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Tax Guidelines on Qualifying Employment in Maritime Activities and the Servicing of Offshore Oil and Gas Industry Activities

Background
 
The Maritime sector is a significant player in the local economic development. The marine and maritime sectors contribute to 14.7 per cent of the local GDP, which figure is projected to increase to 18 per cent by 2039. Almost 25 per cent of the local workforces (almost 40,000 people) are employed in the coastal tourism, water sports, shipping and fisheries sectors. Over 1,500 merchant ships fly the Maltese flag, with the Maltese register ranking as one of the largest in Europe and in the world. New legislation has breathed new life into Malta’s maritime industry and the country has been steadily building up a cluster of maritime services.
 
The objective of the Qualifying Employment in Maritime Activities and the Servicing of Offshore Oil and Gas Industry Activities (Personal Tax) Rules (LN140 of 2018 ) is to give a long-term vision to the sector in order to adequately equip the necessary operations with the skills required and control the limitations encountered due to a limited availability of human resources.
 
 
Eligible Employment and Offices, includes the following positions:
  • Maritime Activities
  • Chief Executive Officer
  • Chief Operations Officer
  • Managing Director
  • Chief Financial Officer
  • General Manager
  • Crewing Manager
  • Technical Manager
  • Technical Ship Superintendent
  • Designated Person Ashore
  • Master
  • Chief Mate
  • Second Officer
  • Chief Engineer
  • Second Engineer
  • Chef
 
 
Servicing of the Offshore Oil and Gas and Ancillary Services Industry Activities
  • Chief Executive Officer
  • Chief Operating Officer
  • Head of Training Academy (which Academy must be certified by an international accreditation institution).
 
 
Conditions for Eligibility
 
The rules came into force with effect on the 01 April 2018 and apply to income which is brought to charge in year of assessment 2017 (basis year 2016), as regards eligible offices in the Servicing of the Offshore Oil and Gas and ancillary services industry and as from the year of assessment 2018 as regards eligible offices in Maritime Activities. The rules apply to individuals not domiciled in Malta.
The Qualifying Employment in Maritime Activities and the Servicing of Offshore Oil and Gas Industry Activities (Personal Tax) Rules, 2018 is a programme that allows senior employees engaged within the maritime and oil and gas industry to benefit from a flat rate of 15% tax on employment income derived in respect of work or duties carried out in Malta.
 
 
Main Applicable Conditions
  • be employed to fill a senior position (or to perform equivalent activities) and be in possession of professional qualifications or acceptable professional experience;
  • be entitled to remuneration of at least €65,000 for basis year 2018 (exclusive of the annual value of any fringe benefits) in terms of a contract of employment;
  • reside in accommodation regarded as normal for a comparable family in Malta;
  • not be domiciled in Malta;
  • be in possession of a valid travel document;
  • be in possession of adequate health insurance;
  • does not benefit under any alternative incentives available in Malta;
  • has signed a Qualifying Contract of Employment.

 

Qualifying Contract of Employment

  • derives employment income subject to income tax in Malta;
  • has an employment contract subject to the laws of Malta and proves to the satisfaction of the Authority for Transport in Malta that the contract is drawn up for exercising genuine and effective work in Malta;
  • proves to the satisfaction of the Authority for Transport in Malta that  the applicant is in possession of professional qualifications and has professional experience;
  • fully discloses for tax purposes and declares emoluments received in respect of income from a qualifying contract of employment and all income received from a person related to his employer paying out income from a qualifying contract as chargeable to tax in Malta;
  • proves to the satisfaction of the Authority for Transport in Malta that he performs activities of an Eligible Employment and Office.

 

Eligible office is an employment included in the list  above and which is held with any of the following:

  • any undertaking  holding  a  Document  of Compliance  (DOC)  issued  in  terms  of  the  International Safety Management (ISM) Code or a Seafarer Recruitment and  Placement  Services  Licence  issued  in  terms  of  the Maritime Labour Convention, 2006;  or
  • any undertaking  engaging  the  particular individual  for  work  on  board  any  ship,  excluding  ships operating on regular services as well as ships whose use or operation requires certification in terms of the Commercial Vessels  Regulations  and  which  are  berthed  or  anchored within the territorial waters of Malta or any port in Malta for at least a period of one month over a calendar year; or
  • any undertaking which carries on mainly a trade or business consisting in the Servicing of the offshore oil and gas  and  ancillary  services  industry.

 

Application

An application for a formal determination relating to eligibility must be made to the Registrar General of Shipping and Seamen, Transport Malta using this Form.
 
The benefit is exercised for each year of assessment by means of a declaration made on the RA 29 Form signed by the beneficiary and endorsed by Transport Malta. The Form once endorsed by Transport Malta is to be attached to the Income Tax Return and filed with the Office of the Commissioner for Revenue within the tax return deadline date.