Cap. 159 Art. 4Investment and depreciation allow- ance.

(1) Where it appears to the President of Malta after consultation with the Corporation that from the income derived by an industrialist in respect of gains or profits from the trade or part of the trade of an industrial undertaking there should be allowed, for the purposes of the Income Tax Act, an investment allowance and a deduction for wear and tear in respect of any plant and machinery, owned by the industrialist, and used or employed in the trade or part of the trade of the industrial undertaking, the President of Malta may by order allow such investment allowance and such deduction for wear and tear as set out in the Third Schedule:

Provided that such investment allowance and such deduction for wear and tear shall be allowed in respect only of plant and machinery first acquired, used and employed on the construction day or within five years thereafter: Provided further that no such allowance or deduction shall be allowed when the income derives from gains or profits referred to in article 23 of the Income Tax Act.

(2) Notwithstanding anything contained in article 14(1) of the Income Tax Act, no initial allowance shall be granted in respect of any plant and machinery which has been the subject of an order under subarticle (1) and no deduction from income shall be allowed for exhaustion or wear and tear of any such plant and machinery other than that provided for in subarticle (1).

(3) For all purposes of the Income Tax Act, an allowance or deduction made under subarticle (1) shall be deemed to be a deduction made under paragraph (f) or under paragraph (j) as the case may be of article 14(1) of the Income Tax Act and all the relevant provisions of the Income Tax Act shall apply to such allowance and such deduction: Provided that paragraph (iii) of the proviso to article 14(1)(f) of the Income Tax Act shall not operate so as to prevent the investment allowance and deduction for wear and tear made under subarticle (1) when taken together from exceeding the original cost of the plant and machinery by the amount of the investment allowance: Provided further that the provisions of article 24 of the consultation with the Corporation, that the income or part of the income derived by an industrialist being a company as defined in the Income Tax Act, in respect of gains or profits from the trade or part of the trade of an industrial undertaking in any year has been set aside for the exclusive purpose of financing any project of the company as shall have been approved by the Corporation, and notice of such intention was given to the Commissioner at the time the income or part of the income was set aside as aforesaid, the President of Malta may by order direct that, subject to such conditions as he may consider proper to impose and to the condition that the income or part of the income aforesaid has in fact been used for the purposes for which it was set aside and in compliance with all the conditions of the order, the rate of income tax chargeable under the said Act on the income or part of the income so used shall be reduced as set out in the Fourth Schedule; and in any such case the tax chargeable accordingly under the said Act shall be assessed, or reassessed and where necessary refunded, as the case may require.

(2) No order shall be made under subarticle (1) -

(a) later than twenty-four months after the end of the year immediately preceding the year in which the income in respect of which the order is applied for falls to be charged to tax; or

(b) in respect of any expansion requiring for its realization a period of more than five years from the date of issue of the first order made in respect of that expansion.

(3) For the purposes of this article, where the Commissioner has permitted the gains or profits of an industrialist to be computed, for the purposes of the Income Tax Act, upon the income of the year terminating on a date in the year immediately preceding the year of assessment other than the 31st December, such year shall be deemed to be the year immediately preceding the year of assessment.