Malta: Venture Capital Fund (Tax Credit) Regulations 2006

1. The title of these regulations is the Venture Capital Fund (Tax Credit) Regulations.

2. In these regulations, unless the context otherwise requires –
" the Act" means the Income Tax Act;
" the Corporation" means the Malta Enterprise Corporation;
" designated venture capital fund" means a collective investment scheme -
(a) which is a prescribed fund in terms of article 41A(b) of the Act; and
(b) where the securities issued by such scheme are securities listed on a stock exchange recognised under the Financial Markets Act; and
(c) which is named as such by the Corporation by means of a designation that has not been revoked; and
(d) in which the Corporation holds securities; and
(e) which was set up with the purpose of increasing the amount of private investment capital available for Malta-based companies in the seed or early stage of business development as well as to provide finance for innovative processes, ideas and techniques; and
(f) concerning which the Corporation has informed the Commissioner of the relevant details referred to in paragraphs (a), (b), (c), (d) and (e) hereof;
" replacement certificate" means a certificate issued by the Commissioner in accordance with regulation 4;
" tax credit certificate" means a certificate issued by the Commissioner in accordance with regulation 3, or a replacement certificate as the case may be.

3. (1) Notwithstanding any obligation to secrecy or confidentiality, or any other restriction relating to the disclosure of information imposed by any enactment -
(a) when a designated venture capital fund issues securities to investors, it shall inform the Commissioner of such issue; and
(b) a designated venture capital fund shall, upon any request, give the Commissioner all the information necessary for the purpose of the requirements of these regulations.
(2) When the Commissioner receives a notice by a designated venture capital fund of purchase of securities by investors, and he is satisfied that such securities have been actually fully paid for, he shall issue and deliver a tax credit certificate to each person acquiring the securities.
(3) Each tax credit certificate shall be dated and consecutively numbered and shall indicate:
(a) the name of the designated venture capital fund;
(b) details identifying the securities purchased;
(c) the total nominal value of the securities purchased;
(d) a declaration that the certificate gives the right to a tax credit as provided for in these regulations;
(e) the name of the person to whom the tax credit certificated is issued and, if he is an individual, his identity card or passport number or, if it is a company incorporated in Malta, its company registration number or, in any other case, such details as the Commissioner may consider sufficient to properly identify that person or company.

4. (1) When a person declares in writing that he is the lawful owner of a tax credit certificate and notifies the Commissioner in writing that such certificate has been lost, stolen, destroyed or defaced, he may apply to the Commissioner for a replacement certificate.
(2) When the application for a replacement certificate is made to replace a defaced certificate, the original certificate shall be surrendered to the Commissioner at the same time that the application is made.
(3) The Commissioner may issue and deliver to the applicant a replacement certificate if he is satisfied that the application is made bona fide: provided that the Commissioner may disallow the application without assigning any reason therefor.
(4) Before allowing an application under this regulation the Commissioner may request the applicant to give such undertaking, security and indemnity as it considers appropriate.
(5) A replacement certificate shall comply with regulation 3(3) and it shall also indicate that it is a replacement certificate.
(6) The Commissioner shall note and keep record of every original and replacement certificate.

5. (1) Subject to the provisions of regulation 6, the person identified on a tax credit certificate may claim a tax credit equivalent to thirty percent (30%) of the total nominal value shown on the said certificate following the surrendering of the said certificate to the Commissioner:
Provided that such certificate may only be surrendered after the lapse of the third year from the date when the person holding the certificate had acquired the securities which gave him the right to apply for the certificate:
Provided further that the person surrendering the certificate has continuously held the securities referred to in the previous proviso during the said three years:
Provided also that the maximum amount of tax credit claimed by any person for all the relevant years of assessment taken together may not be greater than €350,000.
(2) Subject to the provisions of subregulation (3), the tax credit shall be allowable as a deduction from the tax chargeable on the income of the person identified on the certificate for the year of assessment commencing on the 1st January of the year immediately following that in which the certificate is surrendered as aforesaid, and any amount that remains unabsorbed for that year of assessment shall be carried forward and treated as a tax credit, to be deducted from the tax chargeable on gains or profits derived by that person in subsequent years: provided that the maximum amount of
tax credit that may be claimed which is referred to in the third proviso to subregulation (1) is not exceeded.
(3) A tax credit allowed in accordance with this regulation may only give rise to a valid claim for refund of tax where it results that, after taking into account the said tax credit, such tax had been paid in excess for any applicable year of assessment, whether such tax was paid by deduction or otherwise.
(4) When a tax credit certificate has been surrendered as aforesaid it may not be delivered back to the surrendering person or delivered or transferred to any other person.

6. No claim for a tax credit shall be allowable if a claim has already been made with respect to the surrender of an original certificate or of a replacement certificate issued to replace the said original certificate.

7. The Commissioner and any person acting on his behalf are indemnified against any claim whatsoever arising from the issue, delivery or replacement of any certificate or the granting of any tax credit under these regulations.

8. (1) The Commissioner shall deem that the designation of a designated venture capital fund has been revoked on the date when the Corporation expressly revokes such a designation or on the date that the relevant entity fails to conform to the definition of designated venture capital fund as provided in regulation 2, whichever date is the earlier.
(2) Where the Commissioner deems that such a designation has been revoked as aforesaid, he shall consider the relevant tax credit certificates which had not been surrendered by the date of such revocation to be surrendered on the date of such revocation:
Provided that such certificates could be surrendered in accordance with the provisions of regulation 5(1):
Provided further that the holder of the certificate surrenders the said certificate not later than six months from the date of such revocation.