L.S. 123.02 Regoli dwar Tnaqqis ta Taxxa (P.A.Y.E)

(1)(

1. b)and (
2. e)of the Income Tax Act; Title. Interpretation. Cap. 123. "paid" means paid directly or indirectly whether in cash or in kind, and includes crediting or depositing in a bank or other account or elsewhere for the benefit, use or advantage of the payee; "payee" means any person to whom emoluments are paid; "payer" means any person by whom emoluments are paid or who pays, or is liable to pay emoluments whether on his own account or on behalf of another person and includes government departments, persons in the public service of malta, public corporations and their officials, and other bodies of persons and their officials; "rate of tax" includes a nil rate. Determination and deduction of tax 3.

(1)The Commissioner shall determine and direct the rate at which tax is to be deducted by a payer on any occasion when emoluments are paid by him to a payee: provided that unless article 71 of the Income Tax Act is applicable or article 46 of the Income Tax Management Act has been applied, the Commissioner shall not, without the consent of the payee, direct the deduction of tax in excess of fifty per cent of the emoluments.

(2)The rate of tax determined by the Commissioner shall be communicated as soon as may be both to the payer and the payee.

(3)Directions for the deduction of tax may include directions regarding the manner in which the tax shall be deducted, the period over which the deduction shall be made and such other directions as the Commissioner may think fit. Determination of rate of tax at which deduction is to be made and its communication to payers and payees. Cap.

1. Cap.
2. 2 [ S.L.123.02 Deduction of tax from emoluments. Amended by: L.N. 101 of 1975; L.N. 12 of 1976; L.N. 143 of 1977; L.N. 135 of 1981; L.N. 62 of 1984; L.N. 38 of 1987; L.N. 25 of 1989; L.N. 409 of
3. Cap.
4. S.L.
5. 62 DEDUCTION OF TAX (P.A.Y.E) 4.

(1)When emoluments are paid to a payee, the payer shall deduct therefrom a tax at the rate determined and communicated to him by the Commissioner: Provided that no such deduction shall be made from any payment to which article 23 of the Employment and Industrial Relations Act and the Weekly Allowance National Standard Order, refer unless the Commissioner otherwise directs.

(2)(

1. a)In cases where the payer has not received directions from the Commissioner regarding the rate at which tax is to be deducted, he shall notify the Commissioner accordingly on the form supplied for this purpose by the Commissioner. (
2. b)The notification required by this sub-rule shall be made within three days of the coming into operation of the contract under which emoluments are paid by the payer.

(3)Where the payer has not received from the Commissioner directions regarding the rate at which tax is to be deducted he shall, until such time as directions are received, deduct tax at the rate of ten per cent: provided that if the payee is not resident in Malta, the payer shall deduct tax at the rate of twenty-five per cent.

(4)Notwithstanding the provisions of sub-rule

(3), but saving the provisions of sub-rule

(6), no deductions shall be made from emoluments paid to a resident payee where directions have not been received by the payer in the following cases: (

1. a)where the payee is unmarried or a widower and the emoluments, if expressed to be due (
2. i)on an annual basis, represent an income of less than two thousand and three hundred and ninetynine euros and twenty-five cents (2,399.25) per annum; (
3. ii)on a monthly basis, represent an income of less than one hundred and ninety-eight euros (198.00) per month; (iii) on a fortnightly basis, represent an income of less than ninety euros and eighty-five cents (90.85) per fortnight; (
4. iv)on a weekly basis, represent an income of less than forty-five euros and forty-two cents (45.42) per week; (
5. v)on a daily basis, represent an income of less than nine euros and twenty-two cents (9.22) per day; (
6. b)where the payee to the best of the payer’s knowledge is living with and maintaining a wife and the emoluments, if expressed to be due (
7. i)on an annual basis, represent an income of less than four thousand and twenty-nine euros and eighty-two cents (4,029.82) per annum; (
8. ii)on a monthly basis represent an income of less DEDUCTION OF TAX (P.A.Y.E) [ S.L.123.02 than three hundred and thirty-five euros and forty-three cents (335.43) per month; (iii) on a fortnightly basis, represent an income of less than one hundred and fifty-three euros and seventy-four cents (153.74) per fortnight; (
9. iv)on a weekly basis, represent an income of less than seventy-six euros and eighty-seven cents (76.87) per week; (
10. v)on a daily basis, represent an income of less than fifteen euros and forty-nine cents (15.49) per day.

