Taxation – Malta (TX-MLA)...Taxation – Malta (TX-MLA) syllabus 5. Relational diagram linking Taxation – Malta with other exams 6. Overall aim of the syllabus 7. Main capabilities

Taxation - Malta (TX-MLA)

© ACCA 2019 All rights reserved.

Taxation –Malta(TX-MLA)Syllabus and study guide

June and December 2019



Summary of content

Introduction1. Intellectual levels2. Learning hours and educational

recognition3. Guide to ACCA examination

structure4. Guide to ACCA examination

assessment

Taxation – Malta(TX-MLA) syllabus

5. Relational diagram linkingTaxation – Malta with otherexams

6. Overall aim of the syllabus7. Main capabilities8. Rationale9. Approach to examining the

syllabus10. The syllabus

Taxation – Malta(TX-MLA) study guide

11. Detailed study guide



1. Intellectual levels

The syllabus is designed toprogressively broaden and deepen theknowledge, skills and professionalvalues demonstrated by the student ontheir way through the qualification.

The specific capabilities within thedetailed syllabuses and study guides areassessed at one of three intellectual orcognitive levels:

Level 1: Knowledge andcomprehension

Level 2: Application and analysisLevel 3: Synthesis and evaluation

Very broadly, these intellectual levelsrelate to the three cognitive levels atwhich the Applied Knowledge,the Applied Skills and the StrategicProfessional examsare assessed.

Each subject area in the detailed studyguide included in this document is givena 1, 2, or 3 superscript, denotingintellectual level, marked at the end ofeach relevant line. This gives anindication of the intellectual depth atwhich an area could be assessed withinthe examination. However, while level 1broadly equates with AppliedKnowledge, level 2 equates to AppliedSkills and level 3 to StrategicProfessional, some lower level skills cancontinue to be assessed as the studentprogresses through each level. Thisreflects that at each stage of study therewill be a requirement to broaden, as wellas deepen capabilities. It is alsopossible that occasionally some higherlevel capabilities may be assessed atlower levels.

2. Learning hours andeducationalrecognition

The ACCA qualification does notprescribe or recommend any particularnumber of learning hours forexaminations because study andlearning patterns and styles vary greatlybetween people and organisations. Thisalso recognises the wide diversity ofpersonal, professional and educationalcircumstances in which ACCA studentsfind themselves.

As a member of the InternationalFederation of Accountants, ACCA seeksto enhance the education recognition ofits qualification on both national andinternational education frameworks, andwith educational authorities and partnersglobally. In doing so, ACCA aims toensure that its qualifications arerecognised and valued by governments,regulatory authorities and employersacross all sectors. To this end, ACCAqualifications are currently recognisedon the education frameworks in severalcountries. Please refer to your nationaleducation framework regulator forfurther information.

Each syllabus is organised into mainsubject area headings which are furtherbroken down to provide greater detail oneach area.



3. Guide to ACCAexamination structure

The structure of examinations varieswithin and between levels.

Applied KnowledgeThe Applied Knowledge examinationscontain 100% compulsory questions toencourage candidates to study acrossthe breadth of each syllabus.These areassessed by a two-hour computer basedexamination.

Applied SkillsThe Corporate and Business Law examis a two-hour computer based objectivetest examination for English and Global.For the format and structure of theCorporate and Business Law orTaxation variant exams, refer to the‘Approach to examining the syllabus’ insection 9 of the relevant syllabus andstudy guide.

The other Applied Skills examinations(PM, TX-UK, FR, AA and FM) contain amix of objective and longer typeresponse questions with a duration ofthree hours for 100 marks. These examsare available in computer-based format.Prior to the start of each exam there willbe time allocated for students to beinformed of the exam instructions. Forthe format and structure of the TXvariant exams, refer to the ‘Approach toexamining the syllabus’ section below.

