S.L. 123.165 Art. 5Exemption from income tax.

(1) In these rules, a beneficiary’s UN pension income or

Widow’s / Widower’s Benefit as the case may be, received in Malta following the granting of the special tax status, shall be exempt from income tax.

(2) Tax shall be charged at the rate of fifteen cents (0.15) on every euro on any income excluding the UN pension or Widow’s / Widower’s Benefit arising outside Malta in the year immediately preceding the year of assessment in which it is received in Malta by the beneficiary, the beneficiary’s spouse and children referred to in paragraphs (b) and (d) of the definition of the term "dependent" in rule 2, following the granting of the special tax status, with the possibility to claim relief of double taxation under article 74(a) and

(b) of the Act: Provided that the minimum amount of tax payable in terms of these rules in respect of the income arising outside Malta excluding UN pension income or Widow’s / Widower’s Benefit of the persons referred to in this sub -rule shall be ten thousand euro (€10,000) in respect of the beneficiary and an additional five thousand euro (€5,000) in the event that both spouses are in receipt of a UN pension.

(3) Income of a beneficiary, the beneficiary’s spouse and children referred to in paragraphs (b) and (d) of the definition of the term "dependant" in rule 2 that is not chargeable to tax under these rules at the rates referred to in sub-rules (1) and (2) shall be charged as separate income at the rate of thirty-five cents (0.35) on every euro.

(4) Notwithstanding any provision in the Income Tax Acts -

(a) subject to the provisions of paragraph (b), the minimum tax referred to in the proviso to sub-rule (2) shall be payable by not later than the 30th April of the year immediately preceding the relevant year of assessment. Such payment shall be accompanied by a return made to the Commissioner that provides proof that all the requirements of rule 4 continue to be satisfied. The said return, which shall be in such form as the Commissioner may determine, does not need to be submitted in the year in which the special tax status is granted;

(b) in the case of the year in which the special tax status is granted, where it is evident that the special tax status will not be granted before the 30th April, the minimum tax referred to in the proviso to sub-rule (2) is to be paid before the special tax status is granted;

(c) any tax paid under the provisions of sub-rule (2) shall not be refundable.

(5) (a) Notwithstanding any provision in the Act, an individual who falls under the definition of "long-term resident" or "permanent resident of Malta" in rule 2 shall be taxable on any income accruing in or derived from Malta or elsewhere, and whether received in Malta or not in respect of income mentioned in article 4 of the Act and subject to tax at the rates mentioned in article 56 of the Act.

(b) In the case where the individual referred to in paragraph (a) is a beneficiary or dependent, the relevant authorised registered mandatary shall -

(i) enquire and obtain information from the relevant beneficiary as to whether the beneficiary or any of his dependants falls under the said definition of "long-term resident" or "permanent resident of Malta" as at the 31st December of each year from the year of the appointed date onwards; and

(ii) notify the Commissioner of any individual that is a beneficiary or dependent that falls under the said definition of "long-term resident" or "permanent resident of Malta" by not later than the 30th April following the 31st December referred to in sub-paragraph (i) on such form as the Commissioner may determine. Where the authorised registered mandatary is not able to obtain such information, he is to notify the Commissioner by the said 30th April of this state of affairs and provide proof that at least two attempts at enquiry were made. Where such notifications are not made within the time specified, the authorised registered mandatary shall be charged an administrative penalty of ten thousand euro (€10,000).