S.L. 463.2 ст. 4Investment tax credit. Cap. 123. Cap. 123. Cap. 325.

(1) An undertaking carrying on or intending to carry out a qualifying activity in terms of regulation 3 that may contribute to the economic development of Malta shall, subject to the terms and conditions of the Guidelines, be entitled to an investment tax credit, which tax credit shall, with respect to an investment project be calculated either -

(a) as a percentage of the qualifying expenditure incurred by such undertaking in the year preceding the year of assessment in question; or

(b) as a percentage of wage costs for jobs directly created by the investment project in accordance with the provisions of sub-regulations (4) to (7): Provided that the total amount of investment tax credits that may be granted in terms of this regulation for a specific investment project shall not exceed:

(i) in the case of an undertaking which qualifies as a small undertaking, fifty per cent of the qualifying expenditure;

(ii) in the case of an undertaking which qualifies as a medium undertaking, forty per cent of the qualifying expenditure;

(iii) in the case of an undertaking which qualifies as a large enterprise, thirty per cent of the qualifying expenditure: 1. fifteen per cent (15%) of the qualifying expenditure for that amount in excess of 50 million euro; and 2. ten point two per cent (10.2%) of the qualifying expenditure for that amount in excess of 100 million euro.

(2) In the case of an investment project that may make a substantial contribution to the economic development of Malta, the Corporation may convert the investment tax credit referred to in sub-regulation (1) into other forms of assistance, including cash grants.

(3) For the purposes of this regulation the terms ‘tangible assets’ and ‘intangible assets’ shall have the meaning attributed to them in the Guidelines.

(4) The amount of investment tax credit based on job creation which an undertaking may claim in a year of assessment in terms of sub-regulation (1)(b) shall be based on the wage cost incurred by that undertaking in the accounting period ending in the year preceding that year of assessment.

(5) An undertaking shall, subject to the terms and conditions of the Guidelines, be considered to have created a job as a result of an investment project for those individuals who are employed by the undertaking, if the job is directly connected with the activity to which the investment project relates and is created within three years from the completion of the investment project and as long as the employment of any such individual is not in replacement of another individual and provided that such employment is not terminated before the lapse of five years from the date of employment in the case of large undertakings and not before the lapse of three years from the date of employment in the case of small and medium sized undertakings:

Provided that for the purpose of determining whether jobs have been created, individuals who are employed by the undertaking on a part-time basis shall be deemed to be a number of full-time employees as is produced by dividing the number of hours worked by such part-time employees by one thousand and seven hundred and sixty: Provided further that where the accounting period ending in the year preceding a year of assessment is more or less than twelve months, the number of hours worked by part-time employees shall be divided by an amount which shall be arrived at by dividing the amount of one thousand and seven hundred and sixty, by three hundred and sixty-five, and then multiplying the result by the number of days comprised in that accounting period.

(6) An undertaking which is entitled to an investment tax credit in respect of a year of assessment shall be entitled to deduct from the amount of income tax which is due on its chargeable income the investment tax credit for the following year and deemed to be part of that investment tax credit, or if there is no such investment tax credit for that year, be deemed to be the investment tax credit for that year and so on for subsequent years: Provided that so much of the investment tax credit which is not so utilised at the end of any year and which is therefore carried forward to be added to the investment tax credit of the following year of assessment and deemed to be the investment tax credit for that year, shall be increased by such rate as may be prescribed in the Guidelines; and where any part of the investment tax credit as so increased is again not utilised, so much of it as is not utilised shall be further increased by the said percentage and carried forward to the following year, and so on for subsequent years: Provided further a tax credit shall not give rise to a right to a refund of tax.

(7) Where an undertaking has benefited from the provisions of this regulation, the investment 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 investment 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 an investment tax credit in accordance with this regulation; and the tax which has so been relieved shall not be available for refund for any purpose of the Income Tax Act.

(8) (a) The chargeable income which is deemed to have been relieved from tax in accordance with sub-regulation (7) shall, for the purposes of the Income Tax Act, be allocated to the Final Taxed Account of the company in question 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 sub-regulation (1) is distributed to a member which is also a company (in this sub-regulation is 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 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 for a tax credit under the Business Promotion Act and also under the provisions of these regulations, it shall avail itself of the tax credit due under the Business Promotion Act before any set-off is made in respect of the tax credit due under these regulations.

(10) 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 by electronic means by not later than the relative tax return date.