S.L. 463.17 Art. 7Utilisation of Tax Credits. Cap. 123. Cap. 123.

(1) An undertaking benefiting from tax credits in terms of these regulations and the respective Guidelines shall be entitled to deduct from the amount of income tax which is due on its chargeable income derived from its trade or business in the years of assessment following the award of the benefit an amount equivalent to the Tax credit awarded.

(2) An undertaking that in any year of assessment does not utilise any tax credit awarded or deducts a value from the amount of income tax which is due on its chargeable income derived from its trade or business that is less than the tax credit awarded shall carry forward the unutilised tax credit for the following years of assessment and so on for subsequent years.

(3) Tax credits awarded in terms of these regulations and the respective Guidelines shall not give rise to a right to a refund of tax.

(4) When an undertaking has benefited from the provisions of these regulations, the tax credit shall be deemed to have relieved from tax so much of that undertaking’s chargeable income which, when multiplied by the rates of tax at which it was chargeable in that year, is equal to the tax credit, and where the undertaking or any subsequent undertaking distributes the income which is so deemed to have been relieved from tax, such undertaking or undertakings shall state in the dividend warrant pertaining to any such distribution that such income has been relieved from tax by a tax credit in accordance with these regulations; and the tax which has so been relieved shall not be available for refund for any purpose of the Income Tax Act.

(5) (a) The chargeable income which is deemed to have been relieved from tax in accordance with these regulations shall, for the purposes of the Income Tax Act, be allocated to the respective tax accounts of the company in question, in accordance with the Tax Accounts (Income Tax) Rules, and any dividends, or part thereof, distributed from such income shall be exempted from income tax in the hands of the members of the company on receipt of such distribution.

(b) Where the dividend referred to in sub-regulation (4) is distributed to a member which is also a company (hereinafter referred to a s "the second company"), the said dividend shall likewise be distributed by the second company to its members in the form of dividends exempt from income tax in the hands of the recipients. and where a member of the second company is again a company, the preceding provisions shall apply mutatis mutandis as though references to the first company were references to the second company, and as though references therein to the second company were references to that member, and the principle set out in this sub-regulation shall continue to be applied for as long as such income or part thereof to which this regulation applies are distributed by way of dividends.

(6) No tax credit shall be due to an undertaking under these regulations for a year of assessment unless it is claimed in the appropriate section of a tax return submitted.