The salient income tax implications of the Business Promotion Act including the possible repercussions of Malta's E.U. membership bid.

Abstract

The recent amendments to the Industrial Development Act, which have renamed Cap. 325 of the Laws of Malta, as the Business Promotion Act, have as their objective that of making provision of new incentives and schemes for the promotion of business in Malta. Consequently, the aim behind the thesis will be that of making a detailed discussion and a comparative analysis of the salient and updated provisions regulating income tax incentives found throughout the Act. This will involve discussing such incentives within the perspective for the introduction of these amendments, including, the inclusion of certain limitation to export-related benefits and more far reaching incentives in respect of specified higher value activities such as software development and biotechnology. A discussion will be also made on the impact of Maltese tax incentives on the international situation of foreign investors, also in the context of relevant double taxation treaties. In the light of the difficulty in carrying out a detailed analysis on respect of significant legislation, this discussion will be based mainly on the general concepts and their application in a large number of countries from which a material level of investment in Malta has originated. Finally, since the amendments have been introduced to bring our tax incentives to industry in line with E.U. legislation, in the light of Malta's E.U. membership bid, a critical analysis, particularly on the implications of E.U. state aid and lawful tax competition rules will be carried out