Commissioner for Revenue publishes clarifications on technical matters in relation to Consolidation Group (Income Tax) Rules

Following the publication of procedural guidelines that sought to clarify the registration procedure of a fiscal unit, the Commissioner for Revenue has recently issued updated guidelines (‘Updated Guidelines’) to address a number of technical matters in relation to the Consolidation Group (Income Tax) Rules (Subsidiary Legislation 123.189) (the ‘Rules’).

The Updated Guidelines provide a number of clarifications in connection to the following notions established in the Rules:

• The meaning of “voting rights” in the definition of “parent company” (rule 2(1));
• The mechanisms for carrying forward of balances (such as unutilised tax losses and capital allowances) and the allocation of the tax account balances within the fiscal unit (rule 4(1));
• The deductibility of expenses (rule 6(1)(b));
• The attribution of income to foreign transparent subsidiaries within the fiscal unit for the purposes of rule 6(1)(f);
• The applicability of rule 6(1)(g), relating to Malta’s source rules for companies that are not ordinarily resident nor domiciled in Malta;
• The determination of the applicable income tax rate, the amounts of refunds claimable and the meaning of the term “specifically empowered” (rule 6(2));
• The interaction of the Rules with rule 9 of the Tax Accounts (Income Tax) Rules, Subsidiary Legislation 123.101 (rule 8(3));
• The application of the anti-abuse measures in terms of rule 13(2);
• The interplay of the Rules with the group relief provisions in terms of articles 16 to 22 of the Income Tax Act (Chapter 123 of the Laws of Malta);
• The reporting considerations in the event of different reporting currencies;
• The necessary prerequisites to exit a fiscal unit (rule 5);
• The obligations under the Final Settlement System (FSS) Rules, Subsidiary Legislation 372.14 and the Value Added Tax Act, Chapter 406 of the Laws of Malta; and
• The reporting obligations for non-Malta resident entities forming part of a fiscal unit.

The full text of the Updated Guidelines can be found here.