Cap. 123 Art. 78Dividends and tax credits.

(1) Where the tax paid or payable by a company is affected by double taxation relief the amount to be set off under article 60 or to be repaid under article 48 of the Income Tax

Management Act, in respect of the tax deductible from any dividend paid by the company, shall be reduced as follows:

(a) if no tax is chargeable on the recipient in respect of the dividend, the reduction shall be an amount equal to tax on the gross dividend at the rate of double taxation relief applicable thereto;

(b) if the rate of tax chargeable on the recipient in respect of the dividend is less than the rate of double taxation relief applicable to the dividend, the reduction shall be an amount equal to tax on the gross dividend at the difference between those two rates.

(2) For the purpose of this article -

(a) if the income of the person chargeable includes one dividend such as is mentioned in the preceding sub-article, that dividend shall be deemed to be the highest part of his total income;

(b) if his income includes more than one such dividend a dividend shall be deemed to be a higher part of his total income than another dividend if the net Malta rate applicable to the former dividend is lower than that applicable to the latter dividend;

(c) where tax is chargeable at different rates in respect of different parts of any such dividend, or where tax is chargeable in respect of some part of any such dividend and is not chargeable in respect of some other part thereof, each part shall be deemed to be a separate dividend;

(d) the expression "double taxation relief" has the same meaning as in article 59 and the expression "the rate of double taxation relief" means the rate which represents the excess of the rate of tax deductible from the dividend over the net Malta rate applicable thereto.