Individual Investor Programme (IIP) of the Republic of Malta

Source: Kinga Warda¸ January 2014¸ PKF Malta

On the 24th December Legal Notice 450 of 2013 “Individual Investor Programme (IIP) of the Republic of Malta” was published. The IIP shall allow for the grant of citizenship by a certificate of naturalization to foreign individuals and their families who contribute to the economic development of Malta¸ as provided in these regulations.

The Legal Notice introduces the qualifications and general requirements for a person to be a main applicant for citizenship under the programme¸ as well as the minimum eligibility criteria for an application under the programme¸ for the applicant and any of his dependants.

An applicant who – (a) provides false information on his application; (b) has a criminal record; (c) is the subject of a criminal investigation; (d) is a potential national security threat to Malta; (e) is¸ or is likely to be¸ involved in any activity likely to cause disrepute to Malta; or (f) has been denied a visa to a country with which Malta has visa-free travel arrangements and has not subsequently obtained a visa to the country that issued the denial¸ shall not be approved for citizenship under the programme¸ unless Identity Malta is satisfied that the applicant is still worthy of being considered for approval due to special circumstances to be demonstrated by the applicant.

The Notice provides a detailed description of the application process which shall be presented to¸ and examined by¸ Identity Malta¸ either directly or through the concessionaire.

No person¸ except Identity Malta¸ the concessionaire or an Approved Agent shall for gain and without being duly authorised¸ advertise¸ publish or disseminate publicly through any means whatsoever any information relating to the programme.

The Legal Notice also provides information about the maxiumum number of admissions which shall not exceed one thousand and eight hundred for the whole duration of the programme.

It also introduces the fund to be known as the National Development and Social Fund into which seventy per cent of contributions received by Identity Malta under the programme shall be paid. Those funds shall be used in the public interest inter alia for the advancement of education¸ research¸ innovation¸ social purposes¸ justice and the rule of law¸ employment initiatives¸ the environment and public health.

Click here to access the Legal Notice 450 of 2013 “Individual Investor Programme (IIP) of the Republic of Malta” on the Laws of Malta website.

Double Tax relief agreement with South Africa

 

 

 

 

 

 

 

 

Source: Marilyn Mifsud¸ PKF Malta¸ November 2013

The Legal Notice amends the definition of the term ‘resident’ to require the applicant to be ‘liable to tax’ under the law of the pertaining State and no longer simply ‘resident for tax purposes’ and ‘ordinarily resident’ or having a ‘place of effective management’ in such State as the 1998 original treaty read.  What this amendment effectively does is to bring in line the residence Article in this Tax Treaty with the provisions of the OECD model convention article on residence¸ which the new provision reproduces verbatim.  In this way the new provision excludes persons such as diplomatic and consular staff serving in the territory and includes all those persons liable to tax¸ although not necessarily subject thereto.

The Legal Notice also introduces an amendment to Article 10 of the DTA on dividends. Departing from the OECD model¸ Malta’s DTA with South Africa always differentiated tax treatment of dividends depending on whether the dividend was being paid by a Company resident in SA to a resident of Malta or by a Company resident in Malta to a resident of SA. In the latter case the DTA provided that the Malta tax paid shall not exceed that chargeable on the profits out of which the dividends are paid. This has remained unchanged.

IIn the former case (that is dividend being paid by a Company resident in SA to a resident of Malta) the DTA provided that the tax payable shall generically not exceed 5%. The new provisions provide that a 5% rate will be applicable if the beneficial owner of such dividends is a company which holds at least 10% of the capital of the company paying the dividend while a rate of 10% shall be applicable in all other cases. It is noteworthy that this differs from the OECD model articles in the following ways: the model articles provide for a 5% rate where the beneficial owner of such dividends is a company (other than a partnership) which holds directly at least 25% of the capital of the company paying the dividend while a rate of 15% shall be applicable in all other cases.

Changes are also introduced into the interest provision governed by Article 11. Here the third sub-paragraph covering instances exempting interest from tax is substituted with