Cap. 159 Art. 3Income Tax Holiday.

(1) Where it appears to the President of Malta, after consultation with the Corporation, that the income derived by an industrialist in respect of gains or profits from the trade or part of the trade of an industrial undertaking should be exempted in whole or in part from the payment of income tax, the President of Malta may by order allow such exemption during a period, hereinafter referred to as "the tax holiday period", of not more than ten years from the production day or from such other days as may be determined by the President of Malta and subject to such conditions and the giving of such security as the President of Malta thinks fit: to him may seem reasonable after consultation with the Corporation. Provided that if the end of the tax holiday period does not coincide with the end of an accounting period of an industrial undertaking, the income for the accounting period in which the last day of the tax holiday period falls shall be apportioned between the parts of the said accounting period which respectively precede and follow the end of the tax holiday period, and the income thus attributed to the part which precedes the end of the tax holiday period shall be exempt from income tax.

(2) In computing the income for the tax holiday period and for the whole of the accounting period in which the last day of the tax holiday period falls the wear and tear of plant, machinery and premises being a mill, factory or other similar premises shall be computed in accordance with the provisions of, and at the rates prescribed under, the Income Tax Act.

(3) The provisions of the Income Tax Act, relating to the deduction of any expenditure on scientific research and on patents or patent rights, where applicable to an industrialist to whom subarticle (1) of this article applies, shall commence to apply in the first year of assessment following the year of assessment during the basis period of which the tax holiday period ends: Provided that such deduction shall be computed by the Commissioner as if the expenditure incurred at any time up to the end of the accounting period in which the last day of the tax holiday period falls were incurred on the first day following the end of the said accounting period.

(4) Any loss incurred during the tax holiday period by an industrialist to whom subarticle (1) applies in the trade referred to in that subarticle shall be set off without any limitation against the income derived from that trade during the period or periods immediately following the tax holiday period: Provided that in determining any such loss no account shall be taken of any capital allowances referred to in the Income Tax Act.

(5) An industrialist to whom subarticle (1) applies, being a limited liability company within the meaning of the Commercial Partnerships Ordinance*, shall be entitled during the tax holiday period and within two years thereafter to distribute to the members of the company a sum equal to the income derived during the tax holiday period from the trade referred to in the aforesaid subarticle and every such sum shall be exempt from the payment of income tax in the hands of such members: Provided that such period of two years may be extended for further periods, each not exceeding two years, as the President after consultation with the Corporation may, for the expansion of the

*Repealed by Act XXV of 1995 (Chapter 386). period of profits out of which it is paid, and declaring that it is exempt from income tax as provided for by subarticle (1).

(7) Every industrialist to whom subarticle (1) applies shall keep separate accounts relating to the income derived from the trade referred to in that subarticle, and in all accounts and statements submitted to the Commissioner such income shall be separately set out; and notwithstanding the exemption from income tax in the tax holiday period the provisions of Part IX of the Income

Tax Act, shall, mutatis mutandis, apply to every such industrialist.