S.L. 123.176 Art. 2Interpretation.

In these rules, unless the context otherwise requires: –

"the Act" means the Income Tax Act;

"interest on risk capital" shall have the meaning assigned to it in terms of rule 4;

"the reference rate" means the risk free rate set by reference to the yield to maturity on Malta Government Stocks with a remaining term of approximately 20 years plus a premium of 5%;

"risk capital" means:

(a) where the undertaking is a company or partnership resident in Malta, the share or partnership capital of the undertaking, any share premium, positive retained earnings, loans or other debt borrowed by the undertaking which do not bear interest, and any other reserves resulting from a contribution to the undertaking, and any other positive balance which is shown as equity in the financial statements of the undertaking; and

(b) where the undertaking is a company or partnership that is not resident in Malta, that part of the risk capital, as defined in paragraph (a), of that undertaking that is attributable to the permanent establishment situated in Malta; and

"undertaking" means a company or a partnership resident in Malta or any other company or partnership that is not resident in Malta that derives income that is effectively connected with a permanent establishment of the company or partnership situated in Malta.