The government of Malta has issued a legal notice revising the local rule on deductions for capital expenditure related to intellectual property or intellectual property rights for income tax purposes on 13 September 2024.
The provisions of these rules will apply with effect from the year of assessment 2024.
The Income Tax (Deductions) (Amendment) Rules have been updated by LN 229 of 2024 to include provisions related to deductions under the second provision of article 14(1)(m) of the Income Tax Act, concerning capital expenditure on intellectual property or intellectual property rights.
A deduction will be permitted for the portion of the expenditure that would otherwise have been deductible based on the minimum period specified in the first provision to article 14(1)(m) (i.e. three years). Additionally, a deduction will be allowed for the remaining part of the expenditure after calculating the initial deduction.
If the deduction under the second provision cannot be fully applied due to insufficient qualifying income, the expenditure cannot be deducted against any other income for that year or surrendered. However, it will be carried forward to the following year.
