As from the year of assessment 2020, the LN 2019 of 2019 amends the following legislation:
- The Highly Qualified Persons Rules; (S.L. 123.126);
- The Qualifying Employment in Aviation (Personal Tax) Rules; and
- The Qualifying Employment in Maritime Activities and the Servicing of Offshore Oil and Gas Industry Activities (Personal Tax) Rules.
As a result of the amendment, which deletes the definition of “business incentive laws” as well as Rule 3(3) of the respective rules, the exclusion that previously applied to income paid by an employer who has received a benefit/s under business incentive laws (including the Malta Enterprise Act and the Business Promotion Act) has been removed.
Patent Box Regime Rules
The Patent Box Regime (Deduction) Rules, 2019 were published in virtue of LN 208 of 2019.
They apply to qualifying income derived from qualifying intellectual property (“qualifying IP”) on or after 1 January 2019 (year of assessment 2020).
The conditions set out in these new rules must subsist for the application of the deduction permitted by article 14(1)(p) of the Income Tax Act, and the manner in which the percentage of qualifying income derived from qualifying IP is to be computed, by reference to the Qualifying IP Expenditure and the Total IP Expenditure and the income/gains derived from qualifying IP, clarifying the scope of each of these terms.
The rules have been drafted in a manner so as to be compliant with the OECD Modified Nexus Approach for IP Regimes, and are understood to be compliant with the relevant parameters as defined by the EU Code of Conduct Group.
VAT exemption for services relation to sports – Guidelines
The Office of the Commission for Revenue has issued guidelines on the VAT exemption in terms of item 5 of Part 2 to the Fifth Schedule of the VAT Act, which applies to services relating to sports supplied by non-profit making organisations.
The guidelines clarify that the exemption, which implements article 132(1) (m) of Directive 2006/112 EC, applies where:
- the service provider is a non-profit making organisation as defined in item 5 of part 5 of the Fifth Schedule to the VAT Act; and
- the services are closely linked to sport or physical education and the services are provided to the person taking part in sport or physical education.
VAT exemption for Welfare services – Guidelines
The Office of the Commission for Revenue has issued guidelines on the VAT exemption in terms of item 11(4) of Part 2 to the Fifth Schedule of the VAT Act, which applies to welfare services supplied by a Government Institution or an institution/organisation recognised as a non-profit making organisation.
The guidelines clarify that:
- a government institution means an entity which is part of a “public authority” as defined in article 2 of the VAT Act; and
- an institution/organisation recognised as a non-profit making organisation means an institution/organisation as defined in item 5 of Part 5 of the Fifth Schedule to the VAT Act.