       BUSINESS PROMOTION [ CAP. 325.        1
CHAPTER 325 
BUSINESS PROMOTION ACT
To encourage the establishment of new businesses and the expansion of existing ones, and
to make ancillary arrangements in relation thereto.
5th July, 1988
ACT XXI of 1988, as amended by Acts IX of 1993, XVII of 1994, XI and XV of 1997, IV and
VI of 2001, IV and VIII of 2003; and Legal Notice 42 of 2004.
ARRANGEMENT OF ACT
  Articles
Part I.  Preliminary  1-3
Part II.  Main Income Tax Incentives  4-15 
Part III.  Other Incentives  16-24 
Part IV.  Guarantee of Incentives  25-31 
Part V.  General Provisions  32-37 
Part VI.  Offences and Penalties  38-43 
Part VII.  Provisions regarding late payment in commercial
transactions 44-56 
Part VIII.  State Aid Monitoring Board 57-58 
Part IX.  Final Provisions  59-61
  2      CAP. 325. ]               BUSINESS PROMOTION
PART I
PRELIMINARY 
Short title.
Amended by:
IV.  2001.3.
1. The short title of this Act is the Business Promotion Act. 
Interpretation.
Amended by:
IX.1993.2;
XI. 1997.2;
IV. 2001.4.
2. (1) In this Act, unless the context or subject otherwise
requires -
"body of persons" means any partnership, fellowship or society
of persons, whether vested with legal personality or not;
Cap. 281.
"certified public accountant and auditor" means an individual
who holds a warrant to act in this capacity issued under the
Accountancy Profession Act, or a partnership of such individuals
duly registered under the said Act;
"company" means:
Cap. 168
Cap. 386.
( a ) any partnership constituted under the Commercial
Partnerships Ordinance *  or the Companies Act, being
a partnership  en nom collectif ,  en commandite  or a
limited liability company;
( b ) any body of persons constituted, incorporated or
registered outside Malta, and of a nature similar to the
aforesaid partnerships;
( c ) any co-operative society duly registered as such under
the appropriate law for the time being in force in
Malta; 
Cap. 202.
"Corporation" means the Malta Development Corporation
established under the Malta Development Corporation Act,  and
where any other authority or person is designated by regulations
prescribed by the Minister to be the competent authority to exercise
any of the functions of the Corporation under this Act, includes any
such other authority or person to the exclusion of the Corporation ;
"enterprise" means any individual or body of persons who or which
carries on or exercises a trade, business, profession or vocation;
"export sales" means:
( a ) the value of goods exported by a qualifying company
calculated free on board; or
( b ) the invoiced value of goods or services sold or
rendered, as the case may be, by a qualifying company
to another qualifying company under a written contract
which clearly stipulates that the said goods or services
are to be exported by the latter company whether as so
sold, or as subjected to further processing or
incorporation in other goods or services, and provided
such export has actually taken place:
Provided that the said contract shall also stipulate
that an officer duly authorised to sign on behalf of the
*Repealed by Act XXV of 1995 (Cap. 386).
       BUSINESS PROMOTION [ CAP. 325.        3
buying company shall furnish the supplying company
with a written declaration confirming that the said
goods or services had been exported together with an
undertaking that the Corporation may examine the
relative export documents and the grant of any benefit
on the basis of the provisions of this paragraph shall be
conditional upon the production by the beneficiary of
such declaration and undertaking together with a
statement by the auditors of the buying company that
confirms that the declaration of the said official is
substantially correct; or
( c ) the value of services rendered or performed by a
qualifying company which are exported by the same
company and in the case of a company qualifying in
terms of article 3(1)( e ) the value of services rendered
or performed for another qualifying company which
satisfies the provisions of article 4(1)( b );
Cap. 409.
and Tourism Services Act, or a building in the course of
construction which is intended to be so licensed upon completion;
Cap. 123.
"income tax" means tax charged or chargeable under the
provisions of the Income Tax Act;
"Maltese company" means a company in which Maltese citizens,
directly or indirectly, either -
( a ) hold more than half in nominal value of its issued
share capital, excluding any part thereof which, neither
as respects dividends nor as respects capital, carries
any right to participate beyond a specified amount in a
distribution; or 
( b ) are entitled to more than half its voting power; 
"Minister" means the Minister responsible for industry and
includes, to the extent of the authority given, any Parliamentary
Secretary authorised in that behalf;
"person" includes a body of persons; 
"prescribed" means prescribed by regulations under this Act;
"public officer" has the same meaning as is assigned to it by
article 124 of the Constitution of Malta;
"qualifying company" means a company which carries on, or
intends to carry on in Malta, a trade or business consisting solely of
any of the activities referred to in article 3(1)( a ) to ( k ) ;
"research and development programme" means a programme for
systematic investigation or research carried out in any field of
science or technology through experiment or analysis, and
includes:
( a ) basic research comprising activities undertaken for the
advancement of scientific or technological knowledge;
( b ) applied research where a final specific application is in
view;
  4      CAP. 325. ]               BUSINESS PROMOTION
( c ) development involving the use of the results of basic
or applied research as aforesaid for the purpose of
creating new or of improving existing material,
devices, products or processes, but excludes routine or
periodic design, testing and analysis of equipment or
products for the purposes of quality or quantity
control, and routine or periodic alterations to existing
products or processes;
"sales revenue derived from export" means "export sales";
''State Aid Monitoring Board'' means the State Aid Monitoring
Board constituted under article 57.
(2) Enactments referred to in this Act shall include any other
enactments replacing the said laws, and where reference in this Act
is made to specific provisions of any existing enactment, such
reference shall be deemed to comprise also a reference to the
corresponding provisions of any enactment replacing the said law.
(3) Words and expressions used in this Act and in other
enactments referred to in this Act shall, unless defined in this Act,
be construed and have the same meaning in this Act as in the said
other enactments.
(4) Wherever in this Act reference is made to incentives and
benefits contemplated by this Act, such reference shall be read and
construed to include incentives and benefits prescribed under this
Act.
Beneficiaries under 
this Act.
Amended by:
IX.1993.3;
XI. 1997.3;
IV. 2001.5;
IV. 2003.8.
3. (1) Unless otherwise provided by or under this Act, the
incentives and benefits contemplated by or under this Act shall be due
to and obtained by any enterprise which carries on or intends to carry
on, in Malta, a trade or business which consists solely of -
( a ) the production, manufacture, improvement, assembly,
processing, repair, preservation or maintenance of any
goods, materials, commodities (including computer
software), equipment, plant or machinery; or
( b ) the rendering of services of an industrial nature
analogous to the activities referred to in paragraph ( a ),
including the repair, maintenance, commissioning,
installation, inspection or testing of plant, machinery
or equipment and the recycling or treatment of waste
material; or 
( c ) fisheries or large scale aquaculture; or
( d ) agriculture, stock farming large scale horticulture; or
( e ) the rendering of a service by a company to non-
resident persons or to a company which satisfies the
provisions of article 4(1)( b ), whether the service is
performed or rendered in Malta or from Malta,
provided such service is prescribed by the Minister to
be a qualifying export service; or
( f ) the rendering of a qualifying support service as may be
prescribed by the Minister; or
       BUSINESS PROMOTION [ CAP. 325.        5
( g ) the export of goods or services produced or provided,
as the case may be, by other qualifying companies; or
( h ) research and development programmes; or
Cap. 334.
Freeports Act and carried on mainly in a freeport as
defined by that Act, by a company licensed under that
Act;
Cap. 409.
( j ) (i) the operation of catering establishments,
guesthouses, hostels, hotels and holiday premises
as defined in the Malta Travel and Tourism
Services Act, and falling within such categories
as may be prescribed; or 
(ii) the undertaking of any project beneficial to the
tourism industry as may be prescribed;
( k ) the production of feature films, television films,
advertising programmes or commercials, and
documentaries:
Provided that where any provision is made by or under this
Act for an incentive or benefit to be obtained by a qualifying company,
any such incentive or benefit shall be due and obtained only by a
company which carries on or intends to carry on in Malta such trade or
business.
(2) Notwithstanding any other provision of this Act, in the case
of activities or classes of activities referred to in subarticle (1)( c ) to
( k ), the incentives and benefits contemplated by this Act shall only
be due to and obtained by a company subject to the approval of the
project by the Corporation, and in granting its approval as
aforesaid, the Corporation may impose such conditions as it may
deem fit:
Provided that with effect from such date as may be determined
by the Minister by order in the Gazette * , the Corporation shall not
approve any projects falling under subarticle (1)( e ).
(3) Notwithstanding any other provision of this Act, the
incentives and benefits granted by article 4 and 5 shall not be due to
or obtained by a trade or business qualifying under subarticle
(1)( g ).
(4) A company qualifying under subarticle (1)( h ) shall qualify
only for those incentives and benefits contemplated by this Act as
the Minister may prescribe. In addition to such incentives the
Minister may also prescribe other special incentives and benefits,
including cash grants, that may be given to such companies.
(5) A trade or business contemplated in subarticle (1) shall be a
trade or business actually and physically carried on or carried out in
Malta, so however that where the services referred to in paragraph
( b ),   ( f ) and ( g )   thereof are rendered outside Malta, the said services
shall, for the purposes of this article, be deemed to have been
rendered in Malta if the actual services are wholly or mainly
*1st November, 2000 - see Legal Notice 135 of 2001.
  6      CAP. 325. ]               BUSINESS PROMOTION
rendered by citizens of Malta.
(6) Subject to the provisions of article 25, the Minister may
from time to time upon a resolution of the House of
Representatives by notice in the Gazette exclude from any or all of
the incentives and benefits contemplated by this Act companies
that would otherwise be qualifying companies but whose trade or
business comprises activities specified in the said notice.
(7) Any notice published in accordance with the provisions of
subarticle (6) may be subsequently revoked or modified by the
Minister upon a resolution of the House of Representatives.
(8) The incentives and benefits contemplated by this Act shall
only be due in respect of activities happening on or after 1st June,
1987, and in respect of gains or profits earned after that date:
Provided that, notwithstanding any other provision of this
Act in respect of:
( a ) projects approved by the Corporation under subarticle
(1)( c ), ( d ), ( e ), ( f ), ( g ) and ( h ); or
( b ) the operation of paragraphs ( b ) and ( d ) of the
definition of "export sales" in article 2, 
the incentives and benefits contemplated by this Act shall not be
due in respect of activities happening before 1st January, 1992, and
in respect of gains or profits earned before that date:
Cap. 386.
Provided further that notwithstanding any other provision
of this Act in respect of qualifying companies incorporated outside
Malta, the incentives and benefits contemplated by this Act may
only be obtained by qualifying companies registered as an oversea
company in accordance with the Companies Act in respect of their
activities happening on or after 1st January, 1997:
Provided further that the incentives and benefits
contemplated by article 6(1), article 8(7), article 9, article 15 and
article 24B may only be obtained by a company constituted under
Maltese Law:
Provided further that the incentives and benefits contemplated
by or under this Act shall only be available to companies which
qualify under any of the provisions of article 3(1)( i ) to ( k ) as from such
date as may be determined by the Minister by order in the Gazette * .
(9) The Minister shall in January of every year publish in the
Gazette a list of companies that have benefited under subarticle
(1)( h ) together with a general description of the activities of the
company and of any cash grants from which the company benefits
under this Act.
(10) Notwhithstanding the provisions of articles 4(6), 5(7),
5A(6) and 15, with effect from the year of assessment 2004 no
company shall be entitled to the incentives provided by articles 4, 5
and 5A:
Provided that a company may qualify for such benefits and
*1st November, 2000 - see Legal Notice 135 of 2001.
       BUSINESS PROMOTION [ CAP. 325.        7
incentives as may be prescribed by the Minister.
Transfer of 
business to an 
oversea company. 
Added by:
XI. 1997.4.
Cap. 386.
3A. (1) Where by means of an extraordinary resolution it is
decided to transfer the trade or business of a company constituted
under Maltese Law, hereinafter referred to as the first company, to
a company which is registered as an oversea company in terms of
the Companies Act, hereinafter referred to as the second company,
and the Corporation is satisfied that the ultimate beneficial
shareholders of the said companies are the same and are not
resident in Malta,
(i) all rights and obligations of the first company
arising from the provisions of this Act shall be
deemed to be the rights and obligations of the
second company as if such rights and
obligations had always appertained to the
second company;
(ii) the second company shall be entitled to the
incentives and benefits contemplated by this Act
to the same extent as the first company would
have been entitled had the transfer of business
not taken place and this irrespective of whether
the first company was dissolved.
Cap. 386.
(2) The provisions of subarticle (1) shall apply,  mutatis
mutandis , where a company registered as an oversea company in
terms of the Companies Act transfers its business to a company
constituted under Maltese Law and in subarticle (1) "the first
company" shall mean a company registered as an oversea company
in terms of the Companies Act and "the second company" shall
mean a company constituted under Maltese Law.
(3) For the purposes of this article a trade or business shall be
deemed to have been transferred when:
(i) all the tangible assets of the first company are
transferred to the second company, which
company uses the said assets in carrying on the
same kind of trade or business as that carried on
by the first company; and
(ii) the customers of the second company are
substantially the same as that of the first
company.
(4) On being satisfied that the provisions of this article have
been complied with, the Corporation may issue a certificate to that
effect, which certificate shall constitute sufficient evidence for the
purpose of the application of this article.
  8      CAP. 325. ]               BUSINESS PROMOTION
PART II
MAIN INCOME TAX INCENTIVES
Tax holidays
Amended by:
IX.1993.4;
XI. 1997.5;
IV. 2001.6.
 4. (1) Where a qualifying company - 
( a ) is a company which:
(i) is constituted under Maltese Law on or after 1st
June, 1987; or
Cap. 386.
(ii) is a company incorporated outside Malta and has
been registered as an oversea company in terms
of the Companies Act registered on or after 1st
June, 1987 but only in respect of its activities
happening on or after 1st January, 1997; and
( b ) subject to the provisions of subarticle (5), derives from
export sales not less than ninety-five per cent of its
total sales revenue; and 
( c ) carries on or carries out a trade or business which does
not consist solely or mainly in the mere expansion,
duplication or replacement of a trade or business
formerly carried on or carried out in Malta by any
person in any way directly or indirectly connected or
associated with the said company through
shareholding, voting or other ownership or controlling
rights, irrespective of the person in whom such rights
are or may have been vested,
such company shall be exempt from income tax on the gains or
profits from its trade or business made during ten consecutive years
of assessment which years shall be comprised within the
company’s first twelve years of assessment as may be determined
by the company by way of an irrevocable notice in writing to the
Corporation to be given not later than the end of the third year of
assessment:
Provided that in the case of a company entitled to obtain the
exemption contemplated in this subarticle, in terms of subarticle
(3)( b ), the twelve years of assessment referred to in this subarticle
shall be the company’s twelve years of assessment immediately
following the year in which its shares were acquired, and the ten
consecutive years of assessment in respect of which the exemption
from income tax may apply shall be comprised in these twelve years of
assessment as may be determined by the company by way of an
irrevocable notice in writing to the Corporation, which notice shall be
given by not later than the end of the third year of assessment falling
within the said twelve years of assessment.
