Some aspects of the Malta Income Tax Act relating to limited liability companies

Abstract

The Income Tax Act is a very special law which in many instances defines its own terms and references. Thus, the first chapter deals with the definition of the word “company”. Here an attempt has been made to explain how this definition differs considerably from the commonly accepted interpretation. The second chapter examines the notions of domicile and residence of companies. These two terms are not defined by the Act, and therefore reference has been made to English Private International Law, which has formed the basis of interpretation of these two terms. The third chapter considers the distribution of dividends. An examination is also made of the effect of such a distribution or deemed distribution on the shareholder. This is a very important chapter in practice because the shareholder is directly effected. The final chapter, which is divided into two parts, deals with certain special tax concessions. The first part considers the tax concessions under the Aids to Industries Ordinance. These concessions can be quite considerable and any company which could qualify for a tax benefit under the Ordinance must surely take it into account in planning its financial future. In the second part an attempt was made to discuss briefly some general aspects of Double Taxation Agreements. It would be impossible to discuss this topic exhaustively as it would entail a consideration of the whole Income Tax Act in relation to the relative foreign Income Tax Acts – something which is surely not to be expected of half a chapter of a thesis. Immediately following are the appendices, the first two being the more important. Appendix I is a list of the double taxation agreements with Malta. Here one will note the number of agreements which are in force but which have not yet been published in Malta. The second Appendix is a list of some of the more important provisions of the O.E.C.D. Model Double Taxation Agreement 1977 which forms the basis of nearly all the double taxation agreements with Malta.