;
that transfer shall be, if the transferor so elects, a transfer to which this article does not apply.
(b) The election referred to in paragraph (a) shall be exercised by means of a declaration to be made to the notary at the time of the publication of the deed of the transfer in question. The notary shall record the said declaration in the deed and make a note thereof in the form that is required to be drawn up for the purpose of article 51 of the Duty on Documents and Transfers Act.
(5) (a) Subject to the other provisions of this subarticle, the tax on a transfer to which this article applies shall be chargeable at the rate of 12% of the transfer value.
(b) When a transfer to which this article applies is a transfer of property -
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(i) that was acquired by the transferor in terms of a transmission causa mortis that happened after the
24th November 1992; or
(ii) that was acquired by the transferor in terms of a donation made more than five years before the date of the transfer in question,
the tax thereon shall be chargeable at 12% of the excess, if any, of the transfer value over its acquisition value, or, where only a part of the property so acquired is transferred, over the portion of the acquisition value related to the portion so transferred.
(c) When a transfer to which this article applies is a transfer of property that was acquired by the transferor in terms of a transmission causa mortis that happened
before the 25th November 1992, the tax thereon shall be chargeable at the rate of 7% of the transfer value.
(6) (a) Subject to the provisions of subarticle (12) the transfer value of property is the consideration paid or payable for the transfer. In a contract of emphyteusis the ground rent payable shall be chargeable as income in accordance with the provisions of article 4 and shall not be included in the transfer value of a transfer to which this article applies.
(b) The acquisition value of property
is:
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Cap. 364.

(i) in the case of property referred to in subarticle (5)(b)(i), the value of the property applicable in respect of the deed of transfer causa mortis as declared in the said deed taking into account the relevant provisions of the Capital Gains Rules,
1993, in terms of article 5 of this Act, any adjustment to the said value made in accordance with the Adjustments to Declared Value of Immovable Property Regulations, 2005, in terms of the Duty on Documents and Transfers Act where applicable, or as determined by the Commissioner under the said Acts;
(ii) in the case of property referred to in subarticle (5)(b)(ii), the value declared in the deed of donation.
(7) (a) In a partition of property to which this article applies, any person to whom an owelty is due shall be deemed to have transferred part of the common property for a consideration equivalent to the value of that owelty.
(b) When a person who pays an owelty transfers partitioned property, in respect of which the owelty was paid, the relative portion of that property representing the owelty as a percentage of the value of the said property when the owelty was paid shall be deemed to be property acquired inter vivos under an onerous title.
(8) When a transfer is a transfer of property that was in part acquired under an acquisition referred to in subarticle (5)(b) and in part acquired under an acquisition not referred to in that subarticle, this article shall apply as if more than one transfer has taken place and the transfer value of each such acquisition shall be determined separately and in a manner proportionate to the acquisition value of the said property.
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Cap. 372.

Cap. 372.

(9) (a) The amount on which tax is chargeable in accordance with this article shall not be reduced by any deduction whatsoever.
(b) No losses or bad debts arising from, or expenditure incurred in respect of, a transfer to which this article applies shall be allowable as a deduction against any income or capital gains.
(10) (a) Tax payable on a transfer to which this article applies shall be final and shall be separate and distinct from that paid or payable under any other provisions of this Act or of the Income Tax Management Act. It shall not be available as a credit against the tax liability of any person or taken into account for the purpose of determining the amount of any refund payable under the said Acts.
(b) Saving the other provisions of this article, no tax shall be chargeable in terms of any provision of the Income Tax Acts on gains or profits derived from any transfer to which this article applies or on any distribution out of such gains or profits.
(c) Any person who carries on a trade, business, profession or vocation shall keep an account of all proceeds and expenditure relating to transfers to which this article applies in addition to the records that he is required to keep in accordance with article 19 of the Income Tax Management Act.
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(d) Every company resident in Malta shall allocate the distributable profits derived from transfers to which this article applies in an account, to be called the Property Transfer Account, that is separate from the accounts to which it is required to allocate its other distributable profits in accordance with the other provisions of the Income Tax Acts. Profits distributed out of the Property Transfer Account to another company resident in Malta shall likewise be allocated to the recipient’s Property Transfer Account.
(e) Any party to a transfer to which this article applies or to a promise of sale relating to such a transfer shall furnish the Commissioner with such particulars relating to that transfer as the Commissioner may require or as may be prescribed.
(11) Tax chargeable under this article shall be due by the transferor and shall be remitted to the Commissioner within fifteen days of the relative transfer. This payment is to be made by the notary who publishes the transfer deed by means of a Bank Draft payable to the Commissioner.
(12) (a) The parties to a transfer of property to which this article applies shall be obliged to ensure that the transfer value of the property reasonably reflects the market value of the said property.
(b) Where the declared transfer value of the property does not reasonably reflect the market value of the said property, each of the parties to the transfer shall become liable to additional tax in the amount or amounts specified in paragraph (d).
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(c) Where it appears to the Commissioner that the declared transfer value of the property does not reasonably reflect the market value of the said property he may issue an order in writing, to each of the parties to the transfer, stating therein the transfer value which in his opinion is applicable in the circumstances, the relative tax payable and the additional tax as specified in paragraph (d).
(d) The additional tax referred to in paragraph (b) shall be equivalent to the difference between the amount of tax payable under this article on the basis of the declared transfer value and the amount of tax which should have been payable had the transfer value of the property declared reasonably reflected the market value of the same.
(e) The additional tax referred to in paragraphs (b), (c) and (d) which is payable by a transferor in a transfer of property to which this article applies shall be in addition to the tax which is payable on the transfer value of the property.

