S.L. 123.207 Art. 2Interpretation. Cap. 123.      S.L. 123.127

(1) In these rules, unless the context otherwise requires:

"Act" means the Income Tax Act;

"advance pricing agreement" means an agreement entered into between the competent authority and a relevant foreign competent authority under the provisions for a mutual agreement procedure found in:

(a) an arrangement as provided for in article 76 of Act;

(b) the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (90/436/EEC); or

(c) any rules or regulations made in accordance with the provisions of article 52B of the Act, which agreement determines in advance of cross-border arrangements between associated enterprises, an appropriate set of criteria for the determination of the transfer pricing for those transactions or determines the attribution of profits to a permanent establishment in line with the arm’s length standard as developed through international tax standards;

"arrangement" means:

(a) any transaction, agreement or dealing of any kind, where, at the relevant time, the parties to such an arrangement are associated enterprises. An arrangement shall also include a series of transactions, agreements and dealings of any kind; or

(b) any notional dealing between a body of persons and its permanent establishment;

"associated enterprises" means bodies of persons where:

(a) one (1) of the bodies of persons controls the other body of persons whether as a result of the fact that it holds, directly or indirectly, a participation of more than seventy-five per cent (75%) in the voting rights, or the ordinary capital, of the other body of persons or by virtue of any powers conferred by the articles of association or other document regulating the other body of persons; or

(b) the same person or persons controls two (2) or more bodies of persons whether as a result of the fact that it holds, directly or indirectly, a participation of more than seventy-five per cent (75%) in the voting rights, or the ordinary capital, of the two (2) or more bodies of persons or by virtue of any powers conferred by the articles of association or other document regulating the two (2) or more bodies of persons:

Provided that, for the purposes of paragraphs (a)

and (b) of this definition, where such bodies of persons are constituent entities of a MNE group as defined in item 3 of

Section I of Annex III of the Cooperation with Other

Jurisdictions on Tax Matters Regulations the percentage interest in the voting rights or the ordinary capital referred to therein shall be fifty per cent (50%);

"company" has the meaning as is assigned to it in article 2(1) of the Act:

Provided that the term "company" shall not include any micro, small or medium-sized enterprise;

"competent authority" means the Minister or his authorised representative. An authorised representative shall be the competent official that is identified as such and whose name and designation are published on the website of the Commissioner;

"cross-border arrangement" means an arrangement between associated enterprises where any one (1) of the following conditions is satisfied:

(a) at least one (1) party to the arrangement is not resident in Malta and at least one (1) party to the arrangement is a company resident in Malta and the arrangement is relevant in ascertaining the total income of that company;

(b) at least one (1) party to the arrangement maintains a permanent establishment situated outside Malta to which the arrangement is effectively connected and at least one (1) party to the arrangement is a company resident in Malta and the arrangement is relevant in ascertaining the total income of that company;

(c) at least one (1) party to the arrangement is not resident in Malta and at least one (1) other party, not being resident in Malta, is a company which maintains a permanent establishment situated in Malta to which the arrangement is effectively connected, or otherwise derives income or gains arising in Malta, and the arrangement is relevant in ascertaining the total income of that company;

"micro, small or medium-sized enterprise" means undertakings fulfilling the criteria laid down in Annex I of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty, as in force at the relevant time;

"relevant material change" means:

(a) a change of facts from those described in the request for the relevant unilateral transfer pricing ruling or advance pricing agreement, including any other communication connected thereto, and on which the substance of the unilateral transfer pricing ruling or advance pricing agreement, or any other matter that is not trivial in connection thereto, was based:

Provided that such change has occurred after the date of the request of the said unilateral transfer pricing ruling or advance pricing agreement;

(b) a change in the relevant legislation on which the substance of the unilateral transfer pricing ruling or advance pricing agreement, or any other matter that is not trivial in connection thereto, was based:

Provided that such change has occurred after the date of the said unilateral transfer pricing ruling or advance pricing agreement; or

(c) a decision of the directly interested party to withdraw the unilateral transfer pricing ruling;

"relevant time" means the earlier of:

(a) the date on which the arrangement becomes binding on the parties thereto; or

(b) the date of commencement of the execution of the arrangement:

Provided that this definition shall be subject to such other methodology as may be determined by means of guidelines issued in accordance with article 96(2) of the Act.

"unilateral transfer pricing ruling" means a ruling issued by the Commissioner that determines, in advance of an arrangement, an appropriate set of criteria for the determination of the transfer pricing for that arrangement. The said criteria include the method used to arrive at the transfer pricing, comparables and appropriate adjustments thereto and critical assumptions as to future events;

(2) Any terms not defined in sub-rule (1) shall, unless the context otherwise requires, have the meaning assigned to them in the Act.