Worldwide transfer pricing reference guide 2014

Malta
Taxing authority and tax law
Taxing authority: Inland Revenue Department.
Tax law: Main tax laws transpire from Income Tax Act (ITA) and Income Tax Management Act (ITMA).
Relevant regulations and rulings
The transfer pricing concept is recognized in a number of articles in the Income Tax Act and Income Tax Management Act (ITMA), notably
Article 5(6) of the ITMA.
OECD Guidelines treatment
Agreements between associated enterprises must be entered into at arm’s length, but Malta’s transfer pricing rules are not very detailed.
Priorities/pricing methods
The Government has no specified preference as to the priority of methods. However the Cost Plus method is an acceptable pricing
method.
Transfer pricing penalties
An incorrect transfer pricing structure could result in a tax assessment. Please refer to the section below for more details regarding
penalties for omission.
Penalty relief
Where an omission from a return is amended by a taxpayer by means of the delivery of a further return (i.e., an adjustment form) before
that taxpayer is notified by the Director General Income Tax (DGIT), an enquiry will be conducted into the taxpayer’s tax declarations and
liabilities and the further return is delivered to the DGIT within 12 months after the relative tax return date, such taxpayer is not subject
to any additional tax.
If a further return is delivered to the DGIT after 12 months after the relative tax return date, but a notification in writing is not yet issued
by the DGIT, the rate of additional tax for that omission shall be 0.1% per month of the endangered tax. 1
If a further return is delivered to the DGIT after a notification in writing is issued by the DGIT, and the taxpayer is not notified with an
assessment in which additional tax is charged for that omission, the rate of additional tax for that omission shall be 0.75% per month of
the endangered tax.
If a further return is not delivered to the DGIT after a notification in writing is issued by the DGIT, and the taxpayer is notified with an
assessment in which additional tax is charged for that omission, the rate of additional tax for that omission shall be 1.5% per month of the
endangered tax.
Documentation requirements
Not applicable.
Documentation deadlines
Not applicable.
Statute of limitations on transfer pricing assessments
Time limits for when the tax authority can access tax and apply penalties for transfer pricing is six years. But in cases of evasion or fraud
the time-limit for raising an assessment is open coded.
1 Endangered tax means the difference between the tax declared to be chargeable by the taxpayer after taking into account any exemption, relief, allowance or tax credits to which
he may be entitled and the tax actually chargeable after considering the same, but shall not include any additional tax.
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