ICLG The International Comparative Legal Guide to: Corporate Tax 2019 15th Edition A practical cross-border insight into corporate tax work Published by Global Legal Group, with contributions from: Blackwood & Stone LP Puri Bracco Lenzi e Associati Boga & Associates Rui Bai Law Firm Braekhus Advokatfirm DA Sameta Carey Schindler Attorneys Eric Silwamba, Jalasi and Linyama Legal Practitioners Sele Frommelt & Partners Attorneys at Law Ltd. Gibson, Dunn & Crutcher LLP Slaughter and May Greenwoods & Herbert Smith Freehills SMPS Legal GSK Stockmann Stavropoulos & Partners Law Office Houthoff T. P. Ostwal & Associates LLP, Chartered Accountants Lenz & Staehelin Tirard, Naudin LEX Law Offices Totalserve Management Limited Maples and Calder Utumi Advogados Marval, O’Farrell & Mairal Vivien Teu & Co LLP Mul & Co Wachtell, Lipton, Rosen & Katz Nagashima Ohno & Tsunematsu Waselius & Wist Nithya Partners WH Partners Noerr LLP Wong & Partners The International Comparative Legal Guide to: Corporate Tax 2019 General Chapters: 1 Fiscal State Aid – Some Limits Emerging at Last? – William Watson, Slaughter and May 1 2 Taxing the Digital Economy – Sandy Bhogal & Panayiota Burquier, Gibson, Dunn & Crutcher LLP 9 Country Question and Answer Chapters: Contributing Editor William Watson, 3 Albania Boga & Associates: Genc Boga & Alketa Uruçi 15 Slaughter and May 4 Argentina Marval, O’Farrell & Mairal: Walter C. Keiniger & María Inés Brandt 21 Sales Director 5 Australia Greenwoods & Herbert Smith Freehills: Richard Hendriks Florjan Osmani & Cameron Blackwood 28 Account Director 6 Austria Schindler Attorneys: Clemens Philipp Schindler & Martina Gatterer 37 Oliver Smith 7 Brazil Utumi Advogados: Ana Claudia Akie Utumi 46 Sales Support Manager Toni Hayward 8 Chile Carey: Jessica Power & Ximena Silberman 52 Sub Editor 9 China Rui Bai Law Firm: Wen Qin 58 Jenna Feasey 10 Cyprus Totalserve Management Limited: Petros Rialas & Marios Yenagrites 64 Senior Editors Suzie Levy 11 Finland Waselius & Wist: Niklas Thibblin & Mona Numminen 71 Caroline Collingwood 12 France Tirard, Naudin: Maryse Naudin 77 CEO 13 Germany Noerr LLP: Dr. Martin Haisch & Dr. Carsten Heinz 86 Dror Levy 14 Greece Stavropoulos & Partners Law Office: Ioannis Stavropoulos Group Consulting Editor & Aimilia Stavropoulou 92 Alan Falach 15 Hong Kong Vivien Teu & Co LLP : Vivien Teu & Kenneth Yim 99 Publisher Rory Smith 16 Iceland LEX Law Offices: Garðar Víðir Gunnarsson & Guðrún Lilja Sigurðardóttir 106 Published by 17 India T. P. Ostwal & Associates LLP, Chartered Accountants: T. P. Ostwal Global Legal Group Ltd. & Siddharth Banwat 112 59 Tanner Street London SE1 3PL, UK 18 Indonesia Mul & Co: Mulyono 120 Tel: +44 20 7367 0720 19 Ireland Maples and Calder: Andrew Quinn & David Burke 128 Fax: +44 20 7407 5255 Email: [email protected] 20 Italy Puri Bracco Lenzi e Associati: Guido Lenzi & Pietro Bracco, Ph.D. 135 URL: www.glgroup.co.uk 21 Japan Nagashima Ohno & Tsunematsu: Shigeki Minami 142 GLG Cover Design 22 Kosovo Boga & Associates: Genc Boga & Alketa Uruçi 151 F&F Studio Design GLG Cover Image Source 23 Liechtenstein Sele Frommelt & Partners Attorneys at Law Ltd.: Heinz Frommelt 156 iStockphoto 24 Luxembourg GSK Stockmann: Mathilde Ostertag & Katarzyna Chmiel 163 Printed by 25 Malaysia Wong & Partners: Yvonne Beh 171 Ashford Colour Press Ltd November 2018 26 Malta WH Partners: Ramona Azzopardi & Sonia Brahmi 177 Copyright © 2018 27 Mexico SMPS Legal: Ana Paula Pardo Lelo de Larrea & Alexis Michel 183 Global Legal Group Ltd. 28 Netherlands Houthoff: Paulus Merks & Wieger Kop 190 All rights reserved No photocopying 29 Nigeria Blackwood & Stone LP: Kelechi Ugbeva 196 ISBN 978-1-912509-43-0 30 Norway Braekhus Advokatfirm DA: Toralv Follestad ISSN 1743-3371 & Charlotte Holmedal Gjelstad 201 Strategic Partners 31 Russia Sameta: Sofia Kriulina 207 32 Sri Lanka Nithya Partners: Naomal Goonewardena & Savini Tissera 213 33 Switzerland Lenz & Staehelin: Pascal Hinny & Jean-Blaise Eckert 219 34 United Kingdom Slaughter and May: Zoe Andrews & William Watson 229 35 USA Wachtell, Lipton, Rosen & Katz: Jodi J. Schwartz & Swift S.O. Edgar 238 36 Zambia Eric Silwamba, Jalasi and Linyama Legal Practitioners: Joseph Alexander Jalasi & Mailesi Undi 247 Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720 Disclaimer This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations. WWW.ICLG.COM EDITORIAL Welcome to the fifteenth edition of The International Comparative Legal Guide to: Corporate Tax. This guide provides corporate counsel and international practitioners with a comprehensive worldwide legal analysis of the laws and regulations of corporate tax It is divided into two main sections: Two general chapters, offering an insight into tax and state aid, and tax in relation to the digital economy. Country question and answer chapters. These provide a broad overview of common issues in corporate