Cap. 325 Art. 15Consequential provisions in respect of double taxation treaties.

Where a member of a qualifying company is a resident of a

State or territory with which Malta has made an arrangement under the provisions of the Income Tax Act for the grant of relief from double taxation, and under that arrangement a dividend, or part thereof, distributed by the qualifying company is subject to income tax in Malta at a rate lower than that chargeable on the income out

*year of assessment 2002 - see Legal Notice 135 of 2001. †year of assessment 2002 - see Legal Notice 135 of 2001. of which the dividend is distributed, the company shall be entitled to require that the gains or profits, or part thereof, derived by it for the year of assessment 1988 and for subsequent years of assessment and which are distributable by way of dividend subject to tax at a reduced amount as aforesaid shall, notwithstanding that the dividend, or part thereof has not been distributed, be taxed at the said reduced rate and not at the rate properly chargeable under the Income Tax Act on the gains or profits of the company: Provided that if there is a change in the shareholding of the company such that the new shareholders would not have been entitled to a reduced rate of tax under any arrangement as aforesaid or if so entitled the rate applicable in such arrangement is more than the rate applicable to the outgoing shareholder, then any profits which have not been distributed at the end of the last financial year of the company preceding the date of change in shareholding less any profit distributions made to the outgoing shareholder in the current financial year shall be taxed at a rate being the difference between the rate of tax which would be applicable had the new shareholder held the shares when such profits were earned, and the rate actually applied, and such tax shall be a tax payable by the company in the year of assessment in which such profits are distributed: Provided further that where a member of a qualifying company is also a company incorporated under Maltese Law, the provisions of this article shall apply to the same extent as if the members of the latter company had owned the shares directly in the qualifying company: Provided further that with effect from such date as may be * determined by the Minister by Order in the Gazette the provisions of this article shall only be applicable to qualifying companies which existed on the day immediately preceding that date.