Month: February 2020

6 Feb 2020

MFSA publishes a revised Corporate Governance Framework for Authorised Entities and Listed Companies in Stakeholder Consultation

The Malta Financial Services Authority has today launched a stakeholder consultation setting out several proposals for the promulgation of a comprehensive principles-based Corporate Governance Code which is applicable to all entities authorised by the MFSA and Listed Companies, which would then be supplemented by sector-specific rules and complementing guidance notes.

The Authority is proposing that entities will be expected to ‘apply and explain’ the high-level principles-based code, and to ‘comply or explain’ how they are following the applicable rules and guidelines. The consultation also puts forward principles, for inclusion in the proposed Corporate Governance Code, on the Board of Directors, the responsibilities of functionaries and officials, engagement with stakeholders, committees, corporate culture, ethics framework, risk management, as well as other topics.

MFSA Chief Executive Officer, Joseph Cuschieri, commented that “We believe that the proposals set out in today’s publication will significantly raise the bar with respect to standards of Corporate Governance and set the tone in so far as the Authority’s expectations. We have put forward these proposals because we believe that the focus on Corporate Governance will have a positive effect on the financial services industry and will raise compliance standards across the board”.

The Consultation Document is publicly available on the MFSA website and will remain open until Wednesday 26 February 2020. Interested parties are invited to send their feedback on  CorporateGovernance@mfsa.mt by this date.

To view the official announcement and download the Consultation Document, please click here.

5 Feb 2020

Withholding Tax on Assignments of Rights acquired under a Promise of Sale Agreement

The Commissioner for Revenue has published guidance relation to the 2020 budget measures introduced regarding the withholding tax due on the assignment of rights acquired under a promise of sale agreement (ċessjoni ta’ konvenju). This measure is retroactively applicable in relation to any assignments made from 1 January 2020 and the relative legislation will be made retroactive to that date.

The guidance states that the final withholding tax shall be withheld from the consideration paid for the assignment of rights acquired under the promise of sale. However, the withholding tax shall be calculated after taking into account the following allowable deductions:

  • Brokerage fees, if any, paid by the assignor to the extent that they result from documentary evidence and are supported by a receipt;
  • Where the assignor had acquired the rights in terms of a prior valid assignment, any sum paid by him to the previous assignor to the extent that it results from that assignment and is supported by a receipt.

Once the above mentioned allowable deductions are deducted on a pro rata basis, tax shall be withheld on the aforementioned consideration at 15% on the first €100,000 whilst 7% provisional tax shall be withheld on the remainder of the consideration. That part of the consideration in excess of €100,000 shall be deemed to be gains or profits derived from a trade, business, profession or vocation falling within the scope of Article 4(1)(a) of the Income Tax Act to be declared in the tax return.

The guidance further clarifies that in the event that a person enters into various promise of sale agreements in relation to different apartments within the same building, such individual is entitled to pay 15% final withholding tax on the first €100,000 of each cession of right on promise of sale, provided that the individual does not cede the promise of sale in favour of third parties and that the rights in relation to each promise of sale are being acquired by different people.