(5)For the purposes of sub-rule

(4), where emoluments are expressed to be due on some basis other than one of the alternatives therein contemplated, the test as to whether tax is to be deducted or not shall be made by using the alternative which is most appropriate.

(6)Where the emoluments are gains or profits chargeable under article 4

(1)(b) of the Income Tax Act, the provisions of subrules

(4)and

(5)shall not be applicable if the emoluments are paid to an employee who - Cap. 123. (

1. a)to the best of the payer’s knowledge is a married woman; or (
2. b)is not expected to render full time services to the payer by whom the emoluments are paid during the period or periods in respect of which they are expressed to be payable. 5. The provisions contained in rule 4

(1)shall also apply to emoluments paid after the determination of the relative contract under which the emoluments have been paid. Deductions to be made after determination of contract. 6.

(1)Where the payer is an employer and the payee is a newly engaged employee, and the emoluments paid to the payee are gains or profits chargeable to tax under article 4

(1)(b) of the Income Tax Act, the payer shall, until such time as he receives directions from the Commissioner in terms of rule 3, deduct tax from emoluments paid to the said payee on the basis of directions regarding such deductions issued by the Comm issioner to a previous employer of the payee. Changes of employment.

(2)Notwithstanding the provisions of sub-rule

(1), the provisions of rule 4

(3)and

(4)shall be applicable (

1. a)if conclusive proof regarding directions issued to the previous employer is not made available to the payer by the payee; (
2. b)if the directions were issued by the Commissioner to a previous employer on a date anteceding by more than eighteen months that on which emoluments are first paid by the payer to his new employee; (
3. c)in respect of any emoluments paid three months or more after a new employee has been engaged where the directions referred to in paragraphs (
4. a)and (
5. b)Cap. 123. 3 4 [ S.L.123.02 DEDUCTION OF TAX (P.A.Y.E) notified a rate of ten per cent or less. Deceased payees. Power of the Commissioner to determine questions. 7. Notwithstanding any obligation laid upon him under any o th er law, in t he eve nt of any em o lu m en ts accr ui ng t o any individual being payable at any time after his death, the payer shall deduct tax therefrom in accordance with the provisions of these Rules as if the deceased individual were still alive and payment was being made to him. 8. If any question shall arise as to (
6. a)the applicability or otherwise of these Rules in respect of any class of income, and/or (
7. b)the rate at which tax is to be deducted when any emoluments are paid, such question shall be determined by the Commissioner, but subject to the provisions of these Rules. Requests for reduction of rate of deduction of tax. 9.

(1)(

1. a)Any payee who feels aggrieved by the rate of tax determined by the Commissioner, or any payer on his behalf, may request the Commissioner to direct a reduction in the rate at which tax is deducted. The request shall be made in writing and shall include sufficient details so as to enable the Commissioner to decide whether a reduction in the rate at which tax is to be deducted is justified. (
2. b)Any request made under the provisions of this rule shall not be valid if made with regard to a rate or in relation to any part of a rate certified by the Commissioner to have been determined for the collection of unpaid tax for a year or years of assessment other than the year of assessment following that during which the deduction is being made.

(2)Any request to the Commissioner made under the provisions of this rule (

1. a)shall not require him to direct the payer to cease making deductions of tax or to deduct tax at a lower rate; and (
2. b)shall not enable the payer to cease deducting tax or to deduct tax at a lower rate before he is instructed to do so by the Commissioner.

(3)The Commissioner as soon as may be following receipt of a request made under the provisions of this rule may require the p ayer to p r od uce s uch fu r ther in fo r matio n as h e may deem necessary. If the Commissioner is satisfied that a reduction in the rate is justified, he shall determine and direct in accordance with rule 3

(1)the new rate at which tax is to be deducted, and he shall communicate it in accordance with rule 3

(2).

