On 19 January 2024, Malta’s Commissioner for Revenue published Guidelines in relation to the Transfer Pricing Rules. These guidelines are issued in terms of Article 96(2) of the Income Tax Act (Chapter 123 of the Laws of Malta) and are to be read in conjunction with the Transfer Pricing Rules (S.L.123.207). These guidelines will be regularly reviewed and in the case of any changes, the revised version of the guidelines will be published on the Malta Tax and Customs Administration website. It is within the interest of the reader to ensure that the most recent version of the published guidelines is being referred to.

The key guidelines include the following:

Transfer Pricing methods

The preferred methodology to be applied for the purposes of these rules shall be those outlined in Chapter II of the OECD Transfer Pricing Guidelines. Other methods may be accepted in accordance with Paragraph 2.9 of the OECD Transfer Pricing Guidelines.

Low value adding intra group services

The arm’s length charge for low value adding intra-group services may be determined in accordance with the OECD Transfer Pricing Guidelines and EU Joint Transfer Pricing Forum guidelines.

Master file

The Master file shall include the information outlined in Annex I to Chapter V of the OECD Transfer Pricing Guidelines. If the Master file is requested by the MTCA , it shall be made available in English or Maltese.

Local file

The Local file shall include the information outlined in Annex II to Chapter V of the OECD Transfer Pricing Guidelines. If the Local file is requested by the MTCA , it shall be made available in English or Maltese.

Retention of Records

It is hereby being clarified that the documentation required to be kept in terms of these rules, constitute part of the record keeping obligations in terms of Article 19(1) of the Income Tax Management Act. The time limit referred to in Article 19(5) of the Income Tax Management Act for the retention of such records shall start to run from the end of the period to which the arrangement in question refers to or the date of that arrangement, whichever is the later.