Cap. 123 Art. 26Deductions not to be allowed.

For the purpose of ascertaining the total income of any person no deduction shall be allowed in respect of -

(a) domestic or private expenses other than those specifically allowed by this Act;

(b) any outgoings and expenses to the extent to which they are not wholly and exclusively incurred in the production of the income and, in the case of gains or profits chargeable under article 4(1)(b), not being furthermore necessarily incurred in the performance of the duties of the relative employment or office;

(c) any loss, diminution, exhaustion or withdrawal of capital, any sum employed or intended to be employed as capital or any expenditure for a capital purpose or of a capital nature save as provided in article 14 and 23;

(d) the cost of any improvements;

(e) any loss or expense which is recoverable under any insurance or contract of indemnity;

(f) rent of any premises or part of premises not paid for the purpose of producing the income;

(g) any payments of a voluntary nature;

(h) any interest, discount or premium paid or payable to a person not resident in Malta where -

(i) the person not resident in Malta derives or benefits from the said interest, discount or premium, directly or indirectly, from the granting of loans or from any form of credit to finance the acquisition, development, construction, refurbishment, renovation of immovable property situated in Malta or any right thereon including professional fees related thereto (including fees related to the acquisition of finance) and any other matter which increases or enhances the value of such immovable property or any right thereon; and

(ii) the said interest, discount or premium is exempt from tax under the provisions of article 12(1)(c)(i); and

(iii) the payor of the interest, discount or premium is a person related to the person not resident in Malta. For the purpose of this paragraph a person is deemed to be related to a person not resident in Malta if:

(i) that person and the person not resident in Malta are, directly or indirectly, controlled or beneficially owned to the extent of more than 10% by the same persons; or

(ii) that person owns, directly or indirectly, more than 10% of the ordinary share capital or voting rights of the person not resident in Malta;

(i) any payment the making of which constitutes a criminal offence or, in the case of a payment made outside Malta, would constitute a criminal offence if made in Malta.