Following the issue of the Consolidated Group (Income Tax) Rules (LN 110 of 2019 on 31 May 2019), Malta introduced fiscal unity rules, enabling, for the first time, the formation of a tax group for Maltese income tax purposes. These rules are effective from year of assessment 2020 in relation to fiscal units having accounting periods commencing in calendar year 2019 and subsequent years. These rules are optional and certain requirements and conditions must be satisfied in order for entities to benefit from such rules.

The main benefit of such rules is the cash flow advantage when compared to the current operation of partial shareholder tax refunds. Through the fiscal unit, the group may achieve an identical effective tax rate without time lapse between the payment of standard corporate income tax rate of 35% and the receipt of the shareholder refund at the level of the shareholder as the new rules will immediately reduce the tax due by the principal taxpayer to the lower effective tax rate.

The Commissioner for Revenue notifies that the Online Application for the Registration of a Fiscal Unit in terms of the Consolidated Group (Income Tax) Rules is available on the Commissioner for Revenue income tax portal as from 18 May 2020. The Commissioner for Revenue has also published guidelines linked to the aforementioned registration process. The deadline for such application in relation to fiscal units having their accounting period from 1 January 2019 to 31 December 2019 is 31 August 2020.

Should you have any queries or wish to discuss further, please contact Andre Zarb, Anthony Pace, Juanita Brockdorff, Doreen Fenech, John Ellul Sullivan or Simon Xuereb