5/7/2008

Bil-Malti  HOME   SERVICES   HELP   SEARCH

Collective Investment Schemes Guidelines on the Provisions of the Income Tax Act relating to Collective Investment Schemes and the Investment Income Provisions  Collective Investment Schemes Index Introduction A Brief Summary of the Investment Income Provisions Prescribed and Non-Prescribed Funds Initial Classification of Funds Change in the Classification of a Fund in a Malta Based Scheme Withholding Tax Suffered by Collective Investment Schemes Withholding Tax on Investment Income Paid to Prescribed Funds Obligation to Notify Payors on the Reclassification of a fund Withholding Tax Suffered by Recipients of Investment Income from Collective Investment Schemes Withholding Tax on Capital Gains Arising on the Disposal of Units or Shares in Non-Prescribed Funds Withholding Tax on Dividends Distributed by Non-Prescribed Funds Tax Consequences on Investors of a Reclassification of a Fund Authorised Financial Intermediates Surrender or Maturity of Unit-Linked Products Table 1 - Monitoring fluctuations in the value of assets Table 2 - Calculation of capital gains on the redemption of units in a non-prescribed fund Table 3 - Capital gains on the Reclassification of a fund from a non-prescribed status Table 4 - Information to be supplied by authorised financial intermediates Table 5 - Capital gains on the surrender or maturity of unit linked products CIS guide   1. Introduction Top In the Budget Speech for 2001 the Minister of Finance had announced the introduction of measures relating to collective investment schemes1. Act IX of 2001 included amendments to the Income Tax Act that implemented these measures. These amendments were complemented by regulations that have been published by means of Legal Notices 55 of 2001 and 111 of 2002. These guidelines contain explanatory notes on these measures. A copy of L.N. 55 of 2001 as amended by L.N. 111 of 2002 may be found at Appendix 1 to these guidelines. The main effect of these measures is that tax is due on certain income of collective investment schemes. Investment income derived by what are termed as "prescribed funds" is subject to a final withholding tax. The withholding tax rate is 15% in the case of bank interest and 10% in the case of other investment income. No tax is withheld on investment income paid to "non-prescribed funds". However, in the case of investments made in non-prescribed funds by investors who are resident in Malta, tax is payable by the investors either when they dispose of their investment or when they receive a dividend. This tax qualifies, subject to certain conditions, for the 15% rate under the final withholding tax system. Other changes relate to unit linked products, ensuring that gains or profits derived from such investments are treated in the same manner as investments in collective investment schemes. The original legislative measures i.e. the provisions introduced by means of Act IX of 2001 and L.N. 55 of 2001, were effective from 1st March 2001. The measures introduced by L.N. 111 of 2002 are effective as from 14th May, 2002. 1The phrase "collective investment scheme" is defined in article 2 of the Income Tax Act as any scheme or arrangement which is licensed under the Investment Services Act and is used accordingly in these guidelines. Home   Next

HOME   SERVICES   GOV.MT   DOI   HELP   SITEMAP   SEARCH   DISCLAIMER   CONTACT