(2) If a company in any year immediately preceding a year of
assessment comprised in the ten consecutive years of assessment
referred to in subarticle (1) derives from export sales less than
ninety-five per cent of its sales revenue, the company shall for that
year of assessment forfeit the exemption granted under the
provisions of this article:
Provided that such forefeiture for any year as aforesaid shall
not -
       BUSINESS PROMOTION [ CAP. 325.        9
( a ) affect the company’s right for exemption in any other
year of assessment; or
( b ) obtain for the company exemption under this article
for any year not comprised in the original ten
consecutive years of assessment.
(3) For the purposes of subarticle (1) -
( a ) the acquisition by a company of any trade or business
formerly carried on or carried out by any person not
connected with the company as set out in paragraph ( c )
of the said subarticle shall not qualify the said
company to obtain the exemption from income tax
contemplated by this article;
( b ) where on the 1st June, 1987, a company was controlled
at least as to fifty per cent directly or indirectly by
Government and not less than fifty per cent of the
shares of the company were owned directly or
indirectly by Government, if all such shares are
acquired by any person not under Government control,
such company shall be qualified to obtain the
exemption contemplated in subarticle (1) if the
company is a qualifying company and it satisfies the
condition at paragraph ( b ) of the said subarticle.
Cap. 123.
(4) The income of any company for any year of assessment in
respect of which exemption from income tax operates under the
provisions of this article shall be computed in the manner set out in
the Income Tax Act, and in accordance with its provisions:
Provided that:
( a ) the provisions of the said Act shall be superseded or
replaced as may be necessary by the provisions of this
Act;
( b ) any entitlement to a deduction under the provisions of
article 12 for any year of assessment in respect of
which exemption under the provisions of this article is
due, shall be deferred to the first year of assessment
next following the ten consecutive years of assessment
referred to in subarticle (1);
( c ) any unabsorbed losses or unabsorbed capital
allowances (including the allowances contemplated by
this Act) at the end of any year of assessment exempt
from income tax under the provisions of this article
shall be carried forward strictly in the manner set out
in the Income Tax Act, notwithstanding that such carry
forward is from an exempt year into a year when no
such exemption is operative:
Provided further that, if, during any one year falling within
the ten consecutive years of assessment referred to in subarticle (1), a
qualifying company fails to qualify for the incentive under that
subarticle, any entitlement under paragraph ( b ) may, at the option of
the company, be utilised as a deduction against its chargeable income
of the first or any subsequent years of assessment in respect of which
  10      CAP. 325. ]               BUSINESS PROMOTION
the company does not so qualify.
(5) The words "not less than ninety-five per cent" in subarticle
(1) shall be substituted by the words "substantially the whole" and
subarticle (2) shall be construed accordingly in any particular line
of production, manufacture or service as may be determined by the
Minister by notice published in the Gazette and in that case the
words "substantially the whole" shall mean that percentage higher
than ninety-five per cent as the Minister may mention in the same
notice:
Provided that such substitution shall, in respect of any
qualifying company, be applicable only as from its first accounting
period commencing on a day subsequent to that on which notice is
published as aforesaid.
( 6) With effect from such date as may be determined by the
Minister by order in the Gazette * , the provisions of this article shall
only be applicable to: 
Cap. 386.
( a ) qualifying companies which existed on the day
immediately preceding that date and, in the case of
companies incorporated outside Malta and which had
been registered as oversea companies in terms of the
Companies Act, were so registered on the day
immediately preceding such date;
( b ) qualifying companies incorporated in Malta or
registered as oversea companies after that date which
carry on or intend to carry on a trade or business which
relates to a project in respect of which the Corporation
has, prior to such date, approved the granting of any
assistance in terms of this Act:
Provided that, as from the aforementioned date, no company
shall qualify for the benefit provided by this article in terms of
subarticle (3)( b ).
Export incentive 
scheme.
Amended by:
IX. 1993.5;
XI. 1997.6;
IV. 2001.7.
5. (1) Where a qualifying company in any year of assessment
increases its export sales over such sales during a base period by
the percentages specified in subarticle (5), the additional export
profits earned by the company in that year from the export sales
resulting in such increase shall be exempt from income tax.
(2) The additional profits exempt from income tax in
accordance with the provisions of subarticle (1) shall be calculated
in accordance with the following formula:
("Y" x "X") - ("B" x "A")
("Z" -      ) - ("C" -       )
where: 
"A" = profits in base period 
"B" = export sales during base period 
"C" = total sales during base period 
"X" = profits earned in year of assessment 
*1st November, 2000 - see Legal Notice 135 of 2001.
       BUSINESS PROMOTION [ CAP. 325.        11
"Y" = export sales in year of assessment 
"Z" = total sales in year of assessment
Cap. 123.
For the purposes of computing the additional profits exempt
from income tax in terms of this subarticle or the profits which are
exempt from income tax or taxed at a reduced rate of income tax
for the purposes of article 5A for any year of assessment
(hereinafter in this subarticle referred to as the relevant year of
assessment), where a qualifying company has changed the date on
which its accounting period ends for the purposes of article 11 of
the Income Tax Act and the profits of such accounting period fall to
be charged to tax -
(i) in any year of assessment comprised in a base period;
or
(ii) in any year relevant of assessment,
the value of the total sales, export sales and profits of the accounting
periods, or where applicable the accounting period, the profits of
which fall to be charged to tax in the years of assessment comprised in
a base period, shall be decreased or increased, as the case may be, by
multiplying the actual value of the said total sales, export sales and
profits by the number of days comprised in the accounting period the
profits of which fall to be charged to tax in the relevant year of
assessment and dividing the product thereof by the number of days
comprised in the said accounting periods or period as the case may be.
(3) For the purpose of the computation set out at subarticle
(2)- 
( a ) there shall be excluded any income which does not
accrue to the company from a trade or business and
any sale or other component of its turnover which is
not connected with its trade or business;
( b ) "profits" and "income" shall in all cases be taken as
comprised in the company’s chargeable income for
income tax purposes after account has been taken,
where appropriate, of any incentive or benefit obtained
by the company under the provisions of this Act;
( c ) a loss made in any year of assessment comprised in a
base period shall be deemed to be zero profits;
Cap. 386.
( d ) where a company was not in existence, or in the case
of a qualifying company incorporated outside Malta,
such company was not registered as an oversea
company in accordance with the Companies Act,
during a year of assessment comprised in a base
period, the company shall be deemed to have had zero
profits for that year of assessment.
(4) For the purposes of this article, profits and export sales
during a base period shall be the average profits and export sales
during a period of two consecutive years of assessment as follows:
  Year of Assessment                                      Base Period 
1989 to 1993  year of assessment:1987 and 1988
1994   1988 and 1989 
  12      CAP. 325. ]               BUSINESS PROMOTION
1995   1989 and 1990
1996   1990 and 1991
1997   1991 and 1992
  1998   1992 and 1993
1999   1993 and 1994
2000   1994 and 1995
2001   1995 and 1996:
Provided that the base period for year of assessment 2002
and subsequent years of assessment shall be determined by
increasing the years comprised in the base period for the preceding
year of assessment by one year.
(5) Exemption from income tax under this article shall be due
where the increase in export sales is of - 
( a ) ten per cent or more over the corresponding base
period in the first year of exemption;
( b ) fifteen per cent or more over the corresponding base
period in the second year of exemption; and
( c ) twenty-five per cent or more over the corresponding
base period in the third and subsequent years of
exemption:
Provided that a qualifying company may benefit from the
provisions of this article for not more than ten years of assessment,
which years need not be consecutive.
(6) The provisions of this article shall only be applicable to: 
( a ) a qualifying company constituted before 1st June
1987, and to
( b ) a qualifying company constituted on or after that date,
if that company, for any year of assessment, would
have been entitled to benefit from an exemption
contemplated in article 4 but for the provisions of
subarticle (1)( b ) thereof.
(7)  With effect from such date as may be determined by the
Minister by order in the Gazette * , the provisions of this article shall
only be applicable to: 
Cap. 386.
( a ) qualifying companies which existed on the day
immediately preceding such date and, in the case of
companies incorporated outside Malta and which had
been registered as oversea companies in terms of the
Companies Act, were so registered on the day
immediately preceding such date;
( b ) qualifying companies incorporated in Malta or
registered as oversea companies after that date and
which would have been entitled to benefit from the
provisions of article 4 but for the provisions of
subarticle (1)( b ) thereof,
and such companies shall continue to be so entitled to the incentive
contemplated under this article up to and including the year of
*1st November, 2000 - see Legal Notice 135 of 2001.
       BUSINESS PROMOTION [ CAP. 325.        13
assessment 2021 or such other date as may be prescribed by the
Minister.
Investment 
incentive scheme.
Added by: 
XI. 1997.7.
Amended by:
IV. 2001.8.
5A. (1) Where a qualifying company incurs expenditure in
acquiring qualifying assets and the aggregate expenditure of the
company on such assets during any relevant year and in the
preceding six accounting periods:
( a ) is equivalent to or exceeds a percentage (in this
subarticle referred to as "the qualifying percentage")
of the company’s total sales during the same period,
the income derived by such company, from its trade or
business, during the relevant year as is proportionately
attributable to its increased export sales as determined
in terms of subarticle (2) shall be taxed at a reduced
rate of income tax as is determined by reference to the
qualifying percentage as follows:
Provided that the six accounting periods
preceding the relevant year shall be accounting periods
the profits of which fall to be charged to income tax in
year of assessment 1998 or subsequent years of
assessment and, where the number of such accounting
periods preceding the relevant year are less than six,
the qualifying percentage referred to in this paragraph
shall be determined for the period of time commencing
from the first day of the accounting period the profits
of which fall to be charged to income tax in year of
assessment 1998 and ending on the last day of the
relevant year:
Provided further that where a company was not in
existence during all of the six years preceding the
relevant year, the qualifying percentage referred to in
this subarticle shall be determined for the period of
time during which such company was in existence;
or
( b ) is equal to or exceeds LM7,000,000, the income
derived by such company from its trade or business
during the relevant year as is proportionately
attributable to its increased export sales as determined
in terms of subarticle (2) shall be exempt from income
tax:
Provided that:
(i) if the number of days comprised in the period of
time commencing from the first day of the
accounting period the profits of which fall to be
Qualifying percentage Applicable rate of 
reduced income tax
% %
8  17.50 
9 8.75
10 0.00
  14      CAP. 325. ]               BUSINESS PROMOTION
charged to income tax in year of assessment
1998 and ending on the last day of the relevant
year, is less than two thousand five hundred and
fifty-five; or
(ii) the number of days comprised in the relevant
year and in the preceding six accounting periods
is less or more than two thousand five hundred
and fifty-five,
the amount of LM7,000,000 shall be increased or
reduced to an amount arrived at by multiplying
LM7,000,000 by the proportion which the number of
the days comprised in the aforementioned periods
bears to two thousand five hundred and fifty-five days.
(2) The income derived by a qualifying company from its trade
or business during the relevant year and which shall be exempt
from income tax or taxed at the reduced rates of tax in accordance
with the provisions of subarticle (1), shall be calculated in
accordance with the formula set out in article 5(2):
Provided that a qualifying company may not claim a benefit
under this article for any year of assessment in which it has also
claimed a benefit under article 5.
(3) A qualifying company may benefit from the incentive
provided for by this article for not more than ten years of
assessment which years need not be consecutive.
(4) For the purposes of this article:
( a ) there shall be excluded any income which is not
derived by the company from its trade or business;
( b ) the amount of total sales and export sales shall be
calculated free on board and where the sale is made
pursuant to a contract of works, it shall include the
uninvoiced value of any materials and components
provided by the customer.
(5) In this article:
"expenditure in acquiring qualifying assets" means expenditure
incurred in acquiring assets in respect of which an investment
allowance can be claimed in terms of article 7, excluding any
expenditure incurred on non-commercial motor vehicles;
Cap. 123.
"non-commercial motor vehicles" means those vehicles to which
article 14(3) of the Income Tax Act applies;
"relevant year" means any accounting period of a qualifying
company which ends in the year preceding year of assessment 1998
or any subsequent year of assessment as the case may be;
"accounting period" means the accounting period as determined
by reference to article 11 of the Income Tax Act;
"profits" and "income" shall in all cases be taken as comprised in
the company’s chargeable income for income tax purposes after
account has been taken of any incentive or benefit obtained by the
company under the provisions of this Act.
       BUSINESS PROMOTION [ CAP. 325.        15
(6)  With effect from such date as may be determined by the
Minister by order in the Gazette * , the provisions of this article shall
only be applicable to: 
( a ) qualifying companies which existed on the day
immediately preceding such date and, in the case of
companies incorporated outside Malta and which had
been registered as oversea companies in terms of the
Companies Act, were so registered on the day
immediately preceding such date;
( b ) qualifying companies incorporated in Malta or
registered as oversea companies after that date which
carry on or intend to carry on a trade or business which
relates to a project in respect of which the Corporation
has prior to such date approved the granting of any
assistance in terms of this Act,
and such companies shall continue to be so entitled to the incentive
contemplated under this article up to and including the year of
assessment 2021 or such other date as may be prescribed by the
Minister.
Reduced rate of 
tax.
Amended by:
XI. 1997.8;
IV. 2001.9.
6. (1) Subject to the provisions of subarticle (2), where it
appears to the Corporation that the gains or profits or part thereof
derived by a qualifying company from its trade or business or part
thereof in the year of assessment commencing on lst January, 1988,
or in subsequent years of assessment, have been set aside for the
exclusive purpose of financing any project as shall have been
approved by the Corporation, and that the gains or profits or part
thereof have in fact been used for the purpose for which they were
set aside, the Corporation shall issue to the qualifying company a
certificate showing compliance and thereupon the rate of income
tax chargeable on the gains or profits or part thereof so used shall
be reduced by seventeen and a half percentage points, and in any
such case the tax chargeable shall be assessed, or reassessed and
where necessary refunded, as the case may require:
Provided that where the qualifying company is a Maltese
company, the rate of income tax chargeable shall be reduced by
nineteen and a quarter percentage points:
Provided further that as from the year of assessment 2001 the
reduction in the rate of income tax shall in all cases be of nineteen and
a quarter percentage points or such other higher percentage as the
Minister may from time to time by regulations prescribe.
