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Tax Update: Tax Credit for Construction Waste Recycling

Kristine Attard and Dr John Caruana  -  8/May/2020

By virtue of Legal Notice 179 of 2020, Malta has implemented another tax incentive which takes the form of a tax credit for construction waste recycling. A licenced individual who accepts construction and demolition material from third parties in his quarries throughout the years 2020-2024 at a fee not exceeding €12 per tonne may now claim a tax credit equivalent to 5% of the gross fees paid to him for the acceptance of the said material. Notably, this tax credit cannot, however, exceed the tax chargeable on the income derived by the said licenced individual during that year from the provision of those services.

By virtue of Legal Notice 218 of 2020, the construction waste recycling incentive has recently been amended wherein the tax incentive is no longer classified as a tax credit.  A licenced individual who accepts construction and demolition material from third parties in his quarries throughout the years 2020-2024 at a fee not exceeding €12 per tonne shall now be charged to tax at 5% of the gross fees paid to him for the acceptance to the said material.

By virtue of LN 284 of 2020, the construction waste recycling incentive has once again been amended and the word ‘Tax Rate’ in the previous Legal Notice shall be substituted by the words ‘Tax Exemption’.  The Income derived by an authorised person from qualifying services during a relevant year shall be exempt from the tax that would otherwise be chargeable on that income subject to the following conditions:

(a) the income in question is declared in a tax return filed in accordance with article 10 of the Income Tax Management Act for the respective year of assessment; and

(b) an amount of tax is paid equivalent to five cents (€0.05) on every euro of that income; and

(c) the tax on the chargeable income of the authorised person for the respective year of assessment shall be calculated at the rate or rates that would apply if that income included also the income exempted by these rules; and

(d) the authorised person produces such documents or other evidence as the Commissioner may require.

Should you have any queries as to how and whether this tax incentive applies for you, please do not hesitate to contact us accordingly. We are happy to help.
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