S.L. 123.217 Art. 3Taxation without imputation.        Cap. 372.

(1) An entity shall be subject to tax in Malta:

(a) in terms of the provisions of the Act excluding these regulations; or

(b) on its chargeable income as determined in terms of the Act at the rate of fifteen cents (0.15) on every euro of the chargeable income, in lieu of the rate determined in article 56(6) of the Act:

Provided that such chargeable income shall not include:

(i) dividends received from profits that are not allocated to the final tax account of another company registered in Malta; and

(ii) income that has been subject to tax at a final rate of tax in terms of any other provision of the Act and, save for the provisions of these regulations, are allocated to the final tax account.

(2) An entity intending to invoke the provisions of sub-regulation (1)(b) may do so:

(a) in respect of income accruing to or derived by the entity in the fiscal year preceding the year of assessment 2025 and subsequent years;

(b) by means of a notice made in such form and by such date as the Commissioner may determine.

(3) Where the provisions of sub-regulation (1)(b) are applied, they shall apply with effect from the year of assessment in which the election is made and shall continue to apply until the entity notifies the Commissioner that it wants to be taxed in accordance with the provisions of sub-regulation (1)(a):

Provided that such notification:

(a) shall not be made before the end of the five (5)-year period which shall start to run from the beginning of the first year of assessment from when the entity applied the provisions of sub-regulation 1(b);

(b) shall be made to the Commissioner on such form and by such date as the Commissioner may determine; and

(c) shall mean that the provisions of sub-regulation 1(a) shall apply for at least five (5) consecutive years of assessment which shall start to run from the beginning of the year of assessment in which the notification was made.

(4) Notwithstanding any other provisions in the Act, when the provisions of sub-regulation (1)(b) are applied:

(a) the tax charged in terms of sub-regulation (1)(b)

shall in no case be lower than the tax charged in terms of sub-

regulation (1)(a) reduced by the amount of refund claimed or claimable in terms of article 48(4) or (4A) of the Income Tax

Management Act, by all the shareholders in respect of the profits subjected to tax under sub-regulation (1)(b), and applying the provisions of article 43(6) of the Act, where applicable;

(b) the tax charged in accordance with sub-regulation (1)(b), shall be final and shall not be available as a credit or set off against the tax liability of any individual or entity, or as a refund to any person;

(c) notwithstanding any other provision of the Act, profits upon which the tax is computed in terms of sub-regulation (1)(b) shall, in so far as they are not profits already allocated to the final tax account, be reallocated to the final tax account of such entity.