(2) The Corporation shall not grant any approval for the
purposes of subarticle (1) - 
( a ) in respect of any application for the purpose of this
article filed with the Corporation later than twenty-
four months after the end of the year immediately
preceding the year of assessment in which the income
in respect of which approval may be given falls to be
charged to tax; or
*1st November, 2000 - see Legal Notice 135 of 2001.
  16      CAP. 325. ]               BUSINESS PROMOTION
( b ) in respect of any project requiring for its realisation a
period of more than five years from the date of
approval.
(3) The Minister may by regulations prescribe  rules for the
application of the benefit provided by this article. Such rules may be in
addition to or in substitution of the rules and conditions prescribed in
this article.
Investment 
allowance. 
Amended by: 
IX.1993.6;
XI.1997.9;
IV. 2001.10.
7. (1) Where a qualifying company after lst June 1987 incurs
or has incurred expenditure in acquiring plant or machinery, or an
industrial building or structure (including a warehouse), for the
purposes of its trade or business, and in consequence of its
incurring such expenditure the plant, machinery, industrial building
or structure is owned by the company, such company shall be
entitled in computing its chargeable income for income tax
purposes in respect of the year of assessment in which the relative
asset is first used by the company in its trade or business, to an
investment allowance which shall be expressed as a percentage of
the cost of the asset as follows:
                       When owned by  When owned by 
                       Maltese companies  other companies 
Plant and                    33%    30%
machinery 
Industrial
building and  16.5% 15%:
structure 
Provided that with effect from the year of assessment 2001,
the rates applicable to Maltese qualifying companies shown above
shall be applicable to all qualifying companies and the rates shown
under the heading "When owned by other companies" shall cease to
apply:
Provided further that with effect from year of assessment
2002, investment allowances shall be calculated at the following
percentages or such other higher percentages as the Minister may
by regulations prescribe:
Plant and machinery  50%
Industrial buildings and structures  20%.
(2) No allowance under this article shall be due except  in
respect of assets:
( a ) which are first used in Malta;
( b ) in respect of which no allowance has been claimed under
this article by any person who is, directly or indirectly,
connected with the company claiming the allowance
contemplated by this article, through shareholding,
voting or other ownership or controlling rights :
Provided that the condition set out in paragraph ( a ) shall not
apply with respect to industrial buildings or structures .
       BUSINESS PROMOTION [ CAP. 325.        17
(3) Where an allowance has been granted to a company under
this article -
Cap. 123.
( a ) the company shall not be entitled to any deduction in
respect of the same asset under the provisions of
article 14(1)( j ) of the Income Tax Act;
( b ) the provisions of article 24 of the said Act shall not
apply in respect of the relative asset;
( c ) nothing contained in the said Act shall operate so as to
prevent the investment allowance and any other
allowance granted under this Act in respect thereof,
when taken together, from exceeding the original cost
of the asset.
(4) The provisions of article 8(5) shall apply in respect of any
investment allowance granted under this article.
(5) In this article and in article 8:
( a ) immovable property held by title of emphyteusis; and
( b ) any other asset to which this article and article 8 of
this Act applies acquired under a finance lease contract
or a contract of hire which stipulates that ownership of
the asset shall or may pass to the lessee when a
specified sum of money has been paid, which contract
is in each case approved by the Corporation,
shall be deemed to be held in full ownership.
(6) A company may qualify for the allowance granted under
this article for a consecutive period of twenty-five years
commencing from the year of assessment 1988 in case of
companies registered before 1st June, 1987 and from the first year
of assessment for companies registered on or after 1st June 1987:
Provided that the Minister may from time to time by notice
in the Gazette increase the said period by a further period or
periods not exceeding twenty-five years.
Cap. 123.
(7) Saving the provisions of this article, investment allowances
shall, for the purposes of the Income Tax Act be deemed to be
deductions granted under article 14(1)( j ) of the said Act and all the
relevant provisions of that Act shall apply accordingly.
(8) The Minister may by regulations prescribe  rules for the
application of the benefit provided by this article. Such rules may be in
addition to or in substitution of the rules and conditions prescribed in
this article.
(9) Any person who under contract with the Corporation or the
Government of Malta constructs buildings or structures which are
immovable in nature and rents such buildings or structures to
qualifying companies shall also be entitled to the allowance
contemplated by this article.
Accelerated 
depreciation.
Amended by:
IV. 2001.11.
8. (1) Where a qualifying company is entitled to an
investment allowance in respect of any asset under the provisions
of article 7, the company shall, in addition, be entitled to a
  18      CAP. 325. ]               BUSINESS PROMOTION
deduction in respect of wear and tear at the following rates on
account of the same asset for the purpose of computing its
chargeable income for income tax purposes:
                      When owned by  When owned by 
                       Maltese companies  other companies 
Plant and                    33 1 / 3  %        25%
machinery   per annum per annum
Industrial
building and        5%       4%
structure   per annum per annum :
Provided that with effect from the year of assessment 2001 the
rates applicable to Maltese qualifying companies shown above shall be
applicable to all qualifying companies and the rates shown under the
heading "When owned by other companies" shall cease to apply.
(2) The allowances for which provision is made in subarticle
(1) shall be granted as from the year of assessment in respect of
which the relative allowance is first due to be granted and shall be
computed on the straight line method.
Cap. 123.
(3) The allowances granted in terms of this article shall replace
any allowances otherwise due to the qualifying company for any
year of assessment under the provisions of article 14(1)( f ) of the
Income Tax Act.
(4) The cost of the land on which any industrial building or
structure is constructed or erected shall, in all cases, be excluded
from any expenditure in respect of which a deduction is due to be
granted under the provisions of this article.
Cap. 123.
(5) Saving the provisions of this article and of article 7,
investment allowances and accelerated depreciation shall for the
purposes of the Income Tax Act be deemed to be deductions
granted under article 14(1)( f )   and   ( j ) of the said Act and all the
relevant provisions of that Act shall accordingly apply.
(6) No allowance under this article shall be due except in
respect of assets which are first used by the company, having been
acquired unused and not second hand:
Provided that this subarticle shall not apply in respect of
industrial buildings or structures acquired from the Government. 
Cap. 123. (7) For the purposes of articles 59 and 60 of the Income Tax
Act, the tax paid or payable in respect of income distributed by a
company by way of dividend to its members may, at the request of
the company, be calculated as if the company was not entitled to a
deduction under this article, but to the deductions contemplated by
article 14(1)( f )   and   ( j ) of the Income Tax Act.
(8) With effect from such year of assessment as may be
determined by the Minister by order in the Gazette, the provisions
of this article shall only be applicable to assets purchased by a
qualifying company during the year preceding the year of
assessment determined by the Minister as aforesaid.
       BUSINESS PROMOTION [ CAP. 325.        19
Tax free dividends.
Amended by:
XI. 1997.10.
9. (1) Any dividends (or part thereof) distributed by a
qualifying company out of its gains or profits, or part thereof,
which, under the provisions of this Act, have been relieved from
the payment of income tax, and to which the provisions of this
article apply, shall be exempt from income tax in the hands of the
members of the company in receipt of such distribution.
(2) Where a dividend referred to in subarticle (1) is distributed
to a member which is also a company (in this subarticle referred to
as "the second company"), the said dividend shall likewise be
distributable by the second company to its own members in the
form of dividends exempt from income tax in the hands of the
recipients, and where a member of the second company is again a
company, the preceding provisions of this subarticle shall apply
mutatis mutandis  as though references to the first company were
references to the second company and as though references therein
to the second company were references to that member, and the
principle set out in this subarticle shall continue to be applied for as
long as the gains or profits or part thereof to which this article
applies are distributed by way of dividends.
 (3) The provisions of this article shall apply to the gains or
profits, or part thereof, of a company which are relieved from
income tax:
( a ) under the provisions of article 4, being gains or profits
derived in any year by a company in respect of which
it is entitled to a tax holiday;
( b ) under the provisions of article 5, being part of the
gains or profits of a company relieved from income tax
for any year under the export incentives scheme;
( c ) under the provisions of article 7, being gains or profits
of a company for any year relieved from income tax
through the grant of an investment allowance;
( d ) under the provisions of article 5A, being gains or
profits of a company relieved from income tax for any
year under the investment incentive scheme.
(4) Every company shall, upon the distribution of a dividend
exempt in whole or in part from income tax under the provisions of
this article, furnish to each member in receipt of such dividend a
certificate setting out the amount of the dividend paid, the year in
which the gains or profits so distributed were earned by the
company, and declaring which part of that dividend is exempt from
income tax as provided in this article.
Training costs 
allowance.
Amended by:
IV. 2001.12.
Cap. 123.
10. (1) Subject to the provisions of subarticle (2), where the
Corporation is satisfied that a training programme approved by it
after the coming into force of this Act can increase the skill and
expertise of the employees of a qualifying company, the
Corporation shall issue a certificate accordingly and the company
shall be entitled to deduct one hundred and twenty per cent of the
actual expenditure incurred by it in organising the training
programme in the computation of its total income for the purposes
of the Income Tax Act:
  20      CAP. 325. ]               BUSINESS PROMOTION
Provided that where the Corporation is satisfied that any
training programme caters wholly or mainly for handicapped
persons, the deduction shall be one hundred and fifty per cent of the
expenditure.
(2) The total deductions due to a company for any year of
assessment under the provisions of this article shall not exceed one-
twentieth of the total sum paid by the company for that year by way
of wages, salaries and other emoluments.
(3) With effect from such date as may be determined by the
Minister by order in the Gazette * , the Corporation shall no longer
grant approvals under the provisions of this article, provided that
such provisions shall continue to apply to training programmes
approved by the Corporation prior to that date even if the
expenditure to which this article applies is incurred after such date.
Export promotion 
allowance. 
Amended by: 
IX.1993.7;
IV. 2001.13.
11. (1) Subject to the provisions of this article, where a
qualifying company incurs or has incurred export promotion
expenditure after 1st June, 1987 principally for the purpose of
seeking opportunities or creating or increasing demand for the
export of its goods or services, that company shall be entitled, in
computing its total income for income tax purposes, to deduct an
amount equivalent to one hundred and forty per cent of the
expenditure so incurred.
(2) The deduction contemplated in subarticle (1) shall still be
due notwithstanding that the relative expenditure - 
( a ) was incurred in opening or seeking to open new export
lines or ventures; or
( b ) does not achieve any export sales or increased export
sales.
(3) The total deduction due for any year of assessment to a
company under the provisions of this article shall not exceed
Lm24,000 or a sum equivalent to five per cent of the total export
sales of the company for that year, whichever sum is the higher.
(4) For the purposes of this article -
( a ) export sales shall be taken to be the monetary value of
export production calculated "free on board", or of the
services exported;
( b ) "export promotion expenditure" shall include, but not
to the exclusion of other appropriate items, expenses
incurred in:
(i) advertising or other means of securing publicity
or soliciting business;
(ii) carrying out market research or obtaining market
information;
(iii) providing free of charge samples or technical
information to a person outside Malta;
(iv) investigating, preparing designs, making
*1st January, 2002 - see Legal Notice 135 of 2001.
       BUSINESS PROMOTION [ CAP. 325.        21
estimates and similar activities connected with
tendering for the supply of goods or services;
(v) research into methods of packaging or
presenting goods for export;
(vi) participation in trade fairs outside Malta; 
(vii) cost of bringing potential buyers to Malta;
( c ) "export promotion expenditure" shall not include
salaries, wages and other similar emoluments except
where these are paid to officers or employees of a
company registered in Malta for the period or periods
in any year during which they are required to tender
their services outside Malta.
(5) With effect from such year of assessment as may be
determined by the Minister by order in the Gazette * , the provisions of
this article shall only be applicable to expenditure incurred in the year
preceding that year of assessment and in the basis years in relation to
the following three years of assessment.
Research and 
development 
allowance. 
Amended by: 
IX.1993.8;
IV. 2001.14.
Cap. 123.
12. (1) In the case of a qualifying company, other than a
company contemplated in article 3(1)( h ) of this Act, the provisions
of article 14(1)( h ) and ( i ) of the Income Tax Act, shall in any year
in which the company is entitled to a deduction thereunder as from
the year of assessment 1988 -
( a ) be deemed to allow a deduction in respect of expenses
incurred as follows in addition to any other expenses
contemplated in the said paragraphs:
(i) experimental or theoretical work aimed at the
discovery of new knowledge related to its trade
or business;
(ii) searching for applications of such work and
knowledge;
(iii) formulation and design of possible applications
for such work;
(iv) testing in search for, or evaluation of, product or
process alternatives;
(v) design, construction and testing of pre-
production prototypes and models;
(vi) design of product, processes, systems or services
involving new technology or substantially
improving those already produced or installed;
( b ) be deemed not to allow as a deduction any expenses
incurred as follows:
(i) routine design, testing and analysis of equipment
or product for the purpose of quality or quantity
control;
(ii) routine or periodic alterations to existing
products or processes;
*year of assessment 2002 - see Legal Notice 135 of 2001.
  22      CAP. 325. ]               BUSINESS PROMOTION
(iii) operational research;
(iv) legal and administrative work in connection with
patent applications, records and litigation and
the sale or licensing of patents and patent rights;
(v) any activity, including design and construction,
relating to the construction, relocation,
rearrangement or start-up facilities or equipment
other than facilities or equipment whose sole use
is for a specified and particular research or
development project;
( c ) be read and construed as if all the provisos thereto
were omitted.
Cap. 123.
(2) Deductions due under the provisions of article 14(1)( h )   or
( i ) of the Income Tax Act, as modified by the provisions of this
article, shall be allowed for the purposes of the said Act at one
hundred and twenty per cent of the actual amount of the
expenditure incurred, but the total deduction granted as aforesaid
shall not, for any year of assessment, exceed five per cent of the
turnover of the company for that year:
Provided that if the amount of the deduction is such that the
full amount thereof cannot be allowed in the year in which it is
incurred, that part which cannot be so allowed shall be added to any
deduction due in this respect for the following year and be deemed
to be part of that deduction or, if there is no such deduction for that
year, be deemed to be the deduction for that year, and so on for
subsequent years.
(3) Nothing in this article shall be considered to grant an
allowance in respect of research and development which is not
substantially carried out in Malta.
(4) With effect from such year of assessment as may be
determined by the Minister by order in the Gazette * , the provisions of
this article shall cease to have effect.
Income tax payable 
by expatriate 
employees. 
Amended by:
IV. 2001.15.
Cap. 123.
13. Where an individual who is not domiciled in Malta or who,
if so domiciled, is not ordinarily resident therein, is employed with
a qualifying company, the tax on the chargeable income of such
individual shall, as from the year of assessment commencing on lst
January, 1989, be charged at the rates contemplated by the Income
Tax Act, so however that any rate of tax in excess of 30 cents on
every lira shall be reduced to 30 cents:
Provided that the tax payable by any individual as aforesaid
shall not be less than one thousand liri (Lm1,000)  per annum ,
reduced however on a  pro rata  basis when that individual is not so
employed during the whole year:
Provided further that the amount of tax payable by any such
individual shall not be increased to more than would have been
payable by him but for the provisions of this article:
Provided further that with effect from such year of assessment
*year of assessment 2002 - see Legal Notice 135 of 2001.