The longer (constructed response)question types used in the Applied Skillsexams (excluding Corporate andBusiness Law) require students toeffectively mimic what they do in theworkplace. Students will need to use arange of digital skills and demonstratetheir ability to use spreadsheets andword processing tools in producing theiranswers, just as they would use thesetools in the workplace. These

assessment methods allow ACCA tofocus on testing students’ technical andapplication skills, rather than, forexample, their ability to perform simplecalculations.

Strategic ProfessionalStrategic Business Leader is ACCA’scase study examination at the StrategicProfessional level and is examined as aclosed book exam of four hours,including reading, planning andreflection time which can be usedflexibly within the examination. There isno pre-seen information and all examrelated material, including caseinformation and exhibits are availablewithin the examination. StrategicBusiness leader is an examinationbased on one main business scenariowhich involves candidates completingseveral tasks within which additionalmaterial may be introduced. Allquestions are compulsory and eachexamination will contain a total of 80technical marks and 20 ProfessionalSkills marks.

The other Strategic Professional examsare all of three hours and 15 minutesduration. All contain two Sections andall questions are compulsory. Theseexams all contain four professionalmarks.

For June, September and December2019 sessions, all Strategic Professionalexams will be assessed by paper basedexamination. From March 2020, theseexams will become available bycomputer based examination. Moredetail regarding what is available in yourmarket will be on the ACCA globalwebsite.

With Applied Knowledge and AppliedSkills exams now assessed by computerbased exam, ACCA is committed tocontinuing on its journey to assess all



exams within the ACCA Qualificationusing this delivery mode.

The question types used at StrategicProfessional again require students toeffectively mimic what they would do inthe workplace and, with the move toCBE, these exams again offer ACCA theopportunity to focus on the application ofknowledge to scenarios, using a rangeof tools – spreadsheets, wordprocessing and presentations - not onlyenabling students to demonstrate theirtechnical and professional skills but alsotheir use of the technology available totoday’s accountants.

ACCA encourages students to take timeto read questions carefully and to plananswers but once the exam time hasstarted, there are no additionalrestrictions as to when candidates maystart writing in their answer books.

Time should be taken to ensure that allthe information and exam requirementsare properly read and understood.

The pass mark for all ACCAQualification examinations is 50%.



4. Guide to ACCAexaminationassessment

ACCA reserves the right to examineanything contained within the studyguide. This includes knowledge,techniques, principles, theories, andconcepts as specified. For the financialaccounting, audit and assurance, lawand tax exams except where indicatedotherwise, ACCA will publishexaminable documents once a year toindicate exactly what regulations andlegislation could potentially be assessedwithin identified examination sessions.

For most examinations (not tax),regulation issued or legislation passedon or before 31 August annually, will beexaminable from 1 September of thefollowing year to 31 August of the yearafter that. Please refer to theexaminable documents for theexamination (where relevant) for furtherinformation.

For the MLA variant, tax examinations inJune and December will be based onlegislation passed before the previous30 September i.e. June and December2019 papers will be based on legislationpassed by 30 September 2018.

Regulation issued or legislation passedin accordance with the above dates maybe examinable even if the effective dateis in the future.

The term issued or passed relates towhen regulation or legislation has beenformally approved.

The term effective relates to whenregulation or legislation must be appliedto an entity’s transactions and businesspractices.

The study guide offers more detailedguidance on the depth and level atwhich the examinable documents will beexamined. The study guide shouldtherefore be read in conjunction with theexaminable documents list.



5. Relational diagram linking Taxation – Malta (TX-MLA) with other exams

This diagram shows links between this exam and other exams preceding orfollowing it. Some exams are directly underpinned by other exams such asAdvanced Taxation – Malta (ATX-MLA) by Taxation – Malta (TX-MLA).

This diagram indicates where students are expected to have underpinningknowledge and where it would be useful to review previous learning beforeundertaking study.

6. Overall aim of the syllabus

This syllabus and study guide is designed to help with planning study and to providedetailed information on what could be assessed in any examination session.

The aim of the syllabus is to develop knowledge and skills relating to the Maltese taxsystem as applicable to individuals, single companies, and groups of companies.



