Malta Tax Deduction (Embellishment Project) Rules, 2017

John Huber & associates

02 November 2017

The Government has issued new rules which provide for an additional deduction for income tax purposes in respect of expenditure incurred by a person carrying on a trade or business (hereinafter referred to as a ‘qualifying person’) in respect of a qualifying project by means of LN 274 of 2017,

In order to benefit from this deduction, no other deduction may be claimed in respect of the same expenditure and where the qualifying person benefits from any form of assistance in relation to the said expenditure by the Government or from any other entity, the amount of such benefit or assistance is subtracted from the expenditure on which the deduction under these rules may be claimed.  The same qualifying person may not claim a deduction for more than one qualifying project in any year.  The deduction provided for by these rules shall only be allowed on completion of the project.

The expenditure has to be incurred on or after 1st January 2017 and a qualifying project is defined as an embellishment or other project useful to the local community that has been approved as such in writing by the Local Council and the Directorate responsible for Local Councils. Such a project must be wholly a community asset on which the qualifying person retains no proprietary rights and for which the said qualifying person is not remunerated in any way.

The allowable deduction is equivalent to 120% of the costs incurred on such expenditure in any year which may be claimed against that person’s chargeable income, up to a maximum of €90,000 in any year.