       BUSINESS PROMOTION [ CAP. 325.        23
as may be determined by the Minister by order in the Gazette * , the
provisions of this article shall only apply to any remuneration paid in
the year preceding that year of assessment and in the basis years in
relation to the following four years of assessment provided that such
remuneration is paid to individuals in respect of whom this article
applied in the year preceding the year of assessment determined by the
Minister as aforesaid.
Feasibility studies.
Amended by:
IV. 2001.16.
Cap. 123.
14. Any expenses and outgoings on feasibility studies incurred
on or after lst June, 1987 by a company constituted on or after that
date shall, when such expenses or outgoings are wholly and
exclusively incurred for the purposes of a trade or business which
entitles or may entitle the company to be a qualifying company for
the purposes of this Act, and to the extent to which such expenses
and outgoings are wholly and exclusively so incurred, be deemed
for the purposes of article 14(1) and of article 26 of the Income Tax
Act, to have been incurred by that company not earlier than the first
day on which the said trade or business is carried on, and, in any
case, as being properly deductible in computing the amount of the
gains or profits arising from the trade or business for the purposes
of the said Act:
Provided that with effect from such year of assessment as may
be determined by the Minister by order in the Gazette † , the provisions
of this article shall only be applicable to expenditure incurred in the
year preceding that year of assessment and in the basis year in relation
to the following year of assessment.
Consequential 
provisions in 
respect of double 
taxation treaties. 
Amended by: 
XVII.1994.36;
XI. 1997.11;
IV. 2001.17. 
Cap. 123.
15. Where a member of a qualifying company is a resident of a
State or territory with which Malta has made an arrangement under
the provisions of the Income Tax Act for the grant of relief from
double taxation, and under that arrangement a dividend, or part
thereof, distributed by the qualifying company is subject to income
tax in Malta at a rate lower than that chargeable on the income out
of which the dividend is distributed, the company shall be entitled
to require that the gains or profits, or part thereof, derived by it for
the year of assessment 1988 and for subsequent years of assessment
and which are distributable by way of dividend subject to tax at a
reduced amount as aforesaid shall, notwithstanding that the
dividend, or part thereof has not been distributed, be taxed at the
said reduced rate and not at the rate properly chargeable under the
Income Tax Act on the gains or profits of the company:
Provided that if there is a change in the shareholding of the
company such that the new shareholders would not have been
entitled to a reduced rate of tax under any arrangement as aforesaid
or if so entitled the rate applicable in such arrangement is more
than the rate applicable to the outgoing shareholder, then any
profits which have not been distributed at the end of the last
financial year of the company preceding the date of change in
shareholding less any profit distributions made to the outgoing
shareholder in the current financial year shall be taxed at a rate
*year of assessment 2002 - see Legal Notice 135 of 2001.
†year of assessment 2002 - see Legal Notice 135 of 2001.
  24      CAP. 325. ]               BUSINESS PROMOTION
being the difference between the rate of tax which would be
applicable had the new shareholder held the shares when such
profits were earned, and the rate actually applied, and such tax shall
be a tax payable by the company in the year of assessment in which
such profits are distributed:
Provided further that where a member of a qualifying
company is also a company incorporated under Maltese Law, the
provisions of this article shall apply to the same extent as if the
members of the latter company had owned the shares directly in the
qualifying company:
Provided further that with effect from such date as may be
determined by the Minister by Order in the Gazette *  the provisions of
this article shall only be applicable to qualifying companies which
existed on the day immediately preceding that date.
PART III 
OTHER INCENTIVES
Soft loans. 
Amended by: 
IX.1993.9;
XI.1997.12;
IV. 2001.18.
16. (1) Where the Corporation is satisfied that in the case of a
qualifying company it would be consistent with the aims and
objectives of the industrial policy of the Government, the
Corporation may grant loans to the said company for the
acquisition of plant, machinery and other fixed assets, but
excluding land and buildings, in accordance with the terms and
conditions herein specified.
(2) The Corporation may grant loans as provided under
subarticle (1) of this article when -
( a ) the plant, machinery or fixed assets are acquired as
part of an investment programme of not more than
three years duration as may be approved by the
Corporation, and
( b ) such investment programme is of not less than twenty-
one thousand liri.
(3) Loans under the provisions of this article shall in no case
exceed thirty-three per cent of the projected capital investment
approved by the Corporation, but no loan shall exceed - 
( a ) Lm1,000,000 in the case of companies satisfying the
condition laid down in article 4(1)( b ) of the Act, and
( b ) Lm200,000 in all other cases.
(4) The rate of interest charged by the Corporation on loans
granted under this article shall be either:
Cap. 204.
( a ) the minimum discount rate in terms of directives
issued from time to time by the Central Bank of Malta
under the Central Bank of Malta Act, less:
*1st November, 2000 - see Legal Notice 135 of 2001.
       BUSINESS PROMOTION [ CAP. 325.        25
(i) two and a half percentage points in respect of
loans made under subarticle (3)( a ), and
(ii) half a percentage point in respect of other loans:
Provided that the provisions of paragraph ( a )(i)
shall be applied by the Corporation when the said
minimum discount rate is at an equivalent or higher
level than two and half percentage points, and the
provisions of paragraph ( a )(ii) shall only be applied by
the Corporation when the said minimum discount rate
is at an equivalent or higher level than half a
percentage point;
or
( b ) such other rate as may be prescribed by the Minister
by notice in the Gazette.
(5) The repayment of the principal as well as the payment of
interest on any loan granted under this article shall be secured by a
general hypothec over the property of the company receiving the
loan in addition to any other security which the Corporation may
require:
Cap. 16.
Provided that for the purposes of Title XXIII of Part II of
Book Second of the Civil Code, the Corporation may allow a
hypothecary debt in respect of a loan or other banking facility
granted by a financial institution situated in Malta to rank
immediately prior to the general hypothec or other security of the
Corporation relative to such loan:
Provided further that the Corporation may accept a prime
bank guarantee or other similar security in respect of its loan
instead of or in addition to a general hypothec as aforesaid. 
(6) The repayment of any loan made under this article, and of
the interest thereon, shall be made within a period and at
instalments as may be agreed with the Corporation, but such period
shall in no case exceed ten years from the date of the first loan
payment received by the company:
Provided that, unless otherwise stipulated by the
Corporation, for the first two years following the first loan payment
the company shall only pay interest on the loan. 
(7) Any loan made under this article shall be applied by the
company for only such purpose as may be authorised by the
Corporation.
(8) Where the Corporation has granted a loan to a qualifying
company under the provisions of this article it shall - 
( a ) from time to time make or cause to be made such
examination of books, documents, premises and all
other things and matters of that company whatsoever
as may be necessary to ensure that the loan is being
applied for the purpose for which it had been made;
and
( b ) request such financial statements from the company as
  26      CAP. 325. ]               BUSINESS PROMOTION
it may require, to be submitted quarterly or at shorter
intervals at the discretion of the Corporation.
(9) Where the Corporation has approved that a loan be granted
by instalments, and any part of such loan has not yet been
advanced, the Corporation, without prejudice to any other remedy,
may withhold any portion of the loan still outstanding if -
( a ) any sum of money, whether principal or interest due in
respect of any loan under this article, remains unpaid;
or
( b ) any prior loan made under this article has not been
applied for the purpose for which it was made or has
not been expended in a careful, timely and economical
manner; or
( c ) the company has gone into liquidation or has become
insolvent or has assigned property for the benefit of
creditors; or
( d ) there has been a breach or non-observance of any
condition attached to the loan.
Cap. 233.
(10) The granting of loans made under this article shall not be
subject to the provisions of the Exchange Control Act.
(11) With effect from such date as may be determined by the
Minister by order in the Gazette *  the provisions of this article and
those of article 24(1)( c ) shall only be applicable with respect to loans
granted before the said date.
Relief from 
customs duty. 
Amended by:
IX. 1993.10;
IV. 2001.19.
17. † (1) Where the Corporation is satisfied that any article is
being imported by a qualifying company -
( a ) for the construction, alteration, reconstruction or
extension of any industrial building or structure or for
any extension thereof, or for the purpose of effecting
repairs to an industrial building or structure or the
extension thereof, or constitutes equipment, tools,
machinery or plant, contained in or related to any
industrial building or structure or extension thereof, or
is intended to replace any such equipment, tools,
machinery or plant, and in all cases for the purposes of
the trade or business carried on or intended to be
carried on by the said company; or
( b ) to serve as materials, components or accessories which
are necessary for and used by or on behalf of the
company for any of the purposes referred to in article
3(1) and to be incorporated in products, 
the Corporation shall issue a certificate accordingly, and the
company shall be entitled to import the article free from customs
duty or at a reduced rate of customs duty:
 Provided that wherever it deems fit in regard to a certain
*1st November, 2000 - see Legal Notice 135 of 2001.
† this article will cease to apply on 1st May, 2004 - see Legal Notice 42 of 2004.
       BUSINESS PROMOTION [ CAP. 325.        27
type of activity the Corporation may issue a certificate of
exemption or reduction in terms of paragraph ( b ) notwithstanding
that the sale is not for export.
(2) Every company which imports into Malta any article free of
customs duty or at a reduced rate of customs duty under subarticle
(1) shall -
( a ) keep a record of the articles which it so imports in
such form and containing such particulars as may be
specified by the Comptroller of Customs (hereinafter
referred to as "the Comptroller");
( b ) cause the articles so imported to be marked in the
manner specified by the Comptroller;
( c ) permit any officer of the Comptroller at all reasonable
times to inspect the record of the articles so imported
and to have access to any premises of the company for
the purpose of examining any such articles which he
may believe to be therein and of satisfying himself of
the accuracy of the particulars in relation to such
articles in the said record.
(3) No article imported into Malta by a company free or at a
reduced rate of customs duty under the provisions of subarticle (1)
shall be sold, given away or otherwise disposed of by the company
except -
( a ) in the case of an industrial building or structure for the
construction, alteration, reconstruction, extension or
equipment of which such article was imported into
Malta:
(i) to the person for whom such industrial building
or structure was constructed; or
(ii) after payment of the amount of customs duty
which would have been payable upon the
importation of such article but for subarticle (1);
or
(iii) with the written authority of the Comptroller
after the expiration of five years from the
importation into Malta of the article if such
article has been actually used for the purpose for
which it was imported into Malta;
( b ) in the case of materials, components or accessories
imported into Malta for any purpose referred to in
article 3(1):
(i) if incorporated in the articles or commodities in
respect of which they were imported into Malta;
or 
(ii) after payment of the amount of customs duty
which would have been payable upon the
importation of such materials or components but
for subarticle (1).
  28      CAP. 325. ]               BUSINESS PROMOTION
Cap. 337.
 (4) Where any article is sold or disposed of to a qualifying
company entitled to relief from customs duty in pursuance of a
certificate issued under the provisions of this article, and the sale or
disposal of such article to the company takes place under
circumstances which, but for the operation of this article, would
cause such article to be deemed to be taken out of bond and duty to
become payable thereon by the company in accordance with any of
the provisions of the Import Duties Act, such article shall (to the
extent only that the company would have been entitled to relief
from customs duty in respect thereof as aforesaid if it had imported
that article at the time of its sale or disposal to it in Malta) be
deemed to be imported by the company at the time at which such
article is sold or disposed of to it.
(5) The provisions of this article and those of article 24(1)( a ) shall
cease to apply on the lapse of ninety days, or such longer period as the
Minister may determine, from the publication of an order in the
Gazette to that effect by the Minister.
Provision of 
factories, etc. 
Amended by: 
IX.1993.11;
XI.1997.13;
IV. 2001.20.
18. (1) Subject to the provisions of subarticle (4), the
Corporation may, consistently with the aims and objectives of the
industrial policy of the Government, procure for a qualifying
company industrial buildings and structures at the following rent:
( a ) Lm1.75  per annum  per square metre for the first three
years of the lease;
( b ) at a rate which shall not exceed Lm4 per square metre
per annum  for the next thirteen years of the lease;
Cap. 158.
( c ) thereafter at the rate determined under the preceding
paragraph which rate, however, shall be adjusted
immediately, and subsequently every five years, to
take account of movements in the index of inflation
contemplated in the Schedule to the Housing
(Decontrol) Ordinance between the first year of the
lease and the date on which every such adjustment is
effected.
(2) Subject to the provisions of subarticle (4), the Corporation
may, consistently with the aims and objectives of the industrial
policy of the Government, procure for a qualifying company, land
on the following terms:
( a ) in the case of land adjoining an industrial building or
structure, by title of lease and the rent payable shall
be-
(i) 23 cents per square metre  per annum  for the first
sixteen years of the lease;
(ii) thereafter at a rate which shall be adjusted
immediately, and subsequently every five years,
to take account of movements in the aforesaid
index of inflation between the first year of the
lease and the date on which every such
adjustment is effected;
( b ) in the case of land which is made available by the
       BUSINESS PROMOTION [ CAP. 325.        29
Corporation in an undeveloped state, the land shall be
granted by title of temporary emphyteusis for a
minimum consideration of 23 cents per square metre
per annum  which shall be revised every twenty-five
years (whether the concession is subsequently
extended or not) to take account of movements in the
said index of inflation as from the date of the grant.
(3) The Corporation may in any particular case provide
industrial buildings and structures constructed according to the
requirements of a qualifying company, or make alterations to
existing buildings and structures, on such terms as the Corporation
may agree with the company.
(4) The Minister may from time to time, by notice in the
Gazette, vary the rates and the method of revision of such rates
established in subarticles (1) and (2).
Cap. 294.
payable under the Duty on Documents Act *  in respect of any deed
or other instrument whereby any land is transferred pursuant to the
provisions of this article.
(6) The Corporation may also procure for a qualifying
company industrial buildings and structures by title of temporary
emphyteusis or undeveloped land by title of lease at such terms and
conditions as may be prescribed by the Minister from time to time.
(7)  Without prejudice to the terms of any agreement then
subsistent, with effect from such date as may be determined by the
Minister by order in the Gazette † , the consideration contemplated in
this article shall no longer apply and the rentals to be charged by the
Corporation for the lease of immovable property as contemplated by
this article, shall be determined by the Corporation.
Child day care 
centres. 
