S.L. 123.87 Art. 10Tax credit for social security contributions paid in respect of qualified personnel. Cap. 318.

(1) Subject to the other provisions of this Part, when a company engaged in a trade, business profession or vocation incurs expenditure consisting of the employer’s share of social security contributions that meets all the conditions of sub-rule (3), it shall be entitled to a tax credit equivalent to that expenditure.

(2) The said tax credit shall be in addition to and without prejudice to the right of that company to a deduction, if any, that may be allowable in respect of the said expenditure in accordance with the provisions of article 14 of the Act: Provided that -

(a) no tax credit shall be allowed under this rule in respect of expenditure in respect of which a deduction or tax credit is availed of under Part I;

(b) the tax credit due to a company under this Part shall not exceed, in the aggregate, the ceiling laid down in Article 4 of Commission Regulation (EC) No 2204/ 2202 on the application of Articles 87 and 88 of the EC Treaty to State Aid for employment, as may be subsequently amended;

(c) where the company in question has benefited from any State aid in respect of expenditure to which the tax credit refers, other than as provided in this Part, the said ceiling shall be reduced by the value of that other benefit;

(d) the correct calculation of the said ceiling and, where applicable, reduction, shall be the sole responsibility of the company.

(3) The tax credit referred to in this rule shall be allowable if -

(a) the relative expenditure represents the employer’s share of social security contributions actually paid by the employer company in accordance with the relevant provisions of the Social Security Act in respect of each individual who, at the time that he was employed as a full-time employee by that company and for the period that the expenditure was incurred, was in possession of a relevant qualification;

(b) the employer company is in possession of a letter of approval issued by the Corporation in terms of sub-rule (4) confirming that the qualification of each of the employees in question is a relevant qualification; and

(c) each employee in respect of whom the tax credit is claimed is an individual -

(i) whose employment with the said company represented a net increase in the number of full-time employees both in the company concerned and in the establishment of which that company forms part; and

(ii) who either had no previous full-time employment in Malta or had not resigned voluntarily from his last full-time employment that he had prior to his employment with the said company; and

(iii) who is first employed by the company claiming the tax credit on or after 1 January, 2005 and st who remains in the full-time employment of that company for at least three consecutive years.

(4) The letter of approval referred to in sub-rule (3)(b) may be issued by the Corporation upon a bona fide application that is made by not later than three months prior to the company’s tax return date for the year of assessment for which the relative tax credit is first claimed, and after the Corporation has obtained all such information and made such ascertainment as it has considered necessary. The Corporation shall deliver the letter of approval to the applicant and a copy thereof to the Commissioner.

(5) The tax credit allowable under this rule shall be due for each year of assessment that immediately follows a year in which expenditure giving rise to the right to the tax credit is incurred:

Provided that -

(a) to the extent that the tax credit cannot be availed of in a year of assessment, it may be carried forward to be availed of in subsequent years of assessment;

(b) a tax credit shall not give rise to a right to a refund of tax;

(c) the tax credit is allowable for not more than three consecutive years of assessment in respect of any one employee, and the first of any such year of assessment shall not be later than the year of assessment 2009;

(d) if an employee in respect of whom a tax credit has been claimed does not remain in employment for the period specified in sub-rule (3)(c)(iii), that tax credit shall be deemed to have never been due;

(e) if a company avails itself of a tax credit which subsequently, in the circumstance mentioned in paragraph (d), is deemed to have never been due, an amount equivalent to credit shall be deemed to be tax due by that company, in addition to any other tax liability, for the year of assessment immediately following that in which that circumstance subsists, and the provisions of the Act shall apply accordingly.