The Bill for the Budget Measures Implementation Act, 2022

Following the Budget Speech on 11th October 2021 by Hon Clyde Caruana, Minister for Finance and Economy, Bill No 247 has been published which includes provisions to implement some Budget Measures and other administrative measures as from 1 January 2022.

Below we highlight the measures which were not mentioned during the Budget Speech:

1. Exemption on transfers of listed securities

Currently the Income Tax Act (hereinafter ‘ITA’), exempts from Capital Gains Tax, gains arising from the transfer of shares listed, or in consequence of a listing, on a stock exchange recognised under the Financial Markets Act. The Bill proposes an amendment to include in the exemption also transfers of securities listed on stock exchanges in the European Union/European Economic Area.


2. Exemption on the transfer of certain assets by non-Maltese residents

Another proposed amendment in the Bill is an amendment to Article 12(1)(c)(ii) of the ITA. Currently Article 12(1)(c)(ii) of the ITA exempts from tax in Malta, any gains or profits accruing to or derived by any person not resident in Malta on a transfer of any units in a collective investment scheme, of any units and such like instruments relating to long-term business of insurance, of any interest in a partnership which is not a property partnership and of any shares or securities in a company which is not a property company. This exemption shall also be extended to ‘transfer of any right over’ such assets.


3. Tax deduction of intellectual property costs

The ITA allows a tax deduction with respect to capital expenditure incurred on intellectual property (IP) and IP rights when they are used in the production of the income. The deduction is to be spread over a minimum of three years.
The Bill proposes that, when the IP is acquired through an intra-group exempt transfer, such deduction is capped at the lower of the cost of acquisition of the IP and the market value of the IP at the time that the IP has been transferred less any deduction claimed by the transferor.


4. Definition of car parks

For the purpose of claiming capital allowances on industrial buildings and structures, the definition of a car park will be amended to include commercial structures even when the provision of parking facilities is not the main income generating activity of the operator, provided that the operation of the car park involves substantial activity, having regard to the (i) the capital employed, (ii) the organisation of the operation, and (iii) the income it generates.


5. Tax on employment outside Malta

Article 56(17) of the ITA provides for a tax rate of 15% on income derived from employment outside Malta where the contract requires the performance of work or duties mainly outside Malta. The Bill proposes an amendment to this article to prohibit access to the special rate where (i) the contract of employment is for a period of less than 24 months or lasts less than 24 months, or (ii) the individual was present in Malta in the relevant year for more than a total of 30 days, disregarding days of vacation or sick leave in Malta and any period preceding the commencement or following the termination of the contract.


6. Tax on income of sports players, athletes and coaches

The article that allows the option to sports player, athletes and coaches to tax their emoluments at 7.5% is proposed to be amended so that (i) the tax is chargeable on the gross emoluments, and (ii) the tax is final and no set-off or refund is granted in respect of the tax so charged.