7. Main capabilities

On successful completion of this exam, candidates should be able to:

A Explain the operation and scope of the Maltese tax system and the obligations oftaxpayers and/or their agents and the implications of non-compliance

B Explain and compute the income tax liabilities of individuals

C Explain and compute the corporate income tax liabilities of individual companiesand groups of companies

D Explain and compute the tax liabilities arising on the disposal of capital assets bycompanies and individuals

E Explain and compute the effect of social security contributions on employees,employers and the self employed

F Explain and compute the effects of value added tax on incorporated andunincorporated businesses

Relational diagram of the main capabilities

This diagram illustrates the flows and links between the main capabilities (sections)of the syllabus and should be used as an aid to planning, teaching and learning in astructured way.



8. Rationale

This syllabus for Taxation – Malta (TX-MLA) introduces candidates to thesubject of taxation and provides the coreknowledge of the underlying principlesand major technical areas of taxation, asthey affect the activities of individualsand businesses.

Candidates are introduced to therationale behind - and the functions of -the tax system. The syllabus thenconsiders the separate taxes that anaccountant would need to have adetailed knowledge of, such as incometax from self-employment, employmentand investments; the corporate incometax liability of individual companies andgroups of companies; the social securitycontribution liabilities of both employedand self-employed persons; the valueadded tax liability of businesses; and thetax liabilities arising on the disposal ofcapital assets by both individuals andcompanies.

Having covered the core areas of thebasic taxes, candidates should be ableto compute tax liabilities, explain thebasis of their calculations, apply taxplanning techniques for individuals andcompanies and identify the complianceissues for each major tax through avariety of business and personalscenarios and situations.



9. Approach to examiningthe syllabus

The syllabus is assessed by a three-hour 15 minute paper-basedexamination (in June 2019) and by athree-hour computer-based examination(in December 2019).

The exam will be predominantlycomputational and all questions arecompulsory.

Section A of the exam comprises 15multiple choice questions of 2 markseach.

Section B of the exam comprises four 10mark questions and two 15 markquestions.

The two 15 mark questions will focus onincome tax (syllabus area B) andcorporate income tax (syllabus area C).

The section A questions and the otherquestions in section B can cover anyareas of the syllabus.



10. The syllabus

A The Maltese tax system and itsadministration

1. The overall function and purpose oftaxation in a modern economy

2. Principal sources of revenue law andpractice

3. The systems for self-assessmentand the making of returns

4. The time limits for the submission ofinformation, claims and payment oftax, including provisional taxpayments and advance companyincome tax

5. The procedures relating to enquiries,appeals and disputes

6. Penalties for non-compliance

B Income tax liabilities

1. The scope of income tax

2. Income from employment

3. Income from self-employment

4. Property, investment and otherincome

5. The comprehensive computation oftaxable income and income taxliability

6. The use of exemptions and reliefs indeferring and minimising taxliabilities

C Corporate income tax liabilities

1. The scope of corporate income tax

2. Profits chargeable to corporateincome tax

3. The comprehensive computation ofcorporate income tax liability and taxaccounting

4. The effect of a group corporatestructure for corporate income taxpurposes

5. The use of exemptions and reliefs indeferring and minimising corporateincome tax liabilities

D Tax liabilities on the disposal ofcapital assets by individuals andcompanies

1. The scope of the taxation of capitalasset disposals

2. The basic principles of computinggains and losses

3. Gains and losses on the disposal ofmovable and immovable property

4. Gains and losses on the disposal ofshares and securities

5. The computation of the tax payableby individuals and companies

6. The use of exemptions and reliefs indeferring and minimising taxliabilities arising on the disposal ofcapital assets

E Social security contributions

1. The scope of social security

2. Class 1 contributions for employedpersons

3. Class 2 contributions for self-employed persons



F Value added tax

1. The scope of value added tax (VAT)

2. The VAT registration requirements

3. The computation of VAT liabilities

4. The effect of special schemes



11. Detailed study guide

A The Maltese Tax systemand its administration

1. The overall function and purposeof taxation in a modern economy

a) Describe the purpose (economic,social etc) of taxation in a moderneconomy.[2]

b) Identify the different types of capitaland revenue tax.[1]

c) Explain the difference betweendirect and indirect taxation.[2]

