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Taxation of collective
investment schemes
The
tax provisions relating to the taxation of funds and investment services
companies are designed to complement the Investment Services Act (ISA)
and to create a fiscal regime which allows for the rapid development of
a funds industry in Malta, both at a domestic and international level.
Collective
Investment Schemes usually take the form of:
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corporate funds - the
Commercial Partnerships Ordinance has been amended to allow for open-ended
corporate vehicles with variable share capital (SICAVs); and
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unit trusts - the Offshore
Trusts Act has been amended to allow unit trusts to be set up. These operate
in effectively tile same way as SICAVs except that the trustee is the legal
owner of the funds held by the investors (or unitholders).
In
both cases, ISA licensed funds are exempt from tax ill Malta and are specifically
excluded from benefiting under Malta's treaty network. However, a
SICAV may elect to waive its right to an exemption from tax on its income,
in which case it is liable to tax at the rate of 25% on its chargeable
income. Capital gains realised by the fund remain exempt from tax
in Malta. A collective investment scheme that has opted to pay tax
is entitled to treaty relief.
Maltese
residents are permitted to invest in ISA funds and they are subject to
a 15% final tax withheld on distributions received from the fund and on
any gains on redemption of shares or units in the fund. The final
tax regime applies to both Maltese individuals and Maltese companies.
There is no further Maltese tax to pay on receipts from ISA funds and there
is no requirement for individuals to disclose the income or gains received
from ISA funds on their tax returns. There is no right to elect to
receive payments from ISA funds gross. However, to the extent that
the amounts received are disclosed on a tax return, the tax deducted shall
be available as a credit against the tax liability of the Maltese investor,
and, where appropriate, for a repayment. |
Malta
as a Tax Friendly Jurisdiction