(4)(

1. a)Not more than one request under this rule shall be made by or on behalf of a payee during any period of twelve consecutive months. DEDUCTION OF TAX (P.A.Y.E) [ S.L.123.02 (
2. b)Nothing in this rule contained shall impair the payee’s r i g h t u n d e r P a r t s V a n d V I o f t h e I n c o m e Ta x Management Act following service of the notice of assessment upon him in terms of article 33

(1). 5 Cap. 372. Accounting of deductions 10.

(1)Every payer shall at all times maintain an up-to-date record complete with monthly totals showing the following details in respect of each payee - Payers to keep records. (

1. a)full name and address; (
2. b)the date of payment and the gross emoluments paid; (
3. c)the tax, if any, deducted; and (
4. d)other details or information which the Commissioner may require.

(2)The record to be maintained in accordance with the provisions of sub-rule

(1)shall be retained and preserved as laid down in article 19 of the Income Tax Management Act. Such record shall be kept on the forms supplied by the Commissioner for this purpose. 11.

(1)(

1. a)On every occasion that emoluments are paid by a payer, he shall furnish the payee in receipt of such em o lu m en ts with a st atem en t s h ow in g th e g r os s amount of those emoluments and the amount of tax, if any, deducted therefrom in accordance with these Rules. The statement shall be given on a form approved by the Commissioner. (
2. b)The payer shall also furnish the payee, within twenty days from the 31st day of December of any year, with a statement in duplicate (one copy to be retained by the payee and the other copy to be forwarded by him to the Commissioner together with the return required to be filed under the provisions of article 10 of the Income Tax Management Act) showing the gross amount of the emoluments paid to hum during that year and the amount of tax, if any, deducted therefrom: Cap. 372. Statement to be given to payees. Amended by: L.N. 132 of 1977. Cap. 372. Provided that, where the contract under which the emoluments are paid is determined prior to the 31st day of December of any year, unless the provisions of rule 19 or of rule 26 apply, the said statement in duplicate shall be furnished to the payee or, in the event of his decease, to his heirs or legal representative, within twelve days of such determination.

(2)Subject to the provisions of rule 10

(2), a payee shall for the purposes of these rules or of the Payment of Provisional Tax (PT) Rules, be entitled to require any person who has at any time paid to him emoluments to furnish him with a statement within twelve days of demand showing the total gross emoluments paid to him and the amount of tax, if any, deducted therefrom during any specific year or part thereof. This statement shall be given on the form approved S.L. 372.18 6 [ S.L.123.02 DEDUCTION OF TAX (P.A.Y.E) by the Commissioner and it shall be furnished to the payee in duplicate. Monthly return remittance to the Commissioner. 12.

(1)(

1. a)Every payer shall submit a return to the Commissioner (including a nil return) on the form approved by him by the tenth day of each month containing the following details in respect of each payee to whom he has paid emoluments at one or more times during the preceding month (
2. i)the full name and address; (
3. ii)the gross emoluments paid during that preceding month; (iii) the rate at which tax is deductible; (
4. iv)the tax if any, deducted during that preceding month; and (
5. v)any other details or information which the Commissioner may consider necessary. The total tax which should have been deducted during the said preceding month as shown on the said return, less any amount recouped under paragraph (b), shall be remitted to the Commissioner together with the return. Such return shall be delivered on the form to be supplied or approved by the Commissioner. (
6. b)Where the payer has deducted tax at a rate higher than that applicable under these Rules and in consequence excess tax has been deducted and also remitted to the Commissioner, and such over-deduction and overremittance becomes known to the payer, he shall make immediately a payment to the payee out of his own funds of an amount corresponding to such excess: Provided that where the circumstances of the case warrant an adjustment to the satisfaction of the Commissioner and that repayment to the payee has been made, the payer shall on the occasion of the next remittance to the Commissioner be entitled to set off and recoup from the total amount of tax to be remitted to the Commissioner an amount corresponding to the amount so repaid to the payee.