Added by: 
XI. 1997.14.
Amended by:
IV. 2001.21.
18A. (1) The Corporation may, consistently with the aims and
objectives of the industrial policy of the Government, grant on
lease to a qualifying company, on its own or jointly with other
qualifying companies, a structure or building to be used as a child
day care centre for the benefit of parent-employees of such a
qualifying company, other qualifying companies or service
providers in government industrial estates as may be approved by
the Corporation in accordance with the terms and conditions herein
specified:
( a ) no rent shall be charged for the first three years of the
lease;
( b ) thereafter an annual rent shall be charged at a rate per
square metre which shall not exceed 25  per   centum  of
the rent per square metre per annum charged for the
factory allocated in accordance with article 18;
( c ) the Corporation may also provide free of charge a
design package which shall include detailed lay-out
*Repealed by Act XVII of 1993.  See  the Duty on Documents and Transfers Act (Cap.
364).
†22nd March, 2001 - see Legal Notice 135 of 2001.
  30      CAP. 325. ]               BUSINESS PROMOTION
plans, lists of furniture and equipment required for the
centre and specifications for air conditioning,
ventilation and sanitary facilities;
( d ) the Corporation may also finance the cost of the
setting up of such a centre up to a maximum of 50  per
centum  of the total cost, excluding the costs for the air
conditioning and ventilation, which may be financed
by the Corporation up to a maximum rate of 25  per
centum  of the total cost.
(2) The Corporation may, consistently with the aims and
objectives of the industrial policy of the Government, allow a
qualifying company to use a portion of an industrial structure or
building procured for such company in accordance with article 18
of this Act, as a child day care centre for the benefit of parent-
employees of such a qualifying company or other qualifying
companies, or parent-employees of service providers in
government industrial estates subject to the same terms and
conditions contemplated under subarticle (1)( a ), ( b ), ( c ) and ( d ).
(3) A qualifying company which sets up a child day care centre
in a structure or building which is held by such company in full
ownership, on emphyteusis or lease from third parties, may be
granted by the Corporation the same benefits and assistance as
provided in subarticle (1)( c ) and ( d ).
(4) The Corporation may also provide the following assistance
to qualifying companies setting up child day care centres in
accordance with the provisions of subarticle (1), subarticle (2) or
subarticle (3):
( a ) the financing of up to a maximum of 50  per   centum  of
the approved recurrent costs for child care at such a
centre, provided that the parent-employees may not be
charged more than a maximum sum per year as may be
determined by the Corporation;
( b ) the financing of approved initial and refresher training
costs of suitably qualified staff.
(5) A qualifying company which sets up a child day care centre
in accordance with subarticle (1), subarticle (2) or subarticle (3),
may be allowed by the Corporation to enter into agreements with
other qualifying companies or with service providers in
government industrial estates regarding vacancies in such a centre.
(6) The Corporation may, in its discretion grant to a qualifying
company operating a child day care centre in accordance with the
provisions of subarticles (1), (2) or (3) relief from customs duty as
provided in article 17 regarding furniture or equipment to be used
in such a centre.
(7) The Corporation may in granting any assistance in
accordance with the provisions of this article, impose any
conditions it may deem fit regarding the fees which may be charged
for such child day care service on the parent-employees.
(8) The Minister may from time to time, by regulations, vary the
       BUSINESS PROMOTION [ CAP. 325.        31
conditions and rates set out in this article.
Training grants. 
Amended by:
IX. 1993.12;
IV. 2001.22.
19. (1) Where the Corporation is satisfied that any employee
engaged by a qualifying company on or after 1st June, 1987 is a
full-time employee engaged for an indefinite period, and that such
employee is undergoing training related to the activities of the
company in accordance with a training programme approved by the
Corporation, a training grant may be given by the Corporation to
the company equivalent to one-half of the statutory weekly
minimum wage for every week of actual training undergone by
each such employee up to a maximum of forty-eight weeks.
(2) Where the Corporation is satisfied that, on or after 1st
January, 1993, a full-time employee who has been employed in a
supervisory or higher capacity by the company for at least three
years undergoes a training programme leading to a certificate in
instruction or training skills approved by the Corporation in
advance and related to the activities of the company, a training
grant may be given by the Corporation to the company equivalent
to one-half of the actual tuition fees incurred by the company.
(3) Where the Corporation is satisfied that, on or after 1st
January, 1993, a full-time employee engaged for an indefinite
period by a qualifying company undergoes a training programme in
order to acquire new skills required by the company due to the
introduction of new technology or methods of production and such
training programme has been approved by the Corporation in
advance, a training grant may be given by the Corporation to the
company equivalent to one-half the statutory weekly minimum
wage for every week of actual training undergone by such
employee up to a maximum of forty-eight weeks:
Provided that the company shall qualify for such grant only
in respect of employees who have not benefited from this scheme
during the two years preceding the year in respect of which such
grant shall be paid.
(4) Where the Corporation is satisfied that, on or after 1st
January, 1993, a full-time management employee who has been so
engaged by a qualifying company for at least three years and is
either qualified in a specific management or technical area or has
not less than three years managerial or technical experience,
undergoes a course in management development training or a
technical upgrading course which has been approved by the
Corporation in advance, a training grant may be given by the
Corporation to the company equivalent to one-half of the actual
tuition fees incurred by the company.
(5) Where the Corporation is satisfied that, on or after 1st
January, 1993, a full-time employee employed by a qualifying
company for an indefinite period undergoes a training programme
which is necessary in view of a complete change in his employment
within the company, which programme has been approved by the
Corporation in advance, a training grant may be given by the
Corporation to the company equivalent to one-half of the statutory
weekly minimum wage for every week of actual training undergone
by such employee up to a maximum of forty-eight weeks.
  32      CAP. 325. ]               BUSINESS PROMOTION
(6) Where the Corporation is satisfied that any trainee in
respect of whom a grant is paid under the provisions of this article
is a handicapped person, the Corporation may, in its discretion,
increase the grant in respect of the said trainee to three quarters of
the statutory weekly minimum wage or of the actual tuition fees, as
the case may be.
Cap. 123.
(7) A training grant received by a company under this article
shall not constitute a taxable receipt under the Income Tax Act.
(8) As from such date as may be determined by the Minister by
order in the Gazette * , the provisions of this article shall only be
applicable to training programmes which were approved by the
Corporation prior to that date.
Management 
services grants.
Amended by:
IX.1993.13;
IV. 2001.23.
20. (1) Where a qualifying company which is a Maltese
company with an actual or foreseen total sales revenue not
exceeding Lm600,000 in its latest or actual financial year satisfies
the Corporation that it may enhance its potential for development
by employing qualified personnel to perform administrative,
technical, marketing or financial functions, or by engaging
consultants to carry out such functions, in accordance with a three-
year plan submitted for the Corporation’s approval, the Corporation
may reimburse twenty-five per cent of the emoluments or fees
disbursed by the company in any year for such personnel or
consultants for a period of three years, so however that the
reimbursement shall not exceed Lm5,000 in any year.
(2) No reimbursement under the provisions of this article shall
be made in respect of emoluments or fees paid or payable to any
person who is in any way, whether directly or indirectly, closely
connected or related to any member of the qualifying company. 
Cap. 123.
(3) The reimbursement received by the company under this
article shall not constitute a taxable receipt under the Income Tax
Act.
(4) As from such date as may be determined by the Minister by
order in the Gazette † , the provisions of this article shall only be
applicable with respect to grants approved by the Corporation prior to
that date.
Exemption from 
death and donation 
duty.
Cap. 239.
21. (1) Notwithstanding anything contained in the Death and
Donation Duty Act ‡ , no duty shall be payable thereunder in respect
of any interest in a qualifying company possessed by any person
when -
( a ) such interest is comprised in a chargeable transmission
happening on or after 1st June, 1987, and
( b ) the former owner thereof before the happening of the
chargeable transmission and new owner after its
happening are both persons not domiciled in Malta,
and
*1st January, 2002 - see Legal Notice 135 of 2001.
†1st January, 2002 - see Legal Notice 135 of 2001.
‡Repealed by Act XVI of 1993.
       BUSINESS PROMOTION [ CAP. 325.        33
( c ) the interest is an interest to which the provisions of
this article apply.
(2) The provisions of this article apply to an interest in a
qualifying company being - 
( a ) shares thereof;
( b ) any dividend distributed or due to be distributed by the
said company;
( c ) any money loaned or advanced to the company, and
any other credit whatsoever, irrespective of the way in
which the loan or advance has been made, or has
resulted, and the security granted therefor;
( d ) any interest on money or other income paid or due to
be paid by the company before the happening of the
chargeable transmission.
Expatriate 
employees.
Cap. 217.
22. (1) The Corporation may certify that an individual who is
not an exempt person under the Immigration Act would, if granted
a licence under the said Act to be employed by a qualifying
company, contribute towards the industrial development of Malta
through his technical or managerial knowledge and experience.
(2) Where an individual in respect of whom a certificate has
been issued under subarticle (1) occupies a senior managerial or
technical position or office, if the relative company employs such
individual for an extended period, it shall satisfy the Corporation
that adequate arrangements are concurrently being made by it to
enable another individual of Maltese citizenship to acquire such
knowledge and experience as will enable him in due course to
occupy the said position or office.
Cap. 217.
(3) Subject to endorsement by the Corporation, where a person
who is not domiciled or ordinarily resident in Malta holds forty per
cent or more of the shares of a qualifying company, such person
shall be entitled to require that one individual named by him shall,
subject to the provisions of the Immigration Act, be granted a
licence under that Act to be employed by the company in Malta.
Industry in Gozo.
Amended by:
IX. 1993.14;
IV. 2001.24.
23. (1) The provisions of this article shall apply in the case of
any qualifying company where the Corporation is satisfied that all
or part of the activities of the company (hereinafter referred to as
"Gozo company") are being carried on or carried out in Gozo. 
(2) The Corporation shall give a grant to a Gozo company to
cover the actual, additional and necessary transport costs incurred
by the company in transporting:
( a ) between Malta and Gozo machinery, plant, materials,
goods or products connected with its activities in Gozo
related to export;
( b ) from Malta to Gozo material connected with its
activities in Gozo whether such activities are related to
export or not.
(3) Where a Gozo company satisfies the condition laid down in
  34      CAP. 325. ]               BUSINESS PROMOTION
article 4(1)( b ), the Corporation shall give a grant to the company to
cover the actual, additional and necessary costs incurred by the
company to accommodate in Gozo persons who are not ordinarily
resident in Gozo and who occupy senior managerial or technical
positions, which grant shall be limited to a period of three
consecutive years:
 Provided that the grant shall not exceed Lm1,500  per annum
in respect of any single employee nor Lm5,000 to the company in
any one year.
(4) The maximum period in respect of which a training grant
may be given under the provisions of article 19 shall be extended to
three years in the case of an employee of a Gozo company
undergoing training if such employee was ordinarily resident in
Gozo for a period of not less than one year immediately before the
commencement of his training.
Cap. 123.
(5) Grants received by a Gozo company under this article shall
not constitute taxable receipts under the Income Tax Act.
(6) With effect from such date as may be determined by the
Minister by order in the Gazette * :
( a ) subarticle (2)( a ) shall be applicable to all activities
whether or not these are related to export;
( b ) subarticle (3) shall apply without the requirement of
the qualifying company to satisfy the conditions of
article 4(1)( b ); and
( c ) subarticle (4) shall only apply to training programmes
approved by the Corporation prior to that date.
S mall enterprises.
Substituted by:
IX. 1993.15;
XI. 1997.15.
Amended by:
IV. 2001.25.
24. (1) Subject to the provisions of article 16(11) and those of
article 17(5), the Corporation may, at its discretion, grant to   a small
enterprise:
( a ) † relief from customs duty as provided in article 17;
( b ) industrial buildings, structures and land on such
conditions as the Corporation may from time to time
determine;
( c ) soft loans as provided in article 16; or
( d ) any other incentive or benefit as would be consistent
with the aims and objectives of the industrial policy of
the Government, as may be prescribed by the Minister
by notice in the Gazette.
(2) In subarticle (1) of this article "small enterprise" means a
person or a company constituted under Maltese Law which:
( a ) carries on or carries out a trade or business
contemplated under article 3(1)( a ) to ( h ) or such other
trade or business as the Minister may prescribe by
notice in the Gazette; and
*1st November, 2000, as regards paragraphs ( a ) and ( b ), and 1st January, 2002, as
regards paragraph ( c ) - see Legal Notice 135 of 2001.
† this paragraph will cease to apply on 1st May, 2004 - see Legal Notice 42 of 2004.
       BUSINESS PROMOTION [ CAP. 325.        35
( b ) qualifies as a small enterprise in accordance with
regulations prescribed by the Minister in terms of this
Act.
Soft loans in 
connection with 
energy and water 
conservation.
Added by: 
XI. 1997.16.
Amended by:
IV. 2001.26.
24A. (1) Where the Corporation is satisfied that in the case of a
qualifying company or of a company which carries on or carries
out, in Malta, a trade or business consisting mainly of the operation
or management of a hotel or group of hotels, it would be consistent
with the aims and objectives of the policy of the Government
regarding energy and water conservation, the Corporation may
grant loans to the said company for the acquisition of related plant,
equipment, machinery and other fixed assets, but excluding land,
and for the financing of the necessary civil engineering and
infrastructural works, in accordance with the terms and conditions
herein specified.
(2) The Corporation may grant loans as provided under
subarticle (1) when the plant, equipment, machinery or fixed assets
are acquired as part of an investment programme for the
conservation of energy or water as may be approved by the
Corporation.
(3) Loans under the provisions of this article shall in no case
exceed thirty-three per cent of the projected investment programme
for the conservation of energy or water as approved by the
Corporation, but no loan shall exceed Lm200,000 or such other
amount as may be prescribed.
Cap. 204.
(4) The rate of interest charged by the Corporation on loans
granted under this article shall be the minimum discount rate in
terms of directives issued from time to time by the Central Bank of
Malta under the Central Bank of Malta Act, less two and a half
percentage points:
Provided that the provisions of this subarticle may only be
applied by the Corporation when the said minimum discount rate is
at an equivalent or higher level than two and half percentage points.
(5) The provisions of article 16(4), (5), (6), (7), (8), (9) and (10)
shall apply  mutatis mutandis  to loans granted by the Corporation
under the provisions of this article.
(6) With effect from such date as may be determined by the
Minister by order in the Gazette * , this article shall apply to all
enterprises.
Reduced rates of 
tax for upgrading, 
refurbishing or 
renovation of a 
hotel.
Added by: 
XI. 1997.16.
Amended by:
IV. 2001.27.
24B. (1) Where it appears to the Corporation in the case of a
company which carries on or carries out, in Malta, a trade or
business consisting mainly of the operation or management of a
hotel or group of hotels, that the gains or profits or part thereof
derived by that company from its trade or business or part thereof
in the year of assessment commencing on 1st January, 1997, or in
subsequent years of assessment, have been set aside for the
exclusive purpose of financing a project for the upgrading,
refurbishing or renovation of a hotel or hotels owned, operated or
*1st November, 2000 - see Legal Notice 135 of 2001.
