17 July 2009 To: IFSP Members (cc Malta Institute of Taxation, Malta ...

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provisions in respect of tax on profits distributed by an ITC to its shareholder are the 2/3rds refund as set out in Art. 48(4)(a) of the ITMA and the refund (7.5%) resulting on assessment of the shareholder of the ITC at 27.5% in terms of 56(8) of the ITA. In no circumstances is the shareholder of an ITC entitled to claim a 6/7ths refund (in terms of Art. 48(4A) ITMA). Claims for a 6/7ths refund by shareholders of an ITC will continue to be rejected by the ITU. Likewise, practitioners are being reminded to make sure that submitted claims for refunds (whether in relation to an ITC or otherwise) are in line with current legislation. (iv) Income tax returns of shareholders of ITCs (for the purposes of the 7.5% tax refund on assessment) and ITC shareholder tax refund claims (in terms of Art. 48(4)(a) of the ITMA) should be sent to the Inland Revenue ITU Mriehel offices and not the Inland Revenue Floriana offices. Currently, the ITU are unable to accept tax payments through internet banking and all member practitioners are requested to resort only to international SWIFT bank transfers for payment of tax. Use of international bank drafts for payment of tax is also discouraged by the ITU. A list of the current Inland Revenue bank accounts to be utilised for the purposes of tax payments is attached. Finally, it needs to be pointed out that in practice, the ITU do not wait for the 14 days from the end of the month in which the refund claim is submitted before processing the relevant claim and effecting the relevant payment of tax refund. Therefore, practitioners are being encouraged not to send refund claims towards the end of a month as currently, the ITU are facing bottleneck situations every end of the month. This is placing a huge strain on this Unit. In view of these persistent bottleneck situations, ITU are considering a change of the relevant legislation as a way out. Certificates of Tax Residency The ITU are regularly receiving requests for Certificates of Tax Residency without the use of the IRD Form RCTR01. The content of this Form was agreed with the IFSP in order that the ITU may be able to process such requests in the shortest possible time. Use of the IRD Form RCTR01 should be considered as mandatory for all requests for Certificates of Tax Residency. A specimen copy of the IRD Form RCTR01 is attached to this Memorandum. Deduction of expenses for income tax purposes ITU have requested that members be reminded that, in terms of Art. 14 of the ITA, outgoings and expenses incurred by a taxable person are deductible for income tax purposes only to the extent that the said outgoings and expenses were wholly and exclusively incurred in the production of the income. Address: P.O Box 37, Valletta, VLT 1000 Tel: 2569 6352 Fax: 2144 9212 E-mail: info@ifsp.org.mt Website: www.ifsp.org
ITU are concerned that claims for deductions have lately been made by holding companies which are out of line because they are unrelated to the business income of the taxpayer or disproportionate thereto. As a consequence, ITU intends issuing guidelines on the deductibility of expenses for income tax purposes which will be communicated at a later date. Chris Curmi Chairman IFSP Tax Committee Address: P.O Box 37, Valletta, VLT 1000 Tel: 2569 6352 Fax: 2144 9212 E-mail: info@ifsp.org.mt Website: www.ifsp.org
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17 July 2009 To: IFSP Members (cc Malta Institute of Taxation, Malta ...

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