These rules (which shall not apply to micro, small or medium-sized enterprises) shall apply for basis years commencing on or after 1st January 2024 in relation to any arrangement (exclusively cross border) entered into on or after that date, and for those arrangements entered into before that date, these rules shall apply to those arrangements that are materially altered on or after that date.
An arrangement is defined as:-
(a) any transaction, agreement or dealing of any kind, where, at the relevant time, the parties to such an arrangement are associated enterprises. An arrangement shall also include a series of transactions, agreements and dealings of any kind; or
(b) any notional dealing between a body of persons and its permanent establishment (i.e. body of persons not resident in Malta and having a permanent establishment in Malta or a company registered in Malta having a permanent establishment outside of Malta)
Associated enterprises are defined as bodies of persons where one of the bodies of persons controls the other body of persons, or the same person or persons controls two or more bodies of persons, whether as a result of the fact that it holds, directly or indirectly, a participation of more than 75% in the voting rights, or the ordinary capital, of the other body/bodies of persons, or by virtue of any powers conferred by the articles of association or other document regulating the other body/bodies of persons.
Provided that where such bodies of persons are constituent entities of a MNE group as defined in item 3 of Section I of Annex III of the Cooperation with Other Jurisdictions on Tax Matters Regulations the percentage interest in the voting rights or the ordinary capital referred to therein shall be 50%.
In determining the total income of any company where any amount incurred or due, accrued or derived, in the year preceding the year of assessment under any cross-border arrangement to which these rules apply differs from the arm’s length amount, it shall be deemed that the arm’s length amount was incurred or due, accrued or derived, instead of the actual amount incurred or due.
The arm’s length amount is particularly defined as the amount that independent parties would have agreed to in relation to the arrangement had those independent parties entered into that arrangement in comparable circumstances. Such transfer pricing methodologies shall be designated by the Commissioner in guidelines which are yet to be published.
As like in all other rules, exceptions apply! These rules shall not apply where:-
(a) It is a securitisation transaction;
(b) i) the aggregate arm’s length value of all items of income and expenditure of a revenue nature forming part of cross-border arrangements in the year preceding the year of assessment, does not exceed €6,000,000; and
(ii) the aggregate arm’s length value of all items of income and expenditure of a capital nature forming part of cross-border arrangements in the year preceding the year of assessment, does not exceed €20,000,000.
The Commissioner may issue a unilateral transfer pricing ruling defined as a Ruling that determines an appropriate set of criteria for the determination of the transfer pricing for that cross-border arrangement. Such ruling is expected to be binding on the Commissioner for a period of 5 years from the date the Ruling takes effect.
The rules also provide for Advantage pricing agreements between the competent authority and the relevant foreign competent authority of a bilateral or multilateral nature. Such agreement may also be entered for a duration of a period not exceeding 5 years.Go Back
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