L.S. 123.88 Regoli dwar Finance Leasing

(1)(

1. f)of the Act but excluding any industrial building or structure; "financial institution" means an institution licensed under the Financial Institutions Act; Cap. 376. "finance lease" means a lease of assets referred to in rule 3: Provided that the Commissioner may, at his absolute discretion, not recognise a lease of assets as a finance lease if he is of the opinion that the leasing company and the lessee are in any way related; "finance leasing company" means (
2. a)a company as defined in the Act, being a duly licensed financial institution which has its objects expressly limited to that of being engaged solely in the business of granting finance leases and in such other acts and activities as are necessary for the conduct of the said business; (
3. b)a company incorporated outside Malta and of a nature similar to that mentioned in paragraph (a); "qualifying finance lease" means a finance lease qualifying in accordance with the provisions of rule 4. 3.

(1)A finance lease is constituted by the lease of an asset on or after the 1st January, 2005 involving the payment by the lessee to the lessor over a number of years of the full, or nearly the full cost of the asset together with a return on the finance provided by the lessor and such other remuneration as may be reasonable in the circumstances of the case. The lessee shall substantially assume all the risks and rewards normally associated with the ownership of an asset, other than the legal title thereto. Finance leases.

(2)A contract of hire purchase, a lease purchase agreement, an operating lease and similar arrangements, as well as sale and leaseback transactions shall not constitute a finance lease. 4. A contract of lease shall qualify as a finance lease under these rules where (

1. a)the lessor is a finance leasing company; and Qualifying finance leases. 2 [ S.L.123.88 S.L. 123.01 FINANCE LEASING (
2. b)the period of the lease is for four years or more and is not shorter than the period of the asset’s depreciation as established in the Schedule to the Deduction (Wear and Tear of Plant and Machinery) Rules; and (
3. c)notification of the lease contract is made to the Commissioner by the finance leasing company, or, if the finance leasing company falls under paragraph (
4. b)of the definition of "finance leasing company" in rule 2, by the lessee, within three months of the signing of the lease contract, on the prescribed form in the Schedule together with an authenticated copy of the relative lease contract. Determination of chargeable income. Amended by: L.N. 368 of 2009. S.L. 123.07 5. For the purpose of determining the income chargeable to tax under the Act of a lessor and of a lessee, notwithstanding the provisions of rule 3 of the Income Tax (Deductions) Rules, the following arrangements shall apply in the case of a qualifying finance lease: (
5. a)without prejudice to the right for any deduction properly attributable there against, the lessor shall be chargeable to tax on the full amount of the annual lease payments; (
6. b)the lessor shall be entitled to a deduction in respect of the wear and tear of the leased asset in accordance with the provisions of article 14

(1)(

1. f)of the Act; (
2. c)the lessee shall be entitled to a deduction in respect of the full amount of the lease payments made by him in respect of the leased asset as well as all other deductions properly due under article 14 of the Act: provided that no deduction under subarticle

(1)(f) of the said article shall be granted. Payment on transfer of ownership. 6. Where on the occasion of the transfer of the title of ownership over a leased asset the lessee makes a payment to the lessor in excess of the total agreed annual payments such payment shall be chargeable to tax in the hands of the lessor. The lessee shall thereafter be entitled to deductions under article 14

(1)(f) of the Act in respect of any such payment and the provisions of article 24 of the Act shall also apply. Termination before due date 7.

(1)For the purposes of these rules, where a finance lease is terminated prior to the expiration of the lease term, the following provisions shall apply: (

1. a)where a lessor obtains repossession of a leased asset and enters into a second or subsequent lease agreement or agreements in respect of the same asset, the total of the deduction for wear and tear to which the lessor is entitled in respect of the asset shall be equal to the total of the deduction for wear and tear not availed of under the previous agreement or agreements; (
2. b)article 24 of the Act shall apply where (
3. i)a lessor disposes of an asset after having FINANCE LEASING [ S.L.123.88 3 obtained repossession of the said asset as mentioned in paragraph (
4. a)of this sub-rule; or (
5. ii)the lessee takes over the asset against a consideration.

(2)Where a finance lease has been terminated before the due date, the finance leasing company and the lessee shall both be under obligation to give notice in writing to the Commissioner of the said termination and notice shall be given within thirty days of the happening thereof. 8.

(1)A finance leasing company shall be deemed not to constitute part of a group of companies for the purposes of articles 16 to 22 of the Act.

(2)No successor in title shