S.L. 463.53 Art. 5Utilisation of tax credits.      Cap. 123.  S.L. 123.101.

(1) An undertaking benefiting from tax credits in accordance with 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 year of assessment immediately following the granting of the tax credit, an amount equivalent to the tax credits granted.

(2) An undertaking that in any year of assessment does not utilise any tax credit granted to it 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 granted to it, may carry forward the unutilised tax credit for the subsequent years of assessment.

(3) Tax credit granted in accordance with these regulations and the respective Guidelines shall not give rise to a right to a refund of tax.

(4) Where an undertaking has benefited from a tax credit granted in accordance with these regulations, the tax credit shall be deemed to have relieved from tax that part of the 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 is a company and such undertaking or any subsequent company distributes the income which is so deemed to have been relieved from tax, such undertaking shall state in the dividend warrant pertaining to any such tax distribution that such income has been relieved from tax by a tax credit in accordance with this regulation.

(5) (a) In the case of an undertaking which is a company, the chargeable income which is deemed to have been relieved from tax in accordance with sub-regulation (4) shall be, for the purposes of the

Income Tax Act, 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 a dividend referred to in paragraph (a) is distributed to a member which is also a company, in this sub-regulation referred to as "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 also a company, the preceding provisions shall apply as mutatis mutandis though references to the first company were references to the second company, and as though references 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) Tax credit shall not be due to any undertaking under this regulation unless it is claimed in the appropriate section of a tax return submitted by not later than the relative tax return.