US Foreign Account Tax Compliance Act (FATCA)
The agreement concluded between the Republic of Malta and the United States to improve international tax compliance and to implement the FATCA (the 'Agreement') entered into force on 26 June 2014. On 18 November 2014, the FATCA Regulations were accordingly issued implementing the said intergovernmental agreement (IGA). Guidelines on the implementation and interpretation of the FATCA Regulations and the said Agreement have been issued by the Maltese Inland Revenue and are updated periodically.
Furthermore, the Exchange of Information (United States of America) (FATCA) (Amendment) Order was enacted in 2015.
Guidelines on FATCA, providing guidance for its implementation and interpretation, have also been issued by the Maltese Commissioner for Revenue and should be periodically updated.
The Common Reporting Standard (CRS) and EU Council Directive 2011/16/EU and 2014/107/EU
By virtue of LN 384 of 2015 entitled the ‘Cooperation with Other Jurisdiction on Tax Matters (Amendment) Regulations, 2015’, the EU Council Directive 2014/107/EU of 9 December 2014 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation (DAC2) and the CRS have been accordingly implemented into Maltese legislation, with effect from 1 January 2016.
Guidelines on the implementation and interpretation of the DAC2 and CRS have also been issued by the Maltese Commissioner for Revenue and updated periodically, with the last update issued on 2 January 2020. Changes to the guidelines include clarification on distributed ledger technology assets, rules on citizenship by investment and residence by investment, updated information on recalcitrant accounts and undocumented accounts, and updated rules as applicable to trusts in respect to registration and reporting by the trust to the Commissioner for Revenue, amongst others.
Although FATCA and CRS/DAC2 reporting is to be done primarily by the XML Schema reporting, the Maltese Commissioner for Revenue updated the alternative online reporting tool available to Maltese Financial Institutions that were classified as Reporting Malta Financial Institutions for DAC2 and CRS purposes. The reporting tool now includes both the report to be submitted relating to the FATCA as well as DAC2/CRS. According to the latest Guidelines, the alternative online reporting tool is only made available after Reporting Malta Financial Institutions request authorisation from the Maltese Commissioner for Revenue, after they successfully manage to explain why they are unable to report by using the XML Schema reporting.
Moreover, due to the current exceptional circumstances brought due to COVID-19, an extension for the submission of the FATCA and CRS reports in relation to reporting year 2019 was granted. The deadline for submission of FATCA and CRS reports both in XML format and using the alternative format (excel sheet) is now 30 June 2020.
Disclosure of Tax Arrangements (DAC6)
The recently published Legal Notice 342 of 2019 introduces rules that transpose the provisions of the sixth update to Council Directive 2011/16/EU on administrative cooperation in the field of taxation into Maltese law (DAC6 or the Directive). The rules transpose the Directive provisions and impose mandatory disclosure by intermediaries (and taxpayers, in specified situations) of certain arrangements with an EU cross-border element where the arrangements bear certain 'hallmarks' set out in the Directive.
It should be noted that there are certain instances wherein an intermediary may waive the filing of certain information in certain situations. In such circumstances, the reporting obligation may shift to another intermediary or to the relevant taxpayer. However, the intermediary is nevertheless required to notify such persons of their reporting obligations.
In the case that intermediaries have waived such reporting obligation, said intermediaries are required to provide the Maltese Commissioner for Revenue with an annual update specifying other intermediaries or taxpayers who will be carrying out the reporting.
As a form of fiscal assistance in order to improve an entity’s liquidity due to the coronavirus pandemic, postponement of payment of certain taxes were introduced, including provisional taxes, employee taxes, maternity fund payments and social security contributions, social security of self-employed persons, and VAT. The eligible period for such tax deferral scheme refers to taxes that fall due in March 2020 and up to June 2020.
Another measure introduced in the light of COVID-19 is that there is the possibility of requesting a three-month moratorium for both personal and business loans. Other measures linked to employment include grants to full-time employments and employees of enterprises that suffered a complete suspension of operations.
The European Commission allows member states to temporarily waive custom duties and VAT on the import of medical devices and protective equipment as a form of aid due to the coronavirus pandemic. The waiver applies to importations made from 30 January 2020 to 31 July 2020. As a result, the 8th Schedule of the VAT Act was amended to include protective face masks and visors.
For further information, please visit: https://www.pwc.com/mt/en/pwc-malta-press-room/covid-19.html