2. Principal sources of revenue lawand practice

a) Describe the overall structure of theMaltese tax system.[1]

b) State the different sources ofrevenue law.[1]

c) Appreciate the interaction of theMaltese tax system with that of othertax jurisdictions.[2]

d) Explain the difference between taxavoidance and tax evasion.[1]

e) Explain the need for an ethical andprofessional approach.[2]

f) Explain the circumstances in whichadvance revenue rulings would berequested by taxpayers.[2]

3. The systems for self-assessmentand the making of returns

a) Explain and apply the features of theself-assessment system as it appliesto individuals.[2]

b) Explain and apply the features of theself-assessment system as it appliesto companies.[2]

4. The time limits for the submissionof information, claims andpayment of tax, includingprovisional tax payments andadvance company income tax

a) Recognise the time limits that applyto the filing of returns, declarationsand the making of claims andadjustments.[2]

b) Recognise the due dates for thepayment of tax under the self-assessment system.[2]

c) Compute provisional tax andadvance company tax payments.[2]

d) Explain when a taxpayer is subjectto the Final Settlement System(FSS) or subject to provisional taxpayments and settlement tax.[2]

e) Explain the withholding taxobligations and implications arisingin connection with payments madeto non-residents.[2]

f) List the information and records thattaxpayers need to retain for taxpurposes.[1]

5. The procedures relating toenquiries, appeals and disputes

a) Explain the circumstances in whichthe Commissioner of InlandRevenue can enquire into a self-assessment tax return.[2]

b) Explain the procedures for dealingwith appeals objections anddisputes.[1]



6. Penalties for non-compliance

a) Calculate interest on overdue tax.[2]

b) State the administrative penaltiesthat can be charged.[2]

B Income tax liabilities

1. The scope of income tax

a) Explain how the residence of anindividual is determined.[1]

b) Distinguish between the taxtreatment of a resident individualand a non-resident individual.[1]

c) Explain the difference betweenresidence and ordinary residence.[1]

Excluded topics

The treatment of a person whocomes to Malta to work,permanent residents andreturned migrants, investmentservice expatriates andinsurance expatriates

Non-resident entertainers

The taxation of Highly QualifiedPersons

Income from trusts andsettlements

Clubs

Ecclesiastical and allied income

Non-resident ship owners

Non-resident air transport, cableand wireless undertakings

Taxation of petroleum profits.

2. Income from employment

a) Recognise the factors that determinewhether an engagement is treatedas employment or self-employment.[2]

b) Recognise the basis of assessmentfor employment income.[2]

c) Compute the income assessable.[2]

d) Recognise the allowable deductionsagainst employment income.[2]

e) Explain the Final Settlement System(FSS).[1]

f) Understand the circumstances inwhich taxable fringe benefits arise.[2]

g) Compute the amount of fringebenefits assessable.[2]

h) Understand the part-time rules asapplicable to employment income.[2]

i) Understand the treatment of theremuneration and benefits receivedby directors.[2]

j) Determine the applicable income taxon overseas employment incomeand explain the conditions whichmust be satisfied to benefit from theflat 15% rate.[2]

