Capital gains tax legislation in Malta : complications encountered in its administration and interpretation

Abstract

The aim of this dissertation is to analyse the provisions of the Income Tax Act regulating Capital Gains Tax and the methods of computation proposed in the Capital Gains Rules of 1993 that can be adopted in calculating the chargeable gain. Complications encountered in the administration and interpretation of the present legislation are highlighted, both as regards immovable property and securities. Due to the fact that literature on capital gains tax in Malta is practically non-existent, this study had to be based on the local statutes and on interviews and discussions made with Inland Revenue officials who highlighted the problems encountered in administering the legislation. Proposals are then made of different alternatives that the Inland Revenue Department can adopt instead of the present Capital Gains Tax legislation. These proposals are intended to make the tax on capital gains more efficient and fair. While viewing the alternatives proposed, comparisons with other countries' Capital Gains Tax legislations are made, with the aim of trying to identify any concepts which can be adopted locally.