S.L. 463.4 Art. 13Tax credits for micro enterprises and the self- employed.

(1) Where the Corporation is satisfied that an undertaking carrying out a trade or business requires assistance to expand, innovate or invest in its business in Malta, the Corporation may provide such an undertaking with a tax credit. The intensity of the tax credit shall be in accordance with the terms and conditions set out in the Guidelines:

Provided that this benefit shall be calculated on the eligible costs incurred as from 1st January 2010 till the 31st December 2012: Provided further that the total amount of tax credits that may be granted in terms of this regulation shall not exceed twenty five thousand euro (€25,000).

(2) In order to qualify for the benefit under sub-regulation (1), the undertaking:

(a) shall not employ more than nine full-time employees, or equivalent, in its trade or business as on the 1st January 2012: Provided that apprentices and students shall not be treated as employees for the purpose of this sub-regulation; and

(b) shall have a turnover or annual balance sheet total that does not exceed two million euro (€2,000,000).

(3) The tax credit referred to in this regulation shall be due as a deduction from tax payable by an undertaking on its chargeable income derived from its trade or business for that year of assessment commencing on the 1st January of the year immediately following the year in which the eligible costs are undertaken, and, where the tax credit, for that year of assessment, exceeds the income tax payable by such an undertaking for that year, the excess in the tax credit shall be allowed to be carried forward to the subsequent year of assessment and deemed to be a tax credit for that year: Provided that a tax credit shall not give rise to a right to a refund of tax. Provided further that unutilised tax credits can only be availed of until year of assessment 2015.

(4) Where an undertaking has benefited from the provisions of this regulation, the tax credit shall be deemed to have relieved from tax so much of that undertaking’s chargeable income which, when multiplied by the rates of tax at which it was chargeable in that year, is equal to the tax credit on the investment; and where the undertaking is a company and such undertaking or any subsequent company distributes the income which is so deemed to have been relieved from tax, such undertaking or undertakings shall state in the dividend warrant pertaining to any such distribution that such income has been relieved from tax by a tax credit in accordance with this regulation; and the tax which has so been relieved shall not be available for refund for any purpose of the Income Tax Act.

(5) (a) In the case of an undertaking which is a company, the chargeable income which is deemed to have been relieved from tax in accordance with sub-regulation (4) shall, for the purposes of the Income Tax Act, be allocated to the Final Taxed Account of the company in question and any dividends, or part thereof, distributed from such income shall be exempted from income tax in the hands of the members of the company on receipt of such distribution.

(b) Where a dividend referred to in paragraph (a) is distributed to a member which is also a company, in this paragraph referred to as ''the second company'', the said dividend shall likewise be distributed by the second company to its members in the form of dividends exempt from income tax in the hands of the recipients, and where a member of the second company is again a company, the preceding provisions shall apply mutatis mutandis as though references to the first company were references to the second company, and as though references therein to the second company were references to that member, and the principle set out in this sub-regulation shall continue to be applied for as long as such income or part thereof to which this regulation applies are distributed by way of dividends.

(6) In case of a company, no tax credit shall be due to an undertaking under this regulation unless it is claimed in the appropriate section of a tax return submitted by electronic means by not later than the relative tax return date.

(7) Applications for assistance under this regulation shall reach the Corporation by not later than the 31st March 2013.

(8) Notwithstanding the provisions of sub-regulation (7), where the Corporation is satisfied that an undertaking that qualified for the benefit under sub-regulations (1) and (2), has incurred eligible costs between 1st July 2012 and 31st December 2012, applied for regulatory licences and permits as required by the Guidelines before the 31st March 2013 and attained these regulatory licences and permits after 31st March 2013, the Corporation may provide such an undertaking with a tax credit under this regulation, provided that applications shall reach the Corporation by not later than 31st December 2013.