Cap. 325 Art. 7Investment allowance.

(1) Where a qualifying company after lst June 1987 incurs or has incurred expenditure in acquiring plant or machinery, or an industrial building or structure (including a warehouse), for the purposes of its trade or business, and in consequence of its incurring such expenditure the plant, machinery, industrial building or structure is owned by the company, such company shall be entitled in computing its chargeable income for income tax purposes in respect of the year of assessment in which the relative asset is first used by the company in its trade or business, to an investment allowance which shall be expressed as a percentage of the cost of the asset as follows:

When owned by When owned by Maltese companies other companies

Plant and 33% 30% machinery

Industrial building and 16.5% 15%: structure Provided that with effect from the year of assessment 2001, the rates applicable to Maltese qualifying companies shown above shall be applicable to all qualifying companies and the rates shown under the heading "When owned by other companies" shall cease to apply: Provided further that with effect from year of assessment 2002, investment allowances shall be calculated at the following percentages or such other higher percentages as the Minister may by regulations prescribe: Plant and machinery 50% Industrial buildings and structures 20%.

(2) No allowance under this article shall be due except in respect of assets:

(a) which are first used in Malta;

(b) in respect of which no allowance has been claimed under this article by any person who is, directly or indirectly, connected with the company claiming the allowance contemplated by this article, through shareholding, voting or other ownership or controlling rights: Provided that the condition set out in paragraph (a) shall not apply with respect to industrial buildings or structures.

(3) Where an allowance has been granted to a company under this article -

(a) the company shall not be entitled to any deduction in respect of the same asset under the provisions of article 14(1)(j) of the Income Tax Act;

(b) the provisions of article 24 of the said Act shall not apply in respect of the relative asset;

(c) nothing contained in the said Act shall operate so as to prevent the investment allowance and any other allowance granted under this Act in respect thereof, when taken together, from exceeding the original cost of the asset.

(4) The provisions of article 8(5) shall apply in respect of any investment allowance granted under this article.

(5) In this article and in article 8:

(a) immovable property held by title of emphyteusis; and

(b) any other asset to which this article and article 8 of this Act applies acquired under a finance lease contract or a contract of hire which stipulates that ownership of the asset shall or may pass to the lessee when a specified sum of money has been paid, which contract is in each case approved by the Corporation, shall be deemed to be held in full ownership.

(6) A company may qualify for the allowance granted under this article for a consecutive period of twenty-five years commencing from the year of assessment 1988 in case of companies registered before 1st June, 1987 and from the first year of assessment for companies registered on or after 1st June 1987: Provided that the Minister may from time to time by notice in the Gazette increase the said period by a further period or periods not exceeding twenty-five years.

(7) Saving the provisions of this article, investment allowances shall, for the purposes of the Income Tax Act be deemed to be deductions granted under article 14(1)(j) of the said Act and all the relevant provisions of that Act shall apply accordingly.

(8) The Minister may by regulations prescribe rules for the application of the benefit provided by this article. Such rules may be in addition to or in substitution of the rules and conditions prescribed in this article.

(9) Any person who under contract with the Corporation or the Government of Malta constructs buildings or structures which are immovable in nature and rents such buildings or structures to qualifying companies shall also be entitled to the allowance contemplated by this article.