Excluded topics

The calculation of the FSS MainCumulative Method

Share option and share incentiveschemes



3. Income from self-employment

a) Recognise the basis of assessmentfor self-employment income.[2]

b) Describe and apply the badges oftrade.[2]

c) Recognise the expenditure that isallowable in calculating the tax-adjusted trading profit.[2]

d) Recognise the relief which can beobtained for pre-tradingexpenditure.[2]

e) Compute the assessable profits oncommencement and on cessation.[2]

f) Capital allowancesi) Define plant and machinery for

capital allowances purposes.[1]

ii) Compute the initial and wear andtear allowances.[2]

iii) Compute capital allowances forcommercial and non-commercialmotor vehicles.[2]

iv) Compute balancing allowancesand balancing charges.[2]

v) Define an industrial building orstructure for capital allowancepurposes.[1]

vi) Compute the initial and wear andtear allowance for industrialbuildings or structures.[2]

vii) Compute the balancingadjustment on the disposal of anindustrial building or structure.[2]

viii) Establish the limitations on theabsorption of unutilised capitalallowances brought forward.[2]

g) Relief for trading lossesi) Understand how trading losses

can be carried forward.[2]

ii) Expalin how trading losses canbe carried forward following theincorporation of a business.[2]

iii) Understand how trading lossescan be claimed against totalincome and chargeable gains.[1]

iv) Recognise the factors that willinfluence the choice of loss reliefclaim.[2]

h) Partnerships and limited liabilitypartnershipsi) Explain how a partnership is

assessed to tax.[2]

ii) Compute the assessable profitsfor each partner following achange in the profit sharingratio.[2]

iii) Compute the assessable profitsfor each partner following achange in the membership of thepartnership.[2]

i) Understand the part-time rules asapplicable to income from self-employment.[2]

Excluded topics

The deductions for anyexpenditure on scientificresearch

The deductions for anyexpenditure on patent or patentrights

The deductions for anyexpenditure on market research

The deductions for anyexpenditure of a capital natureon intellectual property rights

The tax and fiscal incentivesunder the Business PromotionAct and the Business PromotionRegulations and other incentivesprovided under concessionarytax regimes in the Income TaxAct



The tax treatment of ‘payers’ onthe sale of agricultural produceas defined in the relevant rules

The possibility for partnerships toelect to be treated as companies

4. Property, investment and otherincome

a) Compute the amount assessablewhen dividends, premiums, interestor discounts are received.[2]

b) Compute the amount assessablewhen rents, royalties, premiums andother income from property arereceived.[2]

c) Compute the maintenanceallowance and other deductions(such as ground rents) which maybe claimed against rental income.[2]

d) Compute the amount assessablewhen pensions, charges annuitiesand other annual payments arereceived.[2]

e) Explain the investment incomeprovisions and compute the amountof investment income received.[2]

f) Explain the concept of the finalwithholding tax and the treatment ofincome which has been subject tothe final withholding tax.[2]

g) Compute the tax payable on interest,discount or premiums under theinvestment income provisions.[2]

h) Compute the tax payable ondividend income after taking intoaccount the tax at source or doubletaxation relief.[2]

i) Indicate the instances when ashareholder need not declaredividends received from a Malta

company and the instances when itis advisable to declare such dividendincome.[2]

5. The comprehensive computationof taxable income and income taxliability

a) Prepare a basic income taxcomputation involving different typesof income.[2]

b) Calculate the amount of chargeableincome and the Malta tax theron.[2]

c) Compute the amount of income taxpayable after taking into account anytax credits such as tax at source ordouble taxation relief.[2]

d) Explain the treatment of charges onincome.[2]

e) Distinguish between exemptions anddeductions.[1]

f) Recognise the personal deductionsavailable against total income foralimony payments, childcare fees,facilitator fees, sports fees, homesfor the elderly fees, homes or respitecentres for the disabled fees, schoolfees and school transport fees, andfees for cultural activities.[2]

g) Explain the treatment of incomeearned by spouses who opt for ajoint tax computation and those whoopt for a separate tax computation.[2]

Excluded topics

The income of minor children

Commonwealth relief for doubletaxation

Personal deductions forrecognised tertiary educationinstitution fees



6. The use of exemptions and reliefsin deferring and minimisingincome tax liabilities

a) Identify the various exemptions anddeductions which may be claimed.[2]

b) Distinguish between the positive testfor deductions and the negative testfor deductions.[2]

c) Explain how a married couple canminimise their tax liabilities.[2]

