Cap. 123 Art. 59Deduction of tax.

(1)(a) Every company registered in Malta, not being a company referred to in paragraph (b), shall be entitled to deduct from the amount of any dividend, other than a dividend paid out of distributable profits allocated to the untaxed account, paid to any shareholder, a tax at the rate paid or payable by the company, relief of double taxation being left out of account, on the income out of which such dividend is paid:

Provided that where tax is not paid or payable by the company on the whole income out of which the dividend is paid, the deduction shall be restricted to that portion of the dividend which is paid out of income on which tax is paid or payable by the company.

(b) (i) Every collective investment scheme shall be entitled to deduct from the amount of any dividend, other than a dividend paid out of distributable profits allocated to the untaxed account, paid to any shareholder, a tax at the rate paid, payable or suffered by the collective investment scheme, whichever rate is the highest, relief of double taxation being left out of account, on the income out of which such dividend is paid: Provided that where tax is not paid, payable or suffered by the collective investment scheme on the whole income out of which the dividend is paid, the deduction shall be restricted to that portion of the dividend which is paid out of income on which tax is paid, payable or suffered by the collective investment scheme.

(ii) The provisions of article 31 shall apply to the income of a person arising from a dividend referred to in sub-paragraph (i).

(2) Where in respect of any year of assessment the rate of tax chargeable under article 56 upon the chargeable income of a company is increased and any company constituted under the law in force in Malta or resident in Malta has, before the date of the commencement of the enactment imposing the increased rate of tax, deducted from a dividend paid to a shareholder (hereinafter in this sub-article referred to as "the original dividend") tax at a rate lower than that paid or payable by the company for that year in respect of the income out of which such dividend is paid, the company shall be entitled -

(a) on the occasion of the next payment of dividend by the company (hereinafter in this sub-article referred to as "the next dividend"), to make up from that dividend the amount of such under-deduction in addition to making any other deduction which the company is entitled to make from that dividend, irrespective of whether or not the person who is entitled to the next dividend, is the person who was entitled to the original dividend; or

(b) with the written permission of the Commissioner, to recover from the person to whom the original dividend was paid the amount of such under-deduction (which shall be specified in such written permission) as if such amount were a debt due to the company; and in any proceedings for the recovery of such amount, such written permission shall be evidence of such debt, and proof of the Commissioner’s signature upon such written permission shall not be required unless the court for special cause directs otherwise.

(3) Where in respect of any year of assessment any company constituted under the law in force in Malta or resident in Malta, not being a company referred to in sub-article (1)(b), has deducted from a dividend paid to a shareholder (hereinafter in this sub-article referred to as "the original dividend") tax at a rate higher than that paid or payable by the company for that year in respect of the income out of which such dividend is paid, then, unless the company has paid the amount of such over-deduction in accordance with the provisions of sub-article (4), the company shall, on the occasion of the next payment of dividend by the company (hereinafter in this sub-article referred to as "the next dividend") make good such amount by a reduction of the amount of tax deducted by the company from that dividend, irrespective of whether or not the person who is entitled to the next dividend is the person who was entitled to the original dividend.

(4) Where any such company has, in paying a dividend to a shareholder, made such an over-deduction as is mentioned in sub-article (3), the company shall, within fourteen days from the tax return date relevant to the income out of which such dividend was paid, render an account to the Commissioner of the amount of such over-deduction and the Commissioner may, at any time after such account has been rendered as aforesaid but before such over-deduction has been made good in accordance with the provisions of sub-article (3), by notice in writing served upon the company, require the company to pay such amount to the Commissioner and such amount shall thereupon become a debt due to the Government, payable within one month from the date of service of such notice, and shall be recovered as such.

(5) (a) Every company shall upon payment of a dividend, whether tax is deducted therefrom or not, furnish the shareholder with a dividend certificate: Provided that a dividend certificate in respect of a dividend paid out of profits earned in the accounting period in which the dividend is paid need not be furnished at the time of payment of a dividend but shall be so furnished as soon as practicable after the end of the accounting period in which the dividend is paid and in any such event shall be furnished by not later than the tax return date of the year of assessment relative to that accounting period.

(b) The dividend certificate shall be in such form as the Commissioner shall require and shall show, in respect of the dividend distributed to the particular shareholder, the following information:

(i) the gross taxed amount of the distributed profits, in respect of each taxed account, before deduction of any tax chargeable on the company in respect of such distributed profits;

(ii) the total tax chargeable on the company in respect of the distributed profits, showing separately:

(1) the Malta tax payable after all reliefs of double taxation have been given and all tax credits deducted; and

(2) the foreign tax in respect of which relief of double taxation has been given under the double taxation relief, relief in respect of Commonwealth income tax, and unilateral relief provisions; and

(3) the amount which has been set off against Malta tax pursuant to a claim for relief of double taxation under the flat-rate foreign tax credit provisions;

(4) the amount and description of tax credits deducted from the tax chargeable on the company;

(iii) the amount of the distributed profits from each taxed account, after deducting the tax referred to in sub-paragraph (ii) of this paragraph;

(iv) the tax payable on distribution pursuant to articles 62, 67 and 67A which shall be shown separately from the tax referred to in sub-paragraph (ii);

(v) the net amount of the dividend paid to the shareholder;

(vi) where the tax paid or payable by the company on the profits so being distributed is affected by relief of double taxation, the rate, hereinafter in this Act referred to as "the net Malta rate", of the tax paid or payable by the company after taking relief of double taxation into account;

(vii) where the profits being distributed have been exempt from tax and the distribution of such profits by the company is exempt from tax in the hands of the shareholder, a note quoting the relevant law giving such exemption;

(viii) where the profits being distributed by a company (the first company) include a dividend received from another company (the second company), in respect of which the first company is entitled to make a claim for a refund under article 48(4) of the Income Tax Management Act, in respect of the tax paid thereon by the second company, a statement declaring that the first company is entitled to make such a claim in respect of those distributed profits;

(ix) an analysis of the profits out of which the dividend is paid distinguishing between:

(1) profits which are chargeable to tax in the year of assessment 2007 and previous years of assessments; and

(2) profits which are chargeable to tax in the year of assessment 2008 and subsequent years of assessment showing separately the amount of such profits pertaining to each such year of assessment;

(x) such other information as the Commissioner shall require. (6) Deleted by Act VII.2018.24. (7) Deleted by Act VII.2018.24

(8) Any account required to be rendered or any certificate required to be furnished under this article shall be rendered or furnished, as the case may be, by the manager or other principal officer of the company.

(9) For the purposes of this article and of article 60: "company" includes a collective investment scheme; "dividend" includes any distribution made by a collective investment scheme; "relief of double taxation" means any credit or other relief for foreign tax allowable by virtue of the reliefs stipulated in article 74; "shareholder" includes any person holding units in a collective investment scheme; and "tax chargeable on the company" includes tax suffered by a collective investment scheme, whether by deduction or otherwise.