  36      CAP. 325. ]               BUSINESS PROMOTION
managed by such a company and as shall have been approved by
the Corporation, and that the gains or profits or part thereof have in
fact been used for the purposes for which they were set aside, the
Corporation shall issue to such company a certificate showing
compliance and thereupon the rate of income tax charegeable on
the gains or profits or part thereof so used shall be reduced by
seventeen and a half percentage points, or such higher percentage
as the Minister may prescribe, and in any such case the tax
chargeable shall be assessed, or reassessed and where necessary
refunded, as the case may require.
(2) The provisions of article 6(2) shall apply  mutatis mutandis
to   companies qualifying for assistance under the provisions of
subarticle (1).
(3) The Minister may by regulations prescribe rules and
conditions for the application of the benefit provided by this article.
Financial 
assistance.
Added by:
IV. 2001.28.
24C. Where the Minister, on the recommendation of the
Corporation, is satisfied that a project to be undertaken by an
enterprise may make a substantial contribution to the development of
the economy as is consistent with the aims and objectives of the
Government, the Minister may, after consultation with the Corporation
as may be necessary, approve that a grant be given by the Corporation
to such an enterprise subject to such conditions as the Corporation or
the Minister may impose.
PART IV
GUARANTEE OF INCENTIVES
Guarantee of 
incentives.
Amended by:
XI. 1997.17.
25. (1) Where after the coming into force of this Act a
qualifying company or its members or employees are entitled to an
incentive or benefit under any of the following provisions, there
shall be deemed to have come into existence a contract between the
company or its members or employees and the Government, or the
Corporation, as the case may be, guaranteeing the grant and
enjoyment of the relative incentive or benefit in accordance with
the provisions of this Act as hereunder indicated:
( a ) the incentives and benefits contemplated under articles
4, 5, 7, 8, 11, 12 and 14 when and as soon as the
company becomes entitled to a benefit thereunder for
any year of assessment;
( b ) exemption from tax on dividends under article 9;
( c ) the rate of tax chargeable in respect of an expatriate
employee under article 13 when and as soon as the
employee becomes so chargeable;
( d ) gains or profits contemplated in article 15 for as long
as the relative arrangement is still in force;
( e ) exemption from duty under article 21; and
( f ) grants due to a Gozo company in accordance with the
provisions of article 23(2) and (3).
       BUSINESS PROMOTION [ CAP. 325.        37
(2) Where any incentive or benefit contemplated under the
provisions of this Act is not due as of right to a qualifying company
or other beneficiary but depends on the use of discretion vested in
the Corporation, the use of such discretion in favour of a
beneficiary shall constitute a contract between the beneficiary and
the Government, or the Corporation, as the case may be,
guaranteeing the grant and enjoyment of the incentive or benefit in
accordance with the provisions of this Act.
(3) Without prejudice to any other proof available to a
qualifying company, a certificate released by the Corporation to the
effect that a trade or business carried on or carried out, or intended
to be carried on or carried out, by the company does not consist
solely or mainly in the mere expansion, duplication or replacement
of a trade or business formerly carried on or carried out in Malta by
any person directly or indirectly connected with the said company,
shall be conclusive evidence to this effect for the purposes of
article 4(1)( c ). A certificate to like effect may also be issued by the
Corporation for the purpose of determining any question arising
under the provisions of subarticle (3)( a ) of the said article.
(4) Notwithstanding any other provision of this Act, in
releasing a certificate in accordance with the provisions of
subarticle (3), the Corporation may impose any conditions it may
deem fit including a reduction in the term of the tax holiday
contemplated by article 4.
(5) The Corporation may at its discretion issue a certificate
exempting a qualifying company from the requirements of article
4(1)( c ) under such terms and conditions it may deem fit to impose
where:
( a ) the company is a joint venture between an existing
qualifying Maltese company or companies (in this
subarticle referred to as "the first partner company")
and a company which carries on its trade or business
outside Malta (in this subarticle referred to as "the
second partner company") and which, if it were not for
the said joint venture, would satisfy the conditions
established in article 4(1)( c ); and
( b ) the second partner company holds at least 20% of the
ordinary and voting share capital of the joint venture
company; and
( c ) the Corporation is satisfied that the second partner
company would bring into the joint venture company
innovative technology, new production processes or
access to new foreign markets.
(6) The guarantees given by this article shall not be nullified by
any retrospective action, whether by legislation or otherwise.
(7) The provisions of this article shall be without prejudice to
the controlling and regulatory provisions laid down in this Act and
to the powers of the President of Malta under article 26.
Powers of the 
President of Malta.
26. No incentive or benefit contemplated by this Act shall be
  38      CAP. 325. ]               BUSINESS PROMOTION
enjoyed by any qualifying company or other beneficiary for any
year or year of assessment if the President of Malta by order in
writing declares that the grant or acquisition or continued grant and
acquisition of such incentive or benefit is or would be against
public policy ( ordre public ), and where such an order is made it
shall have effect as from the date therein specified but in no case
shall an order have retrospective effect.
Revocation of 
incentives or 
benefits.
27. (1) Where a qualifying company or other beneficiary fails
to comply or cause compliance with any of the conditions attached
to the grant of any incentive or benefit by the Corporation under
this Act, the Corporation may either revoke the incentive or benefit
or by notice in writing require such company or other beneficiary
within thirty days of the receipt of such notice -
( a ) to comply or cause compliance with such conditions;
or
( b ) to establish to the satisfaction of the Corporation that
failure to comply or cause compliance with such
conditions was due to some cause beyond its control
and that there are actual prospects of complying or
causing compliance with such condition within such
time as the Corporation may consider reasonable.
(2) Where a qualifying company or other beneficiary
establishes to the satisfaction of the Corporation that failure to
comply or cause compliance with any conditions attached to the
grant of any incentive or benefit under this Act was due to some
cause beyond its control, and that there are actual prospects of
complying or causing compliance with such conditions within a
reasonable time, the Corporation may authorise reasonable
postponement for the purpose of compliance with such conditions,
as it thinks fit.
(3) Where a qualifying company or other beneficiary:
( a ) having been required so to do by notice under
subarticle (1) of this article, fails to establish to the
satisfaction of the Corporation that its failure to
comply or cause compliance with any conditions
attached to the grant of any incentive or benefit was
due to some cause beyond its control and that there are
actual prospects of complying or causing compliance
with such conditions within a reasonable time; or
( b ) having been allowed a postponement under subarticle
(2) of this article, fails within the period of such
postponement to comply or cause compliance with
such conditions,
the Corporation may revoke any incentive or benefit granted to the
company or other beneficiary under this Act, and that revocation
shall be operative from such date as may be determined by the
Corporation.
(4) Where the grant of any incentive or benefit under this Act is
revoked in accordance with the provisions of this article, the
relative company or other beneficiary shall pay or repay to the
       BUSINESS PROMOTION [ CAP. 325.        39
Government or to the Corporation, as the case may be, any sums
which it would have paid to the Government or the Corporation but
for the provisions of this Act or which it had received thereunder,
and any sums which the company or other beneficiary is so liable to
pay or repay may be set off against any sums which may be due
from the Government or the Corporation to the company or other
beneficiary for any reason whatsoever, without prejudice to any
right of the Government or the Corporation for the recovery of any
balance remaining due.
(5) The provisions of this article shall only apply where the
grant of an incentive or benefit under this Act depends on the use of
discretion vested in the Corporation.
(6) In all cases of revocation under the provisions of this
article, an appeal shall lie by the aggrieved party to the Appeals
Board constituted under article 28.
Establishment of 
Appeals Board.
28. (1) There shall be an Appeals Board, hereinafter referred
to as "the Board", which shall have exclusive jurisdiction to hear
and determine appeals in accordance with the provisions of article
30. The Board shall consist of a Chairman and two other members,
appointed by the Prime Minister from among persons who, in his
opinion, are conversant with the matters contemplated by this Act.
(2) A person shall be disqualified from being appointed to or
from continuing to be a member of the Board so long as he is a
member of the House of Representatives, or a public officer.
(3) Every person appointed to be a member of the Board shall,
before entering upon his office, make and subscribe a declaration
on oath in the form prescribed to that effect before a Commissioner
for Oaths which shall be deposited with the Attorney General.
(4) Subject to the provisions of this article, the office of a
member of the Board shall become vacant -
( a ) at the expiration of five years from the date of
appointment to that office; or
( b ) upon the resignation or death of a member before the
expiration of his term of office; or
( c ) upon the removal from office of the member by the
Prime Minister for inability to discharge the functions
of his office, whether arising from infirmity of mind or
body or for any other cause, or for misbehaviour.
(5) Any member of the Board may be challenged or shall
abstain in the same circumstances as a judge of the superior courts,
and in any such case the Prime Minister shall appoint in his stead
another person who is qualified to be a member for the particular
case in respect of which the member has been challenged or has
abstained.
(6) When the office of a member of the Board is vacant or
when a member is for any reason unable to perform the functions of
his office, the Prime Minister shall appoint a person who is
qualified to be appointed to be a member, to be a temporary
  40      CAP. 325. ]               BUSINESS PROMOTION
member of the Board; and any person so appointed shall, subject to
the provisions of subarticles (4) and (5), cease to be such a member
when a person has been appointed to fill the vacancy or, as the case
may be, when the member who was unable to perform the functions
of his office resumes those functions.
(7) The members of the Board shall not be personally liable for
any acts or defaults of the Board done or omitted to be done in good
faith in the course of the proceedings of the Board.
(8) There shall be a secretary to the Board who shall be a
public officer designated by the Prime Minister to perform the
functions of secretary. The Board shall also have such other staff as
the Prime Minister may deem necessary and designated as
aforesaid.
(9) The members of the Board shall receive such remuneration
as the Prime Minister may determine.
(10) The Minister may make regulations governing appeals to
the Board and, without prejudice to the generality of the foregoing,
may make regulations -
( a ) prescribing the manner in which an appeal shall be
made to the Board;
( b ) prescribing the procedure to be adopted by the Board
in hearing an appeal and the records to be kept by the
Board;
( c )   prescribing the manner in which the Board shall be
convened and the places where and the times at which
the Board shall hold sittings;
( d ) prescribing fees to be paid in respect of appeals to the
Board; and
( e ) generally for the carrying out of the provisions of this
Act relating to the Board.
Summoning of 
witnesses and 
administration of 
oath.
29. (1) The Board shall have power, exercisable through its
Chairman - 
( a ) to summon witnesses;
( b ) to administer an oath to any witness and to require him to
give evidence or to produce books or other documents before it.
 (2) A summons may be served either by hand or by post. Where
it is served by hand it shall be sufficient to prove service by
evidence that the summons was left with a person over the age of
16 years at the place of residence or of business of the person
summoned; and if served by post it shall be sufficient to prove
service by evidence that the summons was properly addressed and
posted.
(3) Any person summoned as aforesaid who refuses, or without
sufficient cause fails, to attend at the time and place mentioned in
the summons, or refuses, without sufficient cause, to answer or to
answer fully and satisfactorily, to the best of his knowledge and
belief, all questions put to him by or with the concurrence of the
       BUSINESS PROMOTION [ CAP. 325.        41
Board, or refuses or fails, without sufficient cause, to produce any
document he was required to produce by or with the concurrence of
the Board, shall be guilty of an offence against this Act:
Provided that, without prejudice to the generality of the
provisions of subarticle (1)( b ), no person giving evidence before
the Board may be compelled to answer any question which tends to
expose him to any criminal prosecution, and every such person
shall, in respect of any evidence given by him before the Board, be
entitled to the same privileges to which a witness giving evidence
before a court of law is entitled.
Appeals to the 
Board.
30. (1) Subject to the provisions of subarticle (2), a qualifying
company or other beneficiary aggrieved by any decision taken in
respect of any matter falling under or contemplated by the
provisions of this Act shall have the right to appeal against that
decision before the Board.
(2) Saving the provisions of article 27(6), subarticle (1) shall
not apply to any decision taken by the President of Malta, the
Minister, or the Corporation, as the case may be, in the exercise of
discretionary power.
(3) The provisions of this article shall be without prejudice to
the proceedings contemplated in -
Cap. 123.
Cap. 239.
Act * :
Provided that any issue decided under this article in respect
of any matter contemplated under this Act shall, saving the
provisions of article 31, be final and conclusive.
(4) Appeals to the Board shall be heard  in camera  unless the
Board, on the application of both contending parties, otherwise
directs.
(5) The Board may order the correction of any arithmetical
error incurred in any of its decisions on an application filed by
either party within thirty days from the date of service upon it of
that decision, and such application shall be served on the other
party.
Appeals to Court 
of Appeal.
Amended by:
VI. 2001.18.
31. (1) An appeal from a decision of the Board may be made
by either party, on a question of law only, to the Court of Appeal
(Inferior Jurisdiction) by an application filed within thirty days
from the date of service upon it of the decision of the Board, and
such application shall be served on the other party.
(2) Unless rules made hereunder provide a longer period, seven
clear days’ notice shall be given to the parties of the date fixed for
the hearing of an appeal made to the Court of Appeal.
(3) All appeals to the Court of Appeal shall be heard  in camera
unless the Court, on the application of both contending parties,
*Repealed by Act XVI of 1993. 
  42      CAP. 325. ]               BUSINESS PROMOTION
otherwise directs.
Cap. 12. (4) The Board established under article 29 of the Code of
Organization and Civil Procedure may make rules concerning
appeals to the Court of Appeal under this article.
(5) The Minister responsible for justice may by regulations
under this article establish the fees payable in the registry of the
courts relative to the filing of judicial acts in connection with
appeals to the Court of Appeal (Inferior Jurisdiction) under this
Act:
Cap.12.
    Provided that until such fees are so established by the
Minister, the fees contained in Schedule A to the Code of
Organization and Civil Procedure shall apply.
(6) The Chairman of the Corporation shall as soon as may be
publish the decisions delivered by the Board and by the Court of
Appeal without, however, disclosing the identity of any person.
PART V
GENERAL PROVISIONS
Effect on other 
laws.
32. Nothing contained in this Act shall affect the provisions of
any other law whatsoever except to the extent solely that the
provisions of this Act replace or supersede the provisions of that
law, and no incentive, exemption, reduction of taxation or other
benefit or privilege provided for under the provisions of this Act
shall modify any obligation to furnish returns, statements,
particulars or documents as may be required by any other law.