C Corporate income taxliabilities

1. The scope of corporate incometax

a) Define basic terms such as‘chargeable income’, ‘company’, ‘taxreturn date’, ‘tax settlement date’,‘total income’ and ‘year ofassessment’.[1]

b) Recognise when an accountingperiod starts and when anaccounting period finishes.[1]

c) Explain how the residence of acompany is determined.[2]

d) Distinguish between the taxtreatment of a resident company anda non-resident company. [1]

e) Describe the operation of the fullimputation system of taxation.[2]

Excluded topics

Investment service companies

Insurance companies

Banking groups

Collective investment schemes

Companies in receivership orliquidation

Reorganisations.

2. Profits chargeable to corporateincome tax

a) Recognise the expenditure that isallowable in calculating the tax-adjusted trading profit.[2]

b) Explain how relief can be obtainedfor pre-trading expenditure.[1]

c) Compute capital allowances (as forincome tax on income from self-employment).[2]

d) Compute property business profitsunder the Tax on Property TransferRules.[2]

e) Explain the treatment of expensesincurred in the production of theincome and those expenses whichare not incurred in the production ofthe income.[2]

f) Understand how trading losses canbe carried forward.[2]

g) Understand how trading losses canbe claimed /absorbed againstincome of the current accountingperiod.[2]

h) Recognise the factors that willinfluence the choice of accountingdate and explain the procedure tochange the accounting date. [1]

i) Recognise the factors that willinfluence the choice of loss reliefclaim.[2]

j) Compute profits chargeable tocorporate income tax distinguishing



between the profits which areallocated to the Final Tax Account,the Immovable Property Account,Maltese Taxed Account, the ForeignIncome Account and the UntaxedAccount.[2]

Excluded topics

The deductions for anyexpenditure on scientificresearch

The deductions for anyexpenditure on patent or patentrights

The deductions for anyexpenditure on market research

The deductions for anyexpenditure of a capital natureon intellectual property rights

Relief for amortisation ofintangible assets

The tax and fiscal incentivesunder the Business PromotionAct and the Business PromotionRegulations and other incentivesprovided under concessionarytax regimes in the Income TaxAct.

3. The comprehensive computationof corporate income tax liabilityand tax accounting

a) Compute the corporate income taxliability, claiming any tax at source inrespect of Maltese source incomeand the appropriate double taxationrelief in respect of foreign sourceincome.[2]

b) Explain the implications of receivinginvestment income subject to thefinal withholding tax and the

treatment thereof in the preparationof the tax computation.[2]

c) Describe the various forms of doubletaxation relief to relieve withholdingtaxes and underlying taxes and theuse of the flat rate foreign tax creditto minimise the corporate income taxon foreign source income.[2]

d) Compute the effective tax payableon foreign source income.[2]

e) Calculate any applicable notionalinterest deduction (NID) anddetermine the impact of the NID onthe allocation of the company’sprofits to its tax accounts.

f) Allocate the company’s profits to theFinal Tax Account, the ImmovableProperty Account, the MalteseTaxed Account, the Foreign IncomeAccount and the Untaxed Accountand their sub divisions.[2]

g) Explain the implications arising upona distribution of profits from thevarious tax accounts to residentshareholders and non-residentshareholders.[2]

h) Compute the tax credits and taxrefunds which may be claimed by ashareholder upon a distribution ofprofits.[2]

i) Analyse the available creditsbetween the Malta tax paid and therelieved tax and compute the overalltax refund.[2]

j) Describe the requirements of adividend certificate.[2]

k) Explain how exemptions and reliefscan defer or minimise corporateincome tax liabilities.[2]



Excluded topics

Limitation of credit on companytax affected by double taxationrelief.

Investment income provisionsrelating to residents who areregistered for tax refunds or whoare shareholders in companiesregistered for tax refunds orshareholders in companiesavailing themselves of theparticipation exemption.