(2)(a) If the remittance required by sub-rule

(1)is not received by the Commissioner by the due date, or if the amount received is less than that which should have been remitted, the Commissioner shall determine to the best of his judgement the total amount of the deductions of tax which should have been made by the payer during the preceding month, and he shall serve a notice upon the payer requiring him to pay the full amount, or the difference, as the case may be, within the time to be limited in such notice. Such full amount or difference, as the case may be, shall thereupon become a debt due to the Government and recoverable from the payer as set out in rule 17

(2). DEDUCTION OF TAX (P.A.Y.E) [ S.L.123.02 7 (b) Where, following service of a notice issued under paragraph (a), the Commissioner, having regard to the relevant return submitted by the payer under sub-rule

(1)is satisfied that the total amount received by him exceeds the deduction of tax which should have been made, such excess shall be refunded or set off wholly or in part against the next or any other such remittance still due. 13. Where a payer fails to deduct tax in accordance with the provisions of these Rules from any emoluments, and he subsequently pays to the Commissioner the amount which should have been so deducted, he may recover that amount, but only that amount, in a manner approved by the Commissioner from the payee from whose emoluments it should have been deducted. Recovery of deductions paid to the Commissioner from payees. 14.

(1)Not later than the 30th day of January of each year, every payer shall furnish the Commissioner with the following documents - Annual return to be submitted by payers. (

1. a)a separate return for each payee on the form supplied or approved by the Commissioner providing the following details in respect of each payee to whom he has paid emoluments at one or more times during the year ending on the preceding 31st day of December: (
2. i)(
3. ii)(iii) (
4. iv)the full name and address; the gross emoluments paid during that year; the tax, if any, deducted during that year; and any other details or information which the Commissioner may consider necessary; and (
5. b)a statement on the form supplied or approved by the Commissioner which shall include the following: (
6. i)a list showing the names and addresses of all payees in respect of whom a return was submitted under paragraph (a), the total gross emoluments paid during that year, and the total tax deducted therefrom; and (
7. ii)a reconciliation of the sum of the total tax deducted from each payee listed in the statement at sub-paragraph (
8. i)with the sum of the monthly remittances made by the payer for the said year.

(2)The documents required under sub-rule

(1)(

1. a)and (
2. b)shall be furnished in addition to any other return required under rule 12

(1)(a).

(3)The Commissioner may at any time require further returns or statements in relation to any specific period or periods.

(4)The Commissioner may exempt any person or class of persons from complying with any of the provisions of this rule. Any exemption may, at any time, be revoked by the Commissioner.

1. Where a payer, before the end of a year, ceases for any reason to exercise the functions of a payer, and the provisions of rule 26 are not applicable, the returns required in terms of rule 14 Where a payer ceases to carry out his functions. 8 [ S.L.123.02 DEDUCTION OF TAX (P.A.Y.E) shall be furnished within one month of such cessation. Deductions of tax to be set off against payees’ liabilities.
2. Any deduction made under these Rules shall, where the relative amount has been paid to the Commissioner, be set off for the purpose of collection against the tax charged in respect of the year of assessment immediately following that during which the deduction was made: Provided that where the deductions to be set off as aforesaid exceed the tax charged for the said year of assessment, as reduced by any other payments made in its respect, such excess shall be set off against any outstanding liability for any other year of assessment, and any remaining excess shall be refunded. Collection and refunds Recovery of tax deducted by payers. 17.

(1)Any tax deducted or which should have been deducted by payers under these Rules during any month shall be a debt due to Government by the tenth day of the succeeding month and shall be recoverable as such.

(2)Without prejudice to any other powers vested in him, the C o m m i s s i o n er m a y s u e an y p a y er i n a c o u r t o f c o m p e t e n t jurisdiction for the recovery of any tax deducted or which should have been deducted by a payer under these Rules and not remitted to the Commissioner within the prescribed period. Refund of tax over deducted. Cap. 372. 18.

(1)A payee shall be entitled to claim a refund of tax deducted by payers from his emoluments and paid to the Commissioner under these Rules, in excess of the amount with which he is properly chargeable.

(2)Subject to rule 16 claims for refunds under this rule shall be governed by article 48 of the Income Tax Management Act. Miscellaneous Deceased payers.