Official secrecy. 33. (1) Save as may be otherwise required for the purposes of
this Act, or in the course of a prosecution for any offence
committed in relation to this Act, or where the Prime Minister
otherwise directs -
( a ) every person having an official duty or being
employed in the administration of this Act shall regard
and deal with all documents and information relating
to matters contemplated by or pursuant to the
provisions of this Act as secret and confidential and
shall make and subscribe before a Commissioner for
Oaths a declaration on oath to this effect in the form
prescribed which shall be deposited with the Attorney
General;
( b ) no such person shall be required to produce to or
before any court, tribunal, Board, committee of
enquiry or any other authority, or to divulge to any
court, tribunal, Board, committee or other authority,
any matter or thing coming to his notice or being in his
possession in the performance of his duties under this
Act.
(2) Notwithstanding the provisions of subarticle (1), the
       BUSINESS PROMOTION [ CAP. 325.        43
auditor of the Corporation shall have access to any records and
documents as may be necessary for the performance of his duties.
Cumulative 
incentives and 
choice.
Amended by:
XI. 1997.18;
IV. 2001.29.
34. (1) A qualifying company or other beneficiary may be
granted and obtain more than one form of incentive or benefit
under this Act.
 (2) A qualifying company or other beneficiary may, at any
time, by notice in writing, elect not to be granted or to take any
incentive or benefit otherwise due to it under the provisions of this
Act. Such notice shall specify the date from which its election shall
be operative, which date shall invariably be the first day of a year,
or of a year of assessment or of any other financial period, and shall
be irrevocable and indefinite in respect of the matters on account of
which it has been made:
Cap. 159.
Provided that, notwithstanding anything contained in article
61(1), a qualifying company which so elects not to be granted or to
take any incentive or benefit otherwise due to it under the
provisions of this Act, shall not be precluded from being granted
any incentive or benefit of a similar nature granted under the
provisions of the Aids to Industries Ordinance.
Records and 
certification.
Amended by:
XI. 1997.19.
35. (1) No incentive or benefit which may be granted or
obtained under this Act shall be so granted or obtained, and no
entitlement thereto shall exist notwithstanding anything contained
in this Act unless -
( a ) proper and sufficient records and accounts, including
appropriate supporting documentation, have been
maintained for the relative year, year of assessment or
accounting period, as the case may be, by the
qualifying company otherwise entitled to the incentive
or benefit or in relation to which such entitlement
arises; 
( b ) separate accounts have been kept as may be necessary
to identify and quantify the incentive or benefit;
( c ) such computations, returns, statements, particulars or
documents as may be necessary to establish clearly the
entitlement to the incentive or benefit are submitted to
the appropriate authority.
Cap. 168.
Cap. 386.
(2) A qualifying company shall not be entitled to any incentive
or benefit contemplated under the provisions of this Act unless its
annual financial statements, and in the case of a company not
incorporated under Maltese Law the annual financial statements of
its operations in Malta, are audited by a certified public accountant
and auditor in accordance with the provisions of the Commercial
Partnerships Ordinance *  or the Companies Act, as applicable,
whether or not such audit is required under the said Ordinance or
Act and unless all other statements, accounts or documents
submitted for the purpose of acquiring any such incentive or benefit
are also certified by a certified public accountant and auditor to the
*Repealed by Act XXV of 1995 (Chapter 386).
  44      CAP. 325. ]               BUSINESS PROMOTION
same effect that the company’s financial statements are to be
certified under the provisions of the said Ordinance or Act as
aforesaid.
Certain reserve 
funds. 
Amended by: 
IX.1993.16;
IX.1997.20;
IV. 2001.30.
36. (1) A qualifying company in receipt of any of the
incentives and benefits indicated in subarticle (4) shall, at the end
of the accounting period during which the incentive or benefit
stands to be accounted for, transfer to and show in its balance sheet
as on the said date a reserve to be called the "Incentives and
Benefits Reserve" in a sum equal to the amounts therein specified.
This reserve shall show separately any amounts transferred under
subarticle (4)( a ) and any amounts transferred under subarticle
(4)( b ).
(2) The amounts to be transferred to the Incentives and Benefits
Reserve, as provided for by subarticle (1), shall be so transferred from
profits which, but for the provisions of this article, would otherwise be
available for distribution under the laws for the time being in force in
Malta, and where at the end of any accounting period there are
insufficient distributable profits to enable the transfer to the said
reserve of the full amount which should be transferred in accordance
with subarticle (1), the obligation to transfer any amount which could
not be so transferred shall be carried forward to the subsequent
accounting period and deemed to be an obligation for that period, and
so on for subsequent periods.
(3) A reserve created under the provisions of subarticle (1)
shall, except as otherwise provided for in this article, be retained
separately in the balance sheet of the company and shall not be
distributable or convertible into share capital of the company. The
said reserve shall also not be reduced to take account of any losses
incurred by the company, whether such losses are of an ordinary or
extraordinary nature, or capital or revenue in character:
Provided that, notwithstanding anything in this subarticle,
any amount transferred to the Incentives and Benefits Reserve
under subarticle (4)( a ) may, after the lapse of eight years from the
end of the approved investment period, be applied by the company
in paying up unissued shares of the company to be allotted to
members of the company as fully paid bonus shares. Such
distribution shall not be chargeable to tax.
(4) The incentives and benefits referred to in subarticle (1) are
the following:
( a ) the net amount of the profits subject to income tax at a
reduced rate under the provisions of article 6 and
article 24B;
( b ) the amount of any grants given under the following
provisions of this Act:
(i) article 19 by way of a training grant;
(ii) article 20 by way of a management services
grant;
(iii) article 23(3) and (4) by way of accommodation
and training grants to industry in Gozo,
       BUSINESS PROMOTION [ CAP. 325.        45
respectively.
Cap.123.
(5) Distributions made to the members of a company in the
course of winding up the company out of any reserve created in
accordance with the provisions of this article shall not be liable to
tax under the Income Tax Act:
Provided that any tax paid by the company on the profits
referred to in subarticle (4)( a ) shall not be available as a credit or
set-off under the provisions of the said Act to the recipient of the
distribution.
(6) Where a qualifying company is a company incorporated
outside Malta, such company shall show the Incentive and Benefits
Reserve on its balance sheet in respect of its business activities in
Malta until the company’s place of business in Malta, in respect of
which the reserve is required, ceases to exist.
(7) The provisions of subarticles (2), (3) and (5) shall only
apply to companies constituted under Maltese Law.
Powers of the 
Corporation and 
other authorities.
37. (1) Any qualifying company or other person purporting or
seeking to obtain or enjoy any incentive or benefit under the
provisions of this Act shall -
( a ) furnish to the Corporation and to any other authority
such information, accounts, statements and other
documents which the Corporation or that other
authority may deem to be necessary for the purposes of
this Act;
( b ) attend or send a representative to attend before the
Corporation or other authority and answer any
question lawfully made in connection therewith;
( c ) provide the Corporation or other authority with
reasonable access to all premises, places, books and
other documents, and allow copies to be made thereof
for the purposes of this Act.
(2) The Corporation or other authority may delegate to any of
its officers, employees and any other person whomsoever any of
the rights and powers contemplated by this article.
PART VI
OFFENCES AND PENALTIES 
Penalty for 
offences against 
official secrecy. 
Amended by:
IV. 2001.31.
38. Any person who, except as provided for or allowed under
this Act or for the purposes thereof, communicates or attempts to
communicate to any other person any matter or thing coming to his
notice or being in his possession in the performance of his duties
under this Act shall be guilty of an offence and shall, on conviction,
be liable to a fine ( multa ) of not less than two hundred liri and not
more than two thousand liri or to imprisonment for a period not
exceeding six months, or to both such fine and imprisonment:
  46      CAP. 325. ]               BUSINESS PROMOTION
Provided that a person shall not be precluded from
providing such information and access to the Corporation’s records
as may be required by the State Aid Monitoring Board in the
discharge of its functions and duties under this Act:
Cap. 202.
Provided further that a person referred to in article 33(1)( a )
shall have the duty to provide such information and access to the
Corporation’s records as may be required by the Minister for the
execution of the Minister’s responsibilities in terms of the
provisions of this Act and of the Malta Development Corporation
Act.
P enalty for making 
incorrect 
statements, etc.
39. Any person who without reasonable excuse prepares any
incorrect statement or gives any incorrect information in relation to
any matter or thing falling under this Act, shall be guilty of an
offence and shall, on conviction, be liable to a fine ( multa ) of not
less than three hundred liri and not exceeding two thousand liri.
Provisions relating 
to fraud, etc.
40. Any person who wilfully with intent to obtain any
incentive or benefit under this Act or to assist any other person to
do so -
( a ) omits from a return or any other document or
statement made, prepared or submitted for the
purposes of or under this Act, any matter which should
be included therein; or
( b ) makes any false statement or entry in any return or
other document or statement prepared or submitted for
the purposes of or under this Act; or
( c ) gives any false answer, whether verbally or in writing,
to any question or request for information asked or
made in accordance with the provisions of this Act; or
( d ) prepares or maintains or authorises the preparation or
maintenance of any false books of account or other
records or falsifies or authorises the falsification of
any books of account or records; or
( e ) makes use of any fraud, art or contrivance whatever or
authorises the use of any such fraud, art or
contrivance, 
shall be guilty of an offence, and shall for each such offence be
liable on conviction to a fine ( multa ) of not less than five hundred
liri and not exceeding five thousand liri or to imprisonment for any
term not exceeding six months, or to both such fine and
imprisonment.
General penalty. 41. If any person contravenes or fails to comply with any of
the requirements of this Act or of any regulations made thereunder,
in respect of which no special punishment is provided, he shall be
guilty of an offence and shall for each offence be liable, on
conviction, to a fine ( multa ) of not less than one hundred liri and
not more than five hundred liri.
Provision with 
respect to offences.
42. The provisions of this Act establishing offences and
punishments in respect thereof shall not affect the operation of any
other law establishing offences and punishments in respect of the
       BUSINESS PROMOTION [ CAP. 325.        47
same acts or omissions and shall not, in particular, affect the
application of any higher punishment under any other law.
Prescription of 
proceedings for 
offences.
43. Proceedings for an offence under this Act may be
commenced at any time within five years from the date of
commission of the offence.
Added by:
IV. 2001.33.
PART VII
PROVISIONS REGARDING LATE PAYMENT IN COMMERCIAL 
TRANSACTIONS
Interpretation.
"advance payment" means a payment which falls due before the
obligation of the supplier to which the whole contract price relates is
performed, other than a payment of a part of the contract price that is
due in respect of any part performance of that obligation and payable
on or after the day on which that part performance is completed;
"commercial transaction" means a contract for the supply of goods
or services entered into between a micro-enterprise and any body or
person specified in article 45(1)( a ) and ( b );
"contract for the supply of goods or services" means any, or a
combination, of the following contracts:
( a ) a contract of sale or lease of movable effects;
( b ) an agreement to carry out a service, including a
contract of works,  locatio operis , for a consideration
that consists of, or includes, a money consideration;
( c ) a contract of sale, emphyteusis or letting of immovable
property, or a promise thereof;
( d ) a contract of loan ( mutuum ) except for a loan or
banking facility contracted between any undertaking
and a bank or financial institution,
and the term "supplier" shall be construed accordingly;
"contractual remedy" means a contractual right to interest or any
contractual remedy other than interest;
"exempt contract" means a contract that is exempt from the
provisions of this Part in terms of article 47(1);
"late payment" means a payment that is made after the relevant
date;
"legal interest" means interest due on commercial transactions in
terms of article 45;
"purchaser" means the buyer in a contract of sale or the person
who contracts with the supplier in any other contract for the supply
of goods or services, or any third party to whom the obligation to
pay the debt has been legally assigned;
"qualifying debt" means any sum or balance thereof due on a
commercial transaction referred to in article 45(1);
  48      CAP. 325. ]               BUSINESS PROMOTION
"relevant date" or "relevant day", in relation to the payment of a
qualifying debt under this Act, means the date on which payment
falls due in accordance with article 48;
"semester" means either the period in any year starting from the
first day of January and ending on the thirtieth day of June or the
period in any year starting on the first day of July and ending on the
thirty-first day of December as the context may require;
"substantial remedy" shall be construed in accordance with
article 52;
Cap. 13.
"undertaking" means a trader as defined in article 4 of the
Commercial Code, a person exercising a profession or providing a
consultancy service, alone or in partnership with others, or a non-profit
organisation.
(2) The provisions of this Part shall not apply to debts of any
description created before the coming into force of this Act.
Legal interest. 45. (1) Subject to the provisions of this Act, late payment in a
commercial transaction shall carry legal interest with effect from
the relevant date, if such payment is due to an undertaking which is
a micro-enterprise as defined in this Act, and is due by -
( a ) an undertaking which is a medium-sized or large
enterprise as defined in this Act; or
( b ) a public authority, including any Government
department, Government-owned or controlled entity set
up by or under any law or a local council:
Provided that the Minister may by regulations extend the
provisions of this subarticle to late payments due to or by any other
undertaking.
Cap. 16. (2) Notwithstanding the provisions of article 1139 of the Civil
Code, legal interest shall be calculated in accordance with the
provisions of article 50.
(3) Legal interest shall have effect even if no express provision to
this effect is made in the relevant contract, subject to the right of the
contracting parties to exclude or modify the right to such interest in
accordance with article 51.
Application of 
legal interest.
46. Where a contract to which this Part of this Act applies is
combined with an exempt contract, a reference to late payment of debt
shall be interpreted as a reference to late payment of the sum due under
the contract, excluding any part of that sum which refers to the exempt
contract.
Debts not covered 
by this Act.
47. (1) Legal interest shall not be due on:
( a ) a debt to which the right to interest or to charge
interest applies by virtue of any special law, in which
case the provisions of such special law shall prevail;
( b )  any other debt which the Minister may by order exempt:
Provided that this article shall not prevent a sum from carrying
legal interest by reason of the fact that a court, arbitrator or arbiter
       BUSINESS PROMOTION [ CAP. 325.        49
would, but for the provisions of this Part, have power to award interest
on such sum.
Cap. 16.
(2) The provisions of Title IV of Part II of Book Second of the
Civil Code shall not be considered as a special law for the purposes
of subarticle (1)( a ).
Period for which 
legal interest runs.
48. (1) Legal interest shall commence to run from the day on
which the payment of a qualifying debt falls due under the relevant
contract; a date so agreed may be a fixed one or may depend on the
happening of an event or the failure of an event to happen:
Provided that, notwithstanding the foregoing, where the
debt relates to an obligation to make an advance payment, the
provisions of article 53 shall apply.
(2) Where the date or period for payment is not fixed in the
relevant contract, the date from which legal interest shall
commence to run shall be:
( a ) the date on which the obligation of the supplier to
which the debt relates is performed; or
( b ) if the payment is subject to the receipt by the debtor of a
notice of the amount or a request for payment of debt,
thirty days following the day on which the purchaser
receives such notice or request:
Provided that:
(i) if the date of the receipt of such notice or request is
uncertain; or
(ii) if the debtor receives such notice or request for
payment on a date preceding the date of
performance by the supplier of the obligation to
which the debt relates,
legal interest shall commence to run thirty days following
the date stipulated in paragraph ( a ).
