The introduction of tax consolidation group rules within the local context

Abstract

Background and Purpose: On 18th May 2019, the Commissioner for Revenue issued LN 110 of 2019, which introduced tax consolidation rules in our local tax system. The main purpose of the study is to assess the perceptions and opinions of the parties involved, such as local tax practitioners. Possible impacts of the implementation of tax consolidation rules are also identified. Lastly, the study attempts to examine the new legislation from an international perspective. Design: The study involves gathering both secondary and primary data. Apart from analysing the available literature, the study achieves its aims by conducting interviews with ten local tax practitioners, two foreign tax practitioners, a Malta Institute of Taxation representative and a government official. Findings: The data gathered suggests that local tax practitioners and their clients welcome the new rules. Nonetheless, certain implications might affect tax practitioners, foreign entities and the local tax system in general. Apart from possible CFC implications on foreign entities, the local rules are not expected to have considerable foreign implications. Conclusion: The study concluded that tax consolidation rules are a useful alternative to the refund system. The importance of a cost benefit analysis was highlighted. In addition, clearer guidelines are needed to reduce any present grey areas. It was also suggested to reduce the auditing burden of the consolidated accounts and the present share participation threshold. Value: This dissertation aims to serve as a platform for respondents to express their opinions and concerns, while being of guidance to others. In addition, the study aims to provide worthy recommendations to the concerned authorities in order to improve its implementation.