Miguel Borg - Bank of Valletta

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november 2011 from your investor relations officer The Office of the Company Secretary and the Investor Relations Officer at Bank of Valletta is your link to your shareholding in the Bank of Valletta plc., where, as a BOV shareholder, you are assured of individual attention whenever you get in touch with us. A subject that is often the topic of queries from our shareholders is the tax paid on BOV dividends. I am reproducing the most common questions that are asked on this subject, as well as the respective replies and explanations. This information is not intended to constitute tax advice and it is being provided by way of general information. Who can help me with the completion of my tax return, and what documentation is required to claim any tax paid on dividends received on BOV shares? Assistance on the completion of your tax return and/or the treatment of tax paid on dividends should be sought from the Department of Inland Revenue or a professional tax advisor. The Bank cannot provide tax advice to its shareholders. The Bank will, however, provide you with evidence of tax paid on your dividend payments in the form of a dividend advice, which you may utilize in support of any tax claims filed with the Commissioner of Inland Revenue. Why is tax deducted at the rate of 35%, and why cannot I receive my BOV dividend gross of tax? A question that arises from time to time is why dividends paid on BOV Shares are not taxed at the rate of 15%, as is the case for interest on bonds. In terms of the Income Tax Act (Chapter 123 of the laws of Malta) and the Income Tax Management Act (Chapter 372 of the laws of Malta), the tax 12 treatment of income derived from bonds is different from the tax treatment of income derived from shares. Bonds pay interest, which is subject to Final Withholding Tax at the rate of 15%. The bondholder has the option to deduct this tax at source, but may also opt to receive a gross payment. On the other hand, shares pay dividends, which are subject to a different tax treatment. First, tax on dividents is paid at source in Malta, and thus there is no option to receive a gross dividend payment on BOV Shares. Secondly, the rate of tax payable depends on the source of the revenues from which dividends are paid. In broad terms, the Bank’s revenues are categorized according to the nature of the activities through which they were generated. Revenues are then deposited in the appropriate reserves (or accounts) in accordance with the relevant legislative provisions. Dividends are then paid from these reserves, and each reserve is subject to a specific rate of tax. If a dividend is paid from a reserve which is taxable at the rate of 35%, then the dividend will be taxable at 35%, and as stated above, tax is paid at source and there is no option to receive a gross payment. A recent example is the payment of the Bank’s interim dividend on the 28 May 2011, which was paid from a reserve called the ‘Immovable Property Account’, taxable at 35%. The reserves from which dividend payments are effected together with the amount of dividend paid from each reserve and the tax rate applicable to each reserve are listed on the tax advice. Does the above also apply if I am a non-resident of Malta and pay tax in my home country? Yes. A non-resident may, however, be eligible to claim the tax paid from the Commissioner of Inland Revenue and can utilize the tax advices supplied by the Bank in support of such tax claims. What is the tax position of bonus shares? The tax position of bonus shares is the same as that for dividend payments. Indeed, in terms of the Income Tax Act, dividends include bonus shares. In simple terms, when a company issues bonus shares, the company would be distributing profits to its shareholders, which however are being capitalized in the form of bonus shares. Upon allocating the bonus shares to shareholders, the Bank sends a tax advice to the shareholder which lists the gross, tax and net amounts involved in the allocation of the bonus shares. The certificate constitutes a dividend advice and can be utilized to support any tax claims in the same way tax on dividend payments may be claimed. Yours sincerely, Stefan Kottmann Soler Investor Relations Officer
