Recent local amendements to taxation of aviation income : an analysis of their role in attracting investment

Abstract

Purpose: This dissertation examines the fiscal amendments introduced in 2010 available to the aviation sector. Particular reference is made to the amended Article 29 of the Maltese Income Tax Act and the Income Tax Management Act, including changes with regards to wear and tear deductions and fringe benefit rules, together with Malta's network of double taxation treaties. The study also examines the accounting treatment of lease agreements being considered as a fundamental area of benefit created from the amendments taken place. Design: The objectives of this study were achieved through semi-structured interviews with the Malta Transport Authority, the Big 4 professional service firms and 2 local legal firms and by the compilation of a questionnaire completed by Maltese aviation Registrants that can possibly make use of the benefits introduced. Findings: The study ascertains that fiscal incentives are not the main area of benefit attracting new registrations but these must be present in order for the aviation sector to take-off. Aviation is deemed to be a potential area of future success with regards to increased economic activity. However the sector is very competitive and Ireland is very well-established as the leading jurisdiction. On the other hand, it is a mistake to compare aviation with shipping as these sectors are entirely different. Conclusions: Upon evaluating data gathered from this study, the author concludes that although there are a lot of improvements that can be implemented with regards to the aviation sector, Malta is still confident that the numbers required to be able to boast a successful aircraft register are attainable. Value: Overall, this research is an attempt to contribute to the current discussion of making Malta an international aviation hub for aircraft registration, following the success of the Maritime Register.