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Public Country by Country Reporting introduced in Malta

Deloitte Malta Tax Alert

29 May 2024

Malta has introduced public Country by Country Reporting (‘CbCR’) into domestic legislation by way of Act XVIII of 2024, Companies (Amendment) Act, transposing EU Directive 2021/2101 of the European Parliament and of the Council of 24 November 2021 (the ‘Public CbCR Directive’), amending Directive 2013/34/EU as regards the disclosure of income tax information by certain undertakings and branches.

Undertakings in scope of public CbCR

The new provisions of the Companies Act, Chapter 386 of the Laws of Malta, oblige the following undertakings or groups of undertakings to draw up, publish, and make accessible, a report on income tax information, effective for accounting periods commencing on or after 22 June 2024:

i. Ultimate parent undertakings governed by the laws of Malta, where the consolidated revenue on their balance sheet date exceeds €750 million for each of the last two consecutive financial years, as reflected in their annual financial statements.

ii. Standalone undertakings governed by the laws of Malta, where the revenue on their respective balance sheet date exceeds €750 million for each of the last two consecutive financial years, as reflected in its annual financial statements.

iii. Medium-sized and large subsidiary undertakings governed by Malta law, that are controlled by an ultimate parent undertaking that is not governed by the law of an EU/EEA Member State, where the consolidated revenue on its balance sheet date exceeds a total of €750 million for each of the last 2 consecutive financial years, as reflected in its consolidated financial statements.

iv. Further to (iii) above, in circumstances where the non-EU/EEA ultimate parent entity does not provide all the required information, the subsidiary undertaking shall be obliged to draw up, publish, and make accessible a report on the income tax information in its possession, as well as a statement indicating that its ultimate parent undertaking did not make the necessary information available to it.

v. Branches with net turnover of more than €8 million, opened in Malta by undertakings that are not governed by the law of an EU/EEA Member State, shall publish and make accessible a report on income tax information concerning either the ultimate parent undertaking in (i) above or the standalone undertaking in (ii) above, as regards the latter of the last two consecutive financial years.

The income tax information report and statement must remain accessible on the relevant group website for a minimum of five consecutive years.

Exceptions

Where the ultimate parent undertaking or the standalone undertaking, as referred to in (i) and (ii) above, respectively, and their affiliates and branches are established, or have their fixed place of business or permanent business activity, within a territory of a single EU/EEA Member State and no other tax jurisdiction, such undertaking shall not be in scope of public CbCR.

Where the total consolidated revenue on the balance sheet of either an ultimate parent undertaking or a standalone undertaking, as referred to in (i) and (ii) above, respectively, falls below €750 million for each of the last two consecutive financial years, such undertakings will no longer be within scope of the rules concerning public CbCR.

Furthermore, there is an exception for credit institutions, whereby the ultimate parent undertaking or the standalone undertaking, as referred to in (i) and (ii) above, respectively, and their affiliated undertakings disclose a report in accordance with Article 89 of EU Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.

Lastly, where an ultimate parent undertaking or standalone undertaking is not governed by the law of an EU/EEA Member State, but such undertaking draws up, publishes, and makes accessible to the public, a report satisfying the following criteria, the obligations referred to in (iii) and (v) above, shall not apply:

• The report is made accessible to the public, free of charge, and in an electronic reporting format which is machine-readable:

(i) On the website of that ultimate parent undertaking or of that standalone undertaking;

(ii) In at least one of the official languages of the EU;

(iii) Not later than twelve months after the balance sheet date of the financial year for which the report is drawn up; and

• The report identifies the name and registered office of a single subsidiary undertaking, or branch, governed by the laws of an EU/EEA Member State, which has published a report in accordance with the Public CbCR Directive.

Contents of the income tax information report

The contents of the report on income tax information are detailed in the Fourth Schedule of the Companies Act and include, inter alia, the following information:

  • Name of the ultimate parent undertaking or standalone undertaking;
  • Financial year concerned;
  • Currency used for presentation of the report;
  • List of subsidiaries consolidated in the financial statements of the ultimate parent undertaking;
  • Brief description of the nature of their activities;
  • Number of full-time employees; and
  • Revenues (including from transactions with related parties), income, profit or loss before income tax, income tax accrued and paid (cash), and accumulated earnings at the end of the relevant financial year.

Responsibilities of directors and branch representatives

Legal responsibility

Directors of the ultimate parent undertaking or standalone undertaking, as well as directors of subsidiary undertakings, as referred to in (iv) above, and persons designated to carry out the disclosure formalities for branches, as referred to in (v) above, acting within the competences assigned to them under the law of Malta, shall have collective responsibility for ensuring that the report on income tax information is drawn up, published, and made accessible as prescribed above.

Obligation to notify the Registrar of report publication

Any director, or person designated to carry out the disclosure formalities for branches, shall notify the Registrar whether the undertaking that they represent is an ultimate parent undertaking; standalone undertaking; subsidiary undertaking; affiliated undertaking; or a branch, within scope of the public CbCR rules, within 14 days of the date of online publication of the income tax information and statement.

Administrative penalties levied on directors or responsible branch representatives

The directors or responsible branch representatives who have failed to comply with the public CbCR obligations as set out above shall be liable to an administrative penalty of €46.59 for every day during which the default exists, up to a maximum total penalty of €2,329.37.

Responsibilities of the statutory auditor

The statutory auditor of an undertaking governed by the law of an EU/EEA Member State shall state in its audit report whether, for the financial year preceding the financial year for which the financial statements under audit were prepared, the undertaking was required to undertake public CbCR in accordance with the Public CbCR Directive and if this is the case, whether the report was published in accordance with the administrative procedures and requirements for publication outlined above.

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