Reconciliation and/or analysis ofamounts allocated to the untaxedaccount.

4. The effect of a group corporatestructure for corporate income taxpurposes

a) Define a group for the purposes ofthe group relief provisions, andrecognise the reliefs that areavailable to members of such agroup.[2]

b) Define a group for the purposes ofcapital gains, and recognise thereliefs that are available to membersof such a group.[2]

c) Define ‘surrendering company’,‘claimant company’ and ‘allowablelosses’ and explain the group reliefprovisions.[2]

d) Explain the treatment of a paymentfor group relief.[2]

e) Identify the limitations in the grouprelief provisions and the implicationsarising from the tax accounts.[2]

f) Identify the conditions which must besatisfied to claim group relief.[2]

5. The use of exemptions and reliefsin deferring and minimisingcorporate income tax liabilities.The use of such exemptions andreliefs is implicit within all of theabove sections 1 to 4 of part C ofthe syllabus, concerningcorporate income tax

D Tax liabilities on thedisposal of capital assetsby individuals andcompanies

1. The scope of the taxation ofcapital asset disposals

a) Describe the scope of the capitalgains rules.[2]

b) Describe the scope of the propertytransfer rules.[2]

c) List those assets which are subjectto capital gains and the immovableproperty which is subject to theproperty transfers tax.[2]

Excluded topics

The property transfer rules asthey apply to properties formingpart of a project

2. The basic principles of computinggains and losses

a) Compute capital gains for bothindividuals and companies.[2]

b) Calculate the inflation allowance andmaintenance allowance available totransferors in determining the cost ofacquisition.[2]

c) Compute the amount of allowableexpenditure in determining the costof acquisition.[2]



d) Explain the treatment of capitallosses for both individuals andcompanies.[1]

e) Explain the treatment of transfersbetween a husband and wife orbetween close relatives or betweencompanies within the same group.[2]

f) Explain the treatment where anasset is damaged, lost or destroyed,and the implications of receivinginsurance proceeds and reinvestingsuch proceeds.[2]

Excluded topics

Transfers ‘causa mortis’

3. Gains and losses on the disposalof movable and immovableproperty

a) Identify the assets which are subjectto capital gains and those which areoutside the scope of the capitalgains provisions.[2]

b) Identify the immovable propertywhich is subject to the propertytransfers tax.[2]

c) List the various exemptionsavailable.[2]

d) Define own residence for thepurposes of the capital gainsprovisions.[2]

Excluded topics

Transfers of property into andout of trusts, including reversionto settlor.

De-grouping provisions

Share value shifting provisions

4. Gains and losses on the disposalof shares and securities

a) Distinguish the disposals of sharesand securities which are subject totax as capital gains and those whichfall outside the scope of the capitalgains tax provisions.[2]

b) Determine the value of shares,including shares acquired prior to1992.[2]

c) Define and compute ‘goodwill’ inarriving at the value of shares. [2]

d) Define ‘controlling interest’ andillustrate how a transfer of acontrolling interest impacts on thecalculation of the chargeable capitalgain.[2]

e) Illustrate the adjustment to the costof acquisition when transferringshares in a company which hasimmovable property and / orinvestments in another company.[2]

f) Compute the increase for inflation ofthe value of immovable propertyheld by a company and thelimitations which may apply.[2]

Excluded topics

Transfer of shares involvingfiduciary relationships

Reductions in share capital

5. The computation of the taxpayable by individuals andcompanies

a) Recognise and determine whetherthe disposal or transfer of a businessasset is subject to a balancingstatement, capital gains or propertytransfer tax.[2]



b) Compute the amount of capital gainstax or the property transfer taxpayable.[2]

c) Recognise those capital gains whichmay be taxed by final withholdingand when it may be appropriate toelect to have these taxed in thenormal way.[2]

6. The use of exemptions and reliefsin deferring and minimising taxliabilities arising on the disposalof capital assets

a) Explain and apply rollover relief tobusiness assets as it relates toindividuals and companies.[2]