Cap. 372. (f) The provisions of the Income Tax Management Act shall apply to any tax due under this article as if the tax referred to in the said provisions included also the tax chargeable and payable under this article.

(13) The Minister may make rules for the better implementation of the provisions of this article and, without prejudice to the generality of the foregoing, such rules may provide for:
(a) the manner in which the value of any property or of any part of property to which this article applies is to be determined;
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(b) the manner in which tax due under this article is to be paid and collected and the obligations of any person in respect of the payment of such tax;
(c) the manner in which any apportionment of tax due is to be made for the purposes of this article; and
(d) any matter that may be prescribed under this article.".

PART III

Amendment to the Social Security Act. Cap. 318.

Amendment to article 2 of the principal Act.

8. (1) This Part amends the Social Security Act and shall be read and construed as one with the Social Security Act, hereinafter in this Part referred to as "the principal Act".

(2) This Part shall come into force on the 7th January 2006.

9. In article 2(1) of the principal Act, in the definition of "severely disabled person", in paragraph (c) thereof, for the words "Cerebellar Ataxia; or" there shall be substituted the words "Cerebellar Ataxia;" and immediately thereafter there shall be inserted the words "Chronic-Granulomatous Disease; or".

PART IV

Amendment to the Excise Duty Act.

Cap. 382

Amendment to the Fourth Schedule of the principal Act.

10. (1) This Part amends the Excise Duty Act and shall be read and construed as one with the Excise Duty Act hereinafter in this Part referred to as "the principal Act.".

(2) This Part shall be deemed to have come into force on 1st
November, 2005.

11. The Fourth Schedule to the principal Act shall be amended as follows:

(a) for the words in the ‘Rate of Excise Duty’ column thereof in respect of the item "Leaded Petrol falling within CN Codes 2710.11.31, 2710.11.51 and 2710.11.59", there shall be substituted the following:
"Lm 187.00 per 1000 litres.";
(b) for the words in the ‘Rate of Excise Duty’ column thereof in respect of the item "Unleaded Petrol falling within CN Codes 2710.11.41, 2710.11.45 and 2710.11.49", there shall
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be substituted the following:
"Lm 166.00 per 1000 litres";
(c) for the words in the ‘Rate of Excise Duty’ column thereof in respect of the item "Inland Navigation between Malta and Gozo by vessels of a tonnage of 3,500 tons or more", there shall be substituted the following:
"Lm 29.10 per 1000 litres";
(d) for the words in the ‘Rate of Excise Duty’ column thereof in respect of the item "Natural Gas falling within CN Codes 2711.11.00 and 2711.21.00", there shall be substituted the following:
"Lm 0.36 per 1 gigajoule, gross calorific value";
(e) for the words in the ‘Rate of Excise Duty’ column thereof in respect of the item "Electricity falling within CN Code 2716", there shall be substituted the following:
"Lm 0.15 per MWh".

PART V

12. (1) This Part amends the Eco-Contribution Act, and shall be read and construed as one with the Eco-Contribution Act, hereinafter in this Part referred to as "the principal Act".

(2) This Part shall come into force on such date as the Minister for Rural Affairs and the Environment may, with the concurrence of the Prime Minister and the Minister responsible for finance may, by notice in the Gazette, establish.

13. In article 2 of the principal Act, the definition "placed on the market" shall be substituted by the following:

" "placed on the market" means when a product is transferred from the manufacturing stage or when a product is brought into Malta with the intention of distribution on the market in Malta, including when a product is so transferred or brought into Malta for use in the trade or business of the person transferring or bringing the product into Malta;".

Amendment of the Eco- Contribution Act.

Cap. 473.

Amendment of article 2 of the principal Act.

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Objects and Reasons

The objects of this Bill are to implement various budget measures and to implement other administrative measures.