(3) Where the debt is created by virtue of an obligation to pay a
sum due in respect of a period of hire of goods, the provisions of
subarticle (2)( a ) shall have effect as if they referred to the last day
of that period.
(4) Legal interest on a qualifying debt shall cease to run on the
settlement of such debt.
Remission of legal 
interest.
49. (1) The creditor shall not be entitled to legal interest if he
has not fulfilled his contractual or legal obligations:
Provided that if the interests of justice require that the supplier
should receive legal interest at a reduced rate for a period, legal
interest shall run at such rate as fixed by the court as meets the justice
of the case for that period.
(2) The Court may order that legal interestshall not be due -
( a ) by reason of any act or omission at any time, whether
before or after the time at which the debt is created;
and
  50      CAP. 325. ]               BUSINESS PROMOTION
( b ) for the whole period for which legal interest would
otherwise run or for one or more parts of that period.
Rate of legal 
interest.
Cap. 204.
50. (1) The rate of legal interest applicable under this Part of
this Act shall be the minimum discount rate in terms of any
directives issued from time to time by the Central Bank of Malta
under the Central Bank of Malta Act, and prevailing on the relevant
reference date increased by six percentage points.
(2) The first reference date shall be the first calendar day of the
semester during which legal interest first becomes due:
Provided that the rate of legal interest in respect of every
subsequent semester during which the qualifying debt remains due
shall be that prevailing on the first calendar date of the relevant
semester.
(3) The interest rate referred to in subarticle (1) or any other
rate by which it may be replaced shall not be less than eight  per
centum ; should the rate of legal interest calculated according to the
provisions of subarticles (1) and (2), or according to any other
formula that may be prescribed in its place, fall below eight  per
centum,  the applicable rate shall be eight  per centum .
Circumstances 
where legal interest 
may be excluded or 
varied.
51. (1) The provisions of this article shall apply to contract
terms agreed before, or at the same time as, the debt is created.
(2) Any contract terms which purport to exclude the right to
legal interest in relation to the debt, shall be void to that extent,
unless there is a substantial contractual remedy for late payment of
the debt.
(3) Where the parties agree a contractual remedy for late payment
of the debt which constitutes a substantial remedy, the debt shall not
carry legal interest.
(4) The parties may not agree to vary the right to legal interest in
relation to the debt unless either the right to legal interest as varied or
the overall remedy for late payment of the debt is a substantial remedy.
(5) Any contract terms which -
( a ) confer a contractual right to interest that is not a
substantial remedy for late payment of the debt; or
( b ) vary the right to legal interest so as to provide for a right
to interest that is not a substantial remedy for late
payment of the debt,
shall be void to that extent unless the overall remedy for late payment
of the debt is a substantial remedy.
(6) If any remedy for late payment is declared void under this
article, legal interest in terms of this Act shall apply.
(7) In this article "overall remedy", in relation to the late payment
of a debt, means any combination of a contractual right to interest, a
varied right to legal interest or a contractual remedy other than
interest.
(8) Nothing contained in this article shall entitle the parties to
       BUSINESS PROMOTION [ CAP. 325.        51
fix a rate of interest which is higher than the rate of legal interest as
a contractual remedy for late payment of the debt and, if such
higher rate is so fixed, that part of the contract shall be void and
legal interest in terms of this Act shall apply.
Meaning of 
"substantial 
remedy".
52. (1)  A remedy for the late payment of the debt shall be
regarded as a substantial remedy unless -
( a ) the remedy is insufficient either for the purpose of
compensating the supplier for late payment or for
deterring late payment; and
( b ) it would grossly be unfair or unreasonable to allow the
remedy to be relied on by the creditor in the absence of
the right to legal interest as envisaged in this Part of this
Act.
(2) In determining whether a remedy is a substantial remedy or
otherwise, regard shall be had to all the relevant circumstances at the
time the terms of the contract were agreed.
(3) Without prejudice to the generality of subarticle (2), in
determining whether the provisions of the contract are grossly unfair
or unreasonable in terms of subarticle (1)( b ), regard shall be had  inter
alia , to the following matters:
( a ) good commercial practice;
( b ) the nature of the product;
( c ) the vulnerability of the supplier, considering the size of
the contract in relation to the size of his undertaking;
( d ) whether the debtor has any objective reason to deviate
from the provisions of articles 45, 48, 49, and 50;
( e ) whether terms which are grossly unfair or unreasonable
have been imposed by one party to the detriment of the
other through the use of standard clauses or through other
means; and
( f ) whether the supplier received an inducement to agree
to any contract term.
Advance 
payments.
53. (1) A qualifying debt created by virtue of an obligation to
make an advance payment shall be treated, for the purposes of this
Part as if it was created on the day mentioned in subarticles (2), (3),
(4) or (5), as the case may be.
(2) Where the advance payment is the whole contract price, the
debt shall be treated as created on the day on which the supplier’s
obligation is performed.
(3) Where the advance payment is a part of the contract price, but
the sum is not due in respect of any part performance of the supplier’s
obligation, the debt shall be treated as created on the day on which the
supplier’s obligation is performed.
(4) Where the advance payment is a part of the contract price due
in respect of any part performance of the supplier’s obligation, but is
payable before that part performance is completed, the debt shall be
treated as created on the day on which the relevant part performance is
  52      CAP. 325. ]               BUSINESS PROMOTION
completed.
(5) Where the debt is created by virtue of an obligation to pay a
sum due in respect of a period of hire of goods, this article shall have
effect as if -
( a ) references to the day on which the supplier’s obligation is
performed were references to the last day of that period;
and
( b ) references to part performance of that obligation were
references to part of that period.
(6) For the purposes of this article an obligation to pay the
whole outstanding balance of the contract price shall be regarded as
an obligation to pay the whole contract price and not as an
obligation to pay a part of the contract price.
(7) The provisions of this article shall be without prejudice to
any other right of the supplier arising out of the purchaser’s default
on the advance payment in issue.
Recovery of costs. 54. The right to recover any legal interest arising under this Part
of this Act shall not exclude the right to compensation for the recovery
of costs incurred by the creditor in consequence of late payment.
Actions by 
associations 
representing 
micro-enterprises.
55. (1) Where an association is recognised by the Minister as
representing, or having a legitimate interest in representing, micro-
enterprises, or any other category of enterprises as the Minister
may prescribe by regulations, such association may bring an action
before the competent court or other body having jurisdiction for a
declaration that standard contractual terms or practices used by a
person in commercial transactions are grossly unfair within the
meaning of article 52, and such association shall not be required to
show any juridical interest in support of its action.
(2) For the purposes of this article, where the court declares
any such terms or practices to be grossly unfair, every person shall
desist from using any such terms or practices and any such use shall
be null and of no effect.
Power to make 
regulations.
56. The Minister may prescribe regulations to give effect to the
provisions of this Part, and without prejudice to the generality of the
foregoing may, by such regulations, in particular, do any of the
following:
( a ) extend the definition of a "contract for the supply of
goods or services", contained in article 44, to other
contractual relations;
( b ) with the concurrence of the Minister responsible for
Finance, substitute or amend the rate of legal interest
contained in article 48(1) by prescribing:
(i) a different formula for calculating the rate of
legal interest; or
(ii) the rate of legal interest;
( c ) exempt any category of persons, contracts or debts from
the provisions of this Part;
       BUSINESS PROMOTION [ CAP. 325.        53
( d ) extend the application of article 45(1) to other categories
of debtors or of creditors;
( e ) with respect to specified categories of contracts, postpone
the date from which legal interest shall commence to run
in terms of this Act by a period not exceeding thirty days,
provided that the relevant debt shall be subject to a
substantially higher rate of legal interest as may be
prescribed, and which shall apply for any delay in
payment following the expiry of such period;
( f ) prescribe anything that is to be or which may be
prescribed; and
( g ) provide for any other matter incidental to or connected
with any of the above.
PART VIII
STATE AID MONITORING BOARD
State Aid 
Monitoring Board.
Amended by:
VIII. 2003.31.
57. (1) There is hereby established a board to be known as the
State Aid Monitoring Board, hereinafter referred to as "the Board".
(2) The Board shall consist of five members to be appointed by
the Minister responsible for Economic Services, who shall
designate one of the members to be the Chairman, and another
member to be the Deputy Chairman of the Board.
(3) Members of the Board shall, subject to subarticles (4) and (5),
be appointed for a term of three years, and may be re-appointed for a
further period or further periods of three years.
(4) A member of the Board may resign his office at any time by
giving notice in writing to the Minister.
(5) The Minister may at any time remove a member of the Board
on grounds of disability to perform his functions, bankruptcy or
neglect of duty.
(6) The quorum necessary for meetings of the Board shall be the
chairman or, in his absence, the deputy chairman and two other
members.
(7) The Minister shall designate a public officer to act as the
secretary to the Board.
(8) The members of the Board and the Secretary shall be paid
such honorarium as the Minister may determine .
(9) Subject to the other provisions of this Act, the Board may
regulate its own procedures and meetings in such manner as it
deems proper.
Functions and 
powers of the 
Board.
58. (1) The functions of the Board shall be to -
( a ) establish and update a comprehensive state aid
inventory;
  54      CAP. 325. ]               BUSINESS PROMOTION
( b ) review and assess existing and new state aid, and provide
advice about their compatibility with the principles
contained in the relative European Union directives;
( c ) establish and implement appropriate rules of procedure
and methodological systems which lead to an effective
state aid monitoring and reporting system;
( d ) provide expert opinions, positions and proposals for the
formulation and implementation of state aid policy;
( e ) prepare an annual report on state aid in Malta, on the
basis of the established methodology used in the
European Union;
( f ) assist in the identification and implementation of
appropriate capacity building concerning state aids;
( g ) act as the pertinent body concerning state aid in Malta;
and
( h ) exercise such other functions and duties as may be
prescribed.
(2) In its deliberations on specific cases or issues, the Board
may require the input of persons engaged in the public sector and,
or, entities; the Board may also request appropriate expertise from,
or collaboration with, third parties, as it may deem necessary.
(3) In the exercise of its powers and functions under this Act, the
Board shall have the right of access to all relevant information, and
may seek the clarifications and explanations that it may deem
necessary for its deliberations and conclusions.
(4) E very member of the Board shall regard and deal with all
documents and information relating to matters contemplated by or
pursuant to the provisions of this Part of this Act as secret and
confidential and shall make and subscribe before a Commissioner
for Oaths a declaration on oath to this effect in the form prescribed
which shall be deposited with the Attorney General .
(5) Any person who, except as provided for or allowed under
this Act or for the purposes thereof, communicates or attempts to
communicate to any other person any matter or thing coming to his
notice or being in his possession in the performance of his duties as
a member of the Board shall be guilty of an offence and shall, on
conviction, be liable to a fine ( multa ) of not less than two hundred
liri and not more than two thousand liri or to imprisonment for a
period not exceeding six months, or to both such fine and
imprisonment.
Amended by:
IV. 2001.32.
PART IX
FINAL PROVISIONS
Power to make 
regulations.
Amended by:
IV. 2001.32, 34.
59. (1) The Minister may make regulations to give effect to
any of the provisions of this Act and, without prejudice to the
generality of the foregoing, such regulations may in particular
       BUSINESS PROMOTION [ CAP. 325.        55
include provision with respect to -
( a ) the form of applications, returns, statements, reports
and other documents for the purposes of this Act;
( b ) the procedure to be followed in matters relating to the
provisions of this Act, including the processing of
applications made for the purposes of this Act;
( c ) such other promotional measures as he may deem
appropriate and subject to such conditions as he may
deem fit, which measures may include, but shall not be
limited to -
(i) measures of a fiscal nature whereby the tax
payable by an enterprise may be reduced or
absorbed by tax credits or by exempting or
taxing at reduced rates of income tax the profits,
or part thereof, derived by an enterprise from a
trade, business, profession or vocation;
(ii) the provision of financial assistance in the form
of grants, subsidies, loans and loan guarantees;
(iii) measures directed at encouraging employment
and training;
(iv) measures directed at encouraging investment in
research and development;
(v) measures directed at encouraging investment for
the protection of the environment;
(vi) measures directed at assisting firms in difficulty
and assisting them in restructuring;
( d ) special provision with respect to such micro, small or
medium sized enterprises as may from time to time be
prescribed;
( e ) the designation of any authority or person to exercise any
of the functions of the Corporation under this Act.
(2) The power of the Minister under subarticle (1) shall be
exercised with the concurrence of the Minister responsible for
Tourism where the measures relate to operations in the tourism
sector and with the concurrence of the Minister responsible for
Agriculture and Fisheries where the measures relate to operations
in the agricultural or fisheries sector.
(3) Where the Minister proposes to make regulations in
accordance with the provisions of this Act and those regulations
provide that an enterprise may be wholly or partly exempted from
being liable to income tax which, but for the provisions of such
regulations, would have been payable, the power of the Minister to
make such regulations shall be exercised with the concurrence of
the Minister responsible for Finance.
(4) Where the Minister proposes to make regulations in
accordance with the provisions of this Act and those regulations
provide for the granting of any assistance, a copy of such proposed
regulations shall be forwarded to the State Aid Monitoring Board
which shall communicate its comments to the Minister on the
  56      CAP. 325. ]               BUSINESS PROMOTION
proposed assistance to be granted within thirty days of receiving a
copy of the proposed regulations.
Exercise of the 
Corporation’s 
functions under 
this Act.
Added by: 
XI. 1997.21.
Amended by:
XV. 1997.2;
IV. 2001.32.
60.  The Corporation may, with the approval of the Minister,
exercise its functions and powers under this Act through the agency
of other persons:
Provided that any decision taken as result of any delegation
of powers or functions made in accordance with the provisions of
this article will not be effective unless definitely approved by the
Corporation.
Transitory 
provisions relating 
to the Aids to 
Industries 
Ordinance.
Amended by:
IX. 1993.17;
IV. 2001.32.
Cap. 159.
61. (1) On the coming into force of this Act, the provisions of
the Aids to Industries Ordinance shall cease to have effect in
respect of any person carrying on or carrying out, or intending to
carry on or carry out, any trade or business contemplated in article
3(1) or in article 24, without prejudice to anything done or omitted
to be done or still to be done thereunder by or in respect of any such
person, and, in particular, to any relief granted to or any liability,
whether criminal or civil, incurred by any such person under that
Ordinance.
Cap. 159.
(2) On the coming into force of this Act, the procedure for
granting any relief from customs duty under article 8 of the Aids to
Industries Ordinance, and for regulating all matters relating thereto,
shall be that set out in article 17 and the relevant regulatory
provisions of this Act, to the exclusion of the provisions of that
Ordinance.