Excluded topics

Explain and apply the exemptionthat is available upon the transferof a business or partnership ennom collectif into a limited liabilitycompany

Explain and apply the reliefavailable on the reorganisation ofa company

E Social securitycontributions

1. The scope of social security

a) Describe the scope of socialsecurity.[1]

2. Class 1 contributions foremployed persons

a) Compute Class 1 contributionspayable by employers andemployees.[2]

3. Class 2 contributions for self-employed persons

a) Compute Class 2 contributions.[2]

F Value added tax

1. The scope of value added tax(VAT)

a) Describe the scope of VAT.[2]

b) List the principal supplies which areexempt with credit, exempt withoutcredit or subject to the reducedrate.[1]

2. The VAT registrationrequirements

a) Recognise the circumstances inwhich a person must register forVAT under articles 10, 11 or 12 ofthe VAT Act.[2]

b) Explain the advantages of VATregistration for a small undertaking.[2]

c) Explain how and when a person canderegister for VAT.[1]

3. The computation of VAT liabilities

a) Explain how VAT is accounted forand administered.[2]

b) Recognise the tax point when goodsor services are supplied.[2]

c) List the information that must begiven on a VAT invoice.[1]

d) Explain and apply the principlesregarding the valuation of supplies.[2]

e) Recognise the circumstances inwhich input VAT is non-deductible.[2]



f) Compute the relief that is availablefor bad debts.[2]

g) Explain the circumstances andprocedure for making adjustments tooutput tax and input tax and thepenalties and interest that will beapplied.[1]

h) Explain the treatment of imports,exports and trade within theEuropean Union.[2]

Excluded topics

Triangulation

Partial attribution

Detailed knowledge of penalties.

4. The effect of special schemes

a) Describe the cash accountingscheme, and recognise when it willbe possible and advantageous touse the scheme.[2]

b) Describe the accrual accountingscheme, and recognise when it willbe advantageous to use thescheme.[2]

c) Define a ‘small undertaking’ andrecognise when it will beadvantageous to be exempt or optfor the refund scheme.[2]

Excluded topics

The second-hand goods scheme

The capital goods scheme

The special schemes forretailers, civil, mechanical andelectrical engineering contractors

The special scheme for travelagents.



Reading List

Candidates should be aware of the primary and secondary legislation, guidelinesand updates issued by the Inland Revenue Department and the publication of courtcases by the Malta Institute of Taxation, being the main sources of information forthis exam.



Summary of changes to Taxation - Malta (TX-MLA)

ACCA periodically reviews its qualification syllabuses so that they fully meet theneeds of stakeholders such as employers, students, regulatory and advisory bodiesand learning providers.

Table 1 – Additions to syllabus

Section and subject area Syllabus content

C3 The comprehensivecomputation of corporateincome tax liability and taxaccounting

New outcome added:

e) Calculate any applicable notionalinterest deduction (NID) anddetermine the impact of the NID onthe allocation of the company’sprofits to its tax accounts

Table 2 – Deletions from syllabus / additions to excluded topics

Section and subject area Syllabus content

C3 The comprehensivecomputation of corporateincome tax liability and taxaccounting

The reconciliation and/or analysis ofamounts allocated to the untaxedaccount is no longer examinable andis added to excluded topics

D6 The use of exemptions andreliefs in deferring andminimising tax liabilitiesarising on the disposal ofcapital assets

The exemption that is available uponthe transfer of a business orpartnership en nom collectif into alimited liability company is no longeravailable and is added to excludedtopics

D6 The use of exemptions andreliefs in deferring andminimising tax liabilitiesarising on the disposal ofcapital assets

The relief available on thereorganisation of a company is nolonger examinable and is added toexcluded topics

Documents

Taxation – Malta (TX-MLA)...Taxation – Malta (TX-MLA) syllabus 5. Relational diagram linking Taxation – Malta with other exams 6. Overall aim of the syllabus 7. Main capabilities