Suġġett li dwaru l-azzjonisti tal-Bank isaqsu ta’ spiss huwa dak dwar ittaxxa li titħallas fuq id-dividends tal- BOV. Għalhekk qed inġib hawn taħt l-aktar mistoqsijiet komuni li intom tistaqsu dwar dan is-suġġett, kif ukoll it-tweġibiet u l-ispjegazzjonijiet rispettivi. Din l-informazzjoni m’għandhiex bħala għan li sservi ta’ parir dwar it-taxxa u qed tingħata biss bħala informazzjoni ġenerali. Minn fejn nista’ nikseb għajnuna biex nimla l-prospett tat-taxxa tiegħi, u x-tip ta’ dokumenti huma meħtieġa biex nista’ nitlob ħlas lura tat-taxxa mħallsa fuq id-dividends li nkun irċevejt fuq l-ishma tal-BOV tiegħi? Kwalunkwe għajnuna dwar il-mili tal-prospett tat-taxxa tiegħek u/jew dwar it-trattament tat-taxxa mħallsa fuq id-dividends għandha tinkiseb mid-Dipartiment tat-Taxxi Interni jew konsulent tat-taxxa professjonali. Il-Bank ma jistax jagħti pariri dwar it-taxxa lillazzjonisti tiegħu. Madankollu, il-Bank jista’ jagħtik evidenza tat-taxxa mħallsa fuq il-pagament taddividends tiegħek f’għamla ta’ avviż tad-dividends, li tista’ tużah biex issostni kwalunkwe talba għal ħlas lura tat-taxxa mingħand il-Kummissarju tat-Taxxi Interni. Għaliex it-taxxa titnaqqas bir-rata ta’ 35%, u għaliex ma nistax nirċievi d-dividends tiegħi mill-BOV mingħajr ma titnaqqas it-taxxa minnhom? Mistoqsija li tqum minn żmien għal żmien hija għaliex id-dividends li jitħallsu fuq l-ishma tal-BOV ma jiġux intaxxati birrata ta’ 15%, bħal fil-każ tal-imgħax fuq il-bonds. F’dak li għandu x’jaqsam mal-Att dwar it- Taxxa fuq l-Income (Kapitlu 123 tal-liġijiet Important Dates ta’ Malta) u l-Att dwar l-Amministrazzjoni tat-Taxxa (Kapitlu 372 tal-liġijiet ta’ Malta), it-trattament fiskali tad-dħul mill-bonds huwa differenti mit-trattament fiskali taddħul mill-ishma. Il-bonds iħallsu imgħax, li huwa suġġett għal-Final Witholding Tax bir-rata ta’ 15%. Id-detentur ta’ bonds jista’ jagħzel li tinqatagħlu din it-taxxa mill-ewwel, imma jista’ wkoll jagħzel li jirċievi l-pagament sħiħ mingħajr taxxa mnaqqsa. Min-naħa l-oħra l-ishma jħallsu d-dividends, li huma suġġetti għal trattament fiskali differenti. L-ewwel ħaġa, f’Malta t-taxxa fuq id-dividends tinqata’ mill-ewwel, u għal din ir-raġuni ma teżiżtix l-għażla li wieħed jirċievi l-pagament tad-dividend fuq l-ishma tal- BOV mingħajr tnaqqis tat-taxxa. It-tieni ħaġa, ir-rata tat-taxxa mħallsa tiddependi mit-tip tad-dħul minn fejn jitħallsu d-dividends. B’mod ġenerali, id-dħul tal-Bank jiġi kklassifikat skont in-natura talattivitajiet li minnhom ikun ġie ġġenerat l-istess dħul. Dan id-dħul mbagħad jiġi ddepożitat fir-riżervi (jew kontijiet) adattati skont id-dispożizzjonijiet leġiżlattivi rilevanti. Imbagħad id-dividends jitħallsu minn dawn ir-riżervi, u kull riżerva hija suġġetta għal rata speċifika ta’ taxxa. Jekk dividend jitħallas minn riżerva li hija suġġetta għal rata ta’ taxxa ta’ 35%, allura d-dividend irid jeħel taxxa ta’ 35%, u kif intqal aktar ’l fuq, it-taxxa tinqatà mill-ewwel u m’hemmx għażla li wieħed jista’ jirċievi l-pagament mingħajr tnaqqis ta’ taxxa. Eżempju reċenti huwa l-ħlas taddividend interim tal-Bank fit-28 ta’ Mejju 2011, li tħallas minn riżerva msejħa l-‘Immovable Property Account’, li hija suġġetta għal taxxa ta’ 35%. Ir-riżervi li minnhom jitħallsu d-dividends flimkien mal-ammont tad-dividends mħallsa minn kull riżerva u r-rata tattaxxa applikabbli għal kull riżerva huma murija fuq l-avviż tat-taxxa. Jekk jien mhux residenti f’Malta u nħallas it-taxxa f’pajjiżi, japplika għalija wkoll dan t’hawn fuq? Iva. Madankollu bħala persuna mhux residenti f’Malta tista’ tkun eliġibbli li titlob ħlas lura tat-taxxa mħallsa hawn Malta mingħand il-Kummissarju tat-Taxxi Interni u tista’ tagħmel użu mill-avviżi ta’ taxxa mogħtija lilek mill-Bank biex issostni t-talbiet tiegħek. X’inhi s-sitwazzjoni fiskali tal-ishma bonus? Is-sitwazzjoni fiskali tal-ishma bonus hija l-istess bħal dik tal-pagamenti tad-dividends. Fil-fatt, skont l-Att dwar it-Taxxa fuq l-Income, id-dividends jinkludu l-ishma bonus. F’termini sempliċi, meta kumpanija toħroġ ishma bonus, hija tkun qed tqassam il-profitti lill-azzjonisti tagħha, li madankollu jkunu qed jiġu kapitalizzati f’għamla ta’ ishma bonus. Fil-mument li l-Bank jalloka l-ishma bonus lill-azzjonisti tiegħu, huwa jibgħat avviż tat-taxxa lill-azzjonist li fuqu jkunu jidhru l-ammont qabel it-tnaqqis tattaxxa, l-ammont tat-taxxa u l-ammont wara t-tnaqqis tat-taxxa fir-rigward talallokazzjoni tal-ishma bonus. Iċ-ċertifikat jirrappreżenta avviż ta’ dividend u wieħed jista’ jużah biex isostni talbiet għall-ħlas lura ta’ xi taxxa bl-istess mod li wieħed jista’ jitlob ħlas lura ta’ taxxa fuq pagamenti ta’ dividends. Dejjem tiegħek, Stefan Kottmann Soler Investor Relations Officer Board approval of Group Financial Statements - Friday 28 October 2011 Press Conference and Stockbrokers'/Analysts' Meeting - Friday 28 October 2011 Annual General Meeting - Friday 16 December 2011 13
Page 1 and 2: issue 31 november 2011 INTERVIEW WI
Page 3 and 4: l-opportunitajiet ta’ tkabbir għ
Page 5 and 6: Notice Board Bank of Valletta award
Page 7 and 8: Joanna Camilleri, koordinatur edito
Page 9 and 10: X’inhu l-għan tal-LĠA? Waqt laq
Page 11: Għat-tieni sena konsekuttiva, l-Ba
Page 15 and 16: Esperjenza Personali Tlesta r-resta

Miguel Borg - Bank of Valletta

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