If you benefited from Malta’s advantageous tax refund system, or are eligible to do so, keep reading. For those who cannot benefit from the tax refund, unfortunately you cannot benefit from this either.
Legal notice 110 of 2019 was introduced with the aim to improve the waiting times required to process tax refunds, making Malta an even more attractive tax friendly and beneficial jurisdiction. This notice introduced the Consolidated Group regulations as a subsidiary legislation of the Income Tax Act (Chap 123 of the Laws of Malta). In a nutshell this notice allows a group of companies to pay the effective tax rate immediately and avoids having to pay the full tax and get the refund.
To be able to pay the effective tax rate immediately and benefit from this, companies have to form what is referred to as a fiscal unit. A fiscal unit means a group of companies which is typically portraited as a holding company and its subsidiaries. To be able to create a fiscal unit, a few criteria have to be meet. The 2 main ones are: -
1) The parent company holds at least 95% shareholding in the subsidiaries; and
2) The accounting period of the members of the fiscal unit starts and ends on the same date.