S.L. 123.189 Art. 13Anti-abuse measures.

(1) Where the tax payable by the principal taxpayer after taking into account, where applicable, the provisions of rule 6(2), including any applicable tax refund or credit (if any) whether paid to the principal taxpayer or to its shareholders, in relation to a fiscal unit (hereinafter "the tax payable by the principal taxpayer") for any year of assessment, is lower than ninety-five per cent (95%) of the aggregate of the tax that would have been payable by all the companies forming part of the fiscal unit on their chargeable income after any applicable tax refunds or credit (if any) whether paid to the principal taxpayer or to its shareholders for the same year of assessment had those companies not formed part of the fiscal unit, including any tax that was or could have been withheld on investment income referred to in sub-paragraphs (2), (3) and (4) of article 41(a)(viii) of the Act (hereinafter "the tax payable by all the fiscal unit companies"), the election made under rule 3 shall be deemed to have caused an advance to the shareholders of the principal taxpayer falling within the purport of article 46 of the Act which cannot be set off and which is equal to the result of the difference between the tax payable by all fiscal unit companies and the tax payable by the principal taxpayer divided by the rate set out in article 56(6) of the Act:

Provided that where any of the shareholders is a person, other than an individual, which is owned and controlled by, directly or indirectly, or which acts on behalf of an individual who is ordinarily resident and domiciled in Malta (hereinafter "the beneficial owner") or a trustee of a trust where the beneficiaries of such trust fall within the purport of article 61(a)(iii) of the Act (hereinafter "the beneficiaries"), for the purpose of this rule, the shareholders shall be deemed to be the beneficial owners or the beneficiaries, as the case may be.

(2) The advance referred to in sub-rule (1) shall, for the purposes of article 46 of the Act, be deemed to be a dividend distributed to the shareholders of the principal taxpayer on the tax return date following the end of the accounting year in which the shareholders are deemed to have received the advance and the provisions of article 46 of the Act shall apply mutatis mutandis in relation thereto.

(3) Without prejudice to the above, the deemed dividend referred to in sub-rule (2) shall be deemed to constitute an untaxed dividend and the provisions of articles 62 to 65 of the Act shall apply mutatis mutandis in relation thereto:

Provided that, for the purposes of article 62(1) of the Act, where tax is chargeable in respect of such dividend this shall be deducted at the rate set out in article 56(6) of the Act:

Provided further that the proviso to sub-article (2) of article 62 of the Act shall not apply.

(4) Without prejudice to the provisions of article 51 of the Act or any other general anti-avoidance rules under the Income Tax Acts, where in relation to a transaction, or to a series of transactions, the principal taxpayer, the shareholders thereof or the individual direct or indirect beneficial owners of the principal taxpayer, or any person which is controlled and beneficially owned directly or indirectly to the extent of more than fifty per cent (50%) by the same individuals, is in a position to obtain an undue advantage which has the effect of reducing their liability to tax in a manner which is not reconcilable with the object and purpose of this sub-rule, the Commissioner shall determine the relevant liability to tax in such manner and in such amount as may be necessary so as to nullify any such benefit or advantage.