On 31 August 2020, the Maltese Commissioner for Revenue has issued Guidelines in relation to the Anti-Tax Avoidance Directives Implementation Regulations (ATAD) on its website. The guidelines on the ATAD Implementation Regulations were issued in line with the provisions of Article 96(2) of the Income Tax Act.
The main measures of the Guidelines are as follows:
Interest Deduction Limitations
Interest deduction limitations are applicable as from the basis year starting on or after 1 January 2019. Thus, for example, a taxpayer with a 1 July 2018 till 30 June 2019 basis year will not be within the scope of these regulations for that basis year. The scope and applicability of interest deduction limitations are clarified in the Guidelines.
Exit Taxation
Exit taxation on unrealized capital gains shall apply as from 1 January 2020.
Controlled Foreign Company (CFC)
CFC regulations are applicable as from the basis year starting on or after 1 January 2019. Thus, for example, a taxpayer with a 1 July 2018 till 30 June 2019 basis year will not be within the temporal scope of these regulations for that basis year. In this section, the Guidelines also clarify the computation, allocation, and relief for double taxation of CFC income.