1. If any payer dies, anything which he would have been liable to do under these Rules shall be done by his heirs, legal representatives or successors, or, in the case of a payer who paid emoluments on behalf of another person, by the person succeeding him, or, if no person succeeds him, by the person on whose behalf he paid the emoluments. Joint responsibility.
2. Where two or more persons are concurrently to be considered to be the payer in relation to any payee for the purposes of these Rules, the obligations, duties and liabilities imposed on payers by these Rules shall be deemed to have been imposed on them jointly and severally. Inspection of records.
3. Every payer, when called upon to do so by the Co m mis sio ner, sh all p ro du ce fo r in sp ection , at the p ay er ’s premises or, when the Commissioner shall so require, at the Office of Inland Revenue, all wage sheets, lists and other documents and records whatsoever relating to the calculation or payment of emoluments paid by him, or the deduction of tax therefrom, or the accounting of any tax so deducted. DEDUCTION OF TAX (P.A.Y.E) [ S.L.123.02 9
4. Where the payer pays emoluments on behalf of another person the latter shall provide the payer with all the information necessary to enable the payer to comply in every way with the provisions of the Income Tax Act, the Income Tax Management Act and of these Rules. Payment on behalf of another person. 23.

(1)Where any amount is paid by the payer to or for the benefit of a payee in respect of any tax which may be due by the latter, the emoluments shall be deemed to be increased by a sum equivalent to the amount so paid. Tax free emoluments. Cap. 123. Cap. 372.

(2)The provisions of this rule shall also apply in cases where the payer remits tax to the Commissioner which should have been deducted from emoluments paid by him but which has not been deducted, and which is not subsequently recovered by the payer from the payee. 24.

(1)Where any payment of emoluments to a resident payee represents or includes amounts payable on the determination of a contract giving rise to the payment of emoluments, the rate of deduction of tax therefrom, notwithstanding the provisions of rule 3

(1)and rule 4

(3)shall be as set out hereunder - Terminal payments. Amended by: L.N. 409 of 2007. (

1. a)where the terminal payment is less than one thousand and one hundred and sixty-four euros and sixty-nine cents (1,164.69) ................................................. 15%; (
2. b)where it is one thousand and one hundred and sixtyfour euros and sixty-nine cents (1,164.69) or over, but less than two thousand and three hundred and twentynine euros and thirty-seven cents (2,329.37) ....... 20%; (
3. c)where it is two thousand and three hundred and twenty-nine euros and thirty-seven cents (2,329.37) or over but less than four thousand and six hundred and fifty-eight euros and seventy-five cents (4,658.75) 30%; (
4. d)where it is four thousand and six hundred and fiftyeight euros and seventy-five cents (4,658.75) or over but less than eleven thousand and six hundred and forty-six euros and eighty-seven cents (11,646.87) 45%; (
5. e)where it is eleven thousand and six hundred and fortysix euros and eighty-seven cents (11,646.87) or over but less than seventeen thousand and four hundred and seventy euros and thirty cents (17,470.30) .......... 50%; (
6. f)where it is seventeen thousand and four hundred and seventy euros and thirty cents (17,470.30) or over 55%.

(2)The rates of deduction of tax under sub-rule

(1)shall in such instance be increased by ten per cent where payment is made to a non-resident payee or to a resident person on behalf of a nonresident payee.

1. Every payer is hereby indemnified against any person whatsoever for all deductions and payments made by him in pursuance of and by virtue of these Rules. Indemnification of payers. 10 [ S.L.123.02 DEDUCTION OF TAX (P.A.Y.E) Where the payer, but not the relative contract, is changed.
2. Where there has been a change in the payer from whom a payee receives emoluments without there having been an effective change in the contract under which the emoluments are paid, the payer after the change shall be liable to do anything which the payer before the change would have been liable to do under these Rules. Certain arrangements to be null and void.
3. Saving arrangements such as are provided for in rule 23, any arrangement whereby a payer undertakes not to deduct tax as required by these Rules from any part or all of the emoluments paid to a payee shall be null and void. Managers or other principal officers of bodies of persons.
4. The manager or other principal officer of any body of persons shall be personally answerable for all matters required to be done under these Rules by or on behalf of the body of persons. Payers to give notice to the Commissioner.
5. Every payer who is obliged to give notice to the Commissioner within three days of the coming into operation of the contract under which emoluments are first payable by him to any payee. This notice shall be given by every payer on the form supplied by the Commissioner. Forms referred to in these Rules.
6. A sufficient number of forms referred to in these Rules shall be made available free of charge by the Commissioner to every payer on his request. No return, statement, certificate or other information required to be submitted by these Rules shall be deemed to have been submitted unless it is made on a form supplied or approved by the Commissioner.