New provisions on mergers, demergers, division, amalgamation or reorganization of

companies have been introduced in Malta wherein the Commissioner of Inland Revenue

(“CIR”) may issue a ruling if he is satisfied that the transactions are carried out in bona

fide.

A ruling may be issued by the CIR confirming:

i. that the de-grouping charge, value shifting provisions and general anti-avoidance

provisions found in the Income Tax Act or the Duty on Documents and Transfers Act

will not apply to such transaction.

ii. that the transaction will qualify for income tax and stamp duty relief even if the

conditions for the exemption are not satisfied.

The CIR must be satisfied that the merger, demerger, division, amalgamation

or reorganization is effected for bona fide reason and do not part of a scheme or

arrangements of which the main purpose, or one of the main purposes is to avoid duty or

tax payment and issue a ruling in order for the inapplicability of the tax or duty relief.

An application form:

i. must be submitted to the CIR together with a payment of €1,000 (a non-refundable

administrative fee);

ii. must be submitted before the occurrence of any transaction;

i. must be made in writing and contain all relevant particulars of the transactions to

be effected and shall include a copy of the latest audited financial statements (if

any) of the companies involved in the merger, demerger, division, amalgamation or

reorganization and which are in existence at the time of application.

The CIR may require further information before the ruling is issued. The applicant must

furnish such information within 30 days; otherwise the CIR will not proceed further with

the application.

The CIR may impose such conditions as he may deem fit and reasonable, and such

conditions shall apply to any company involved in the merger, demerger, division,

amalgamation or reorganization (even if not yet existing at the time of the ruling) and

to any shareholder thereof as may be indicated by the CIR in the ruling. If the said

conditions are not complied with, the ruling shall be void.

The CIR shall notify the ruling to the applicant and to any other company which is in

existence and is involved in the particular merger, demerger, division, amalgamation or

reorganization, within 30 days of receiving the application (and for further particulars). If

such notice is not complied with within 30 days, or such longer period as he may allow,

he will not proceed further with the application.

The ruling shall not be effective unless it is signed by at least one director of each of the

companies involved in the merger, demerger, division, amalgamation or reorganization as

applicable. If any particulars are furnished which do not fully and accurately disclose all

facts and considerations material for the ruling of the tax authorities, the ruling shall be

void.

The ruling in terms of these rules is final and shall not be questioned on appeal.