Cap. 406 Art. 22Output tax, input tax and credit for input tax.

(1) The output tax of a person registered under article 10 is the tax on supplies and on intra-community acquisitions that becomes chargeable during that period and for which that person is liable in terms of article 20(1) and (2).

(2) The input tax of a taxable person is the tax that becomes chargeable on -

(a) supplies made to him,

(b) intra-community acquisitions made by him, and

(c) importations made by him, to the extent that the supplies so made and the goods so acquired or imported have been or are intended to be wholly used by him in the course or furtherance of his economic activity.

(3) Subject to sub-article (5) -

(a) the input tax credit for a tax period of a person registered under article 10 is an amount equivalent to so much of the input tax of that person that becomes chargeable during that period as is attributable to supplies made or intended to be made by him, being supplies to which sub-article (4) applies;

(b) the input tax credit for the last tax period of a person whose registration under article 10 has been cancelled is an amount equivalent to so much of the input tax of that person that becomes chargeable during that period as is attributable to supplies made by him up to the end of that period, being supplies to which sub-article (4) applies.

(4) This sub-article applies to:

(a) taxable supplies;

(b) exempt with credit supplies;

(c) supplies which take place outside Malta which would, if made in Malta, be treated under the provisions of this Act as taxable supplies or as exempt with credit supplies or supplies taxed outside Malta which if made in Malta would have been treated as exempt without credit supplies;

(d) operations exempt from VAT, relating to:

(i) supplies by persons licensed under the Insurance Business Act or the Insurance Distribution Act, of insurance and reinsurance services, including related transactions, in respect of which they are so licensed;

(ii) the granting and negotiation of credit and the management of credit by the person granting it;

(iii) the negotiation of or any dealings in credit guarantees or any other security for money and the management of credit guarantees by the person who is granting the credit;

(iv) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collecting and factoring;

(v) transactions, including negotiation, concerning currency, bank notes and coins normally used as legal tender;

(vi) transactions, including negotiation, excluding management and safekeeping, in shares, interest in companies or associations, debentures and other securities, excluding documents establishing title to goods, when the customer is established outside the Community or when those operations are directly linked with goods to be exported to a country outside the Community.

(5) The right to an input tax credit, the amount of the credit and the manner in which input tax is attributable to supplies are subject to the conditions, limitations, revisions and adjustments set out in the Tenth Schedule.