tax laws and regulations in 34 jurisdictions. All chapters are written by leading corporate tax lawyers and industry specialists and we are extremely grateful for their excellent contributions. Special thanks are reserved for the contributing editor William Watson of Slaughter and May for his invaluable assistance. Global Legal Group hopes that you find this guide practical and interesting. The International Comparative Legal Guide series is also available online at www.iclg.com. Alan Falach LL.M. Group Consulting Editor Global Legal Group [email protected] Chapter 26 Malta Ramona Azzopardi WH Partners Sonia Brahmi resident in Malta for tax purposes regardless of where management 1 Tax Treaties and Residence and control is exercised in Malta. 1.1 How many income tax treaties are currently in force in your jurisdiction? 2 Transaction Taxes Malta has a voluminous tax treaty network, with most European 2.1 Are there any documentary taxes in your jurisdiction? countries and also with third countries enabling tax-efficient structures and relief from double taxation on cross-border transactions. To The Duty on Documents and Transfers Act (Chapter 364 of the date, Malta has 71 signed and ratified double taxation treaties. Laws of Malta) provides for the imposition of a tax commonly referred to as stamp duty on certain legal documents and transfers. 1.2 Do they generally follow the OECD Model Convention Under the said Act, the duty is chargeable on documents and transfers or another model? or transmissions concerning immovable property, marketable securities, interests in partnerships, transfers causa mortis, Notwithstanding the fact that Malta is not an OECD member contracts of exchange and policies of insurance. country, almost all the double tax treaties which were concluded by Malta adopt the OECD Model Convention as their basis. 2.2 Do you have Value Added Tax (or a similar tax)? If so, at what rate or rates? 1.3 Do treaties have to be incorporated into domestic law before they take effect? VAT was initially introduced into the Maltese legal system in 1994. Since then numerous amendments have been made to the Maltese Article 76(1) of the Income Tax Act (Chapter 123 of the Laws VAT Act (Chapter 406 of the Laws of Malta). The standard rate of of Malta) grants the automatic ratification of double taxation VAT in Malta is 18%. However, in terms of the Eighth Schedule agreements upon their conclusion. Double tax treaties have primacy to the VAT Act, the reduced rates of 0%, 5% or 7% apply to certain of over domestic law as instruments of international law. transactions. The VAT Act and its subsidiary legislations are based on the EU VAT Directives. 1.4 Do they generally incorporate anti-treaty shopping rules (or “limitation on benefits” articles)? 2.3 Is VAT (or any similar tax) charged on all transactions or are there any relevant exclusions? Generally, Malta double taxation agreements do not incorporate anti-treaty shopping rules or limitation of benefits articles. However, The VAT Act distinguishes between different types of exemptions by agreements like the one entered with the USA includes a limitation reference to the rights granted to the person providing the transaction of benefits clause designed to avoid treaty-shopping. and the availability to claim input tax incurred in connection with the said transaction. 1.5 Are treaties overridden by any rules of domestic In fact, the VAT Act lists a number of goods and services which law (whether existing when the treaty takes effect or are considered to be either exempt with credit supplies or exempt introduced subsequently)? without credit supplies. Suppliers providing exempt with credit supplies do not charge VAT on those particular transactions, In Malta, double tax treaties override any provisions to the contrary however, the supplier is still entitled to recover input VAT incurred under Maltese domestic tax legislation on expenses and overheads that are directly connected with the provision of such supplies. On the other hand, suppliers providing exempt without credit supplies, albeit not charging VAT on those 1.6 What is the test in domestic law for determining the particular transactions, are not entitled to recover the input VAT residence of a company? incurred on expenses and overheads that are directly connected with such supplies. All companies incorporated in Malta are deemed to be domiciled and ICLG TO: CORPORATE TAX 2019 WWW.ICLG.COM 177 © Published and reproduced with kind permission by Global Legal Group Ltd, London WH Partners Malta 2.4 Is it always fully recoverable by all businesses? If not, 3 Cross-border Payments what are the relevant restrictions? 3.1 Is any withholding tax imposed on dividends paid by Generally speaking, a business may recover VAT payable or paid in a locally resident company to a non-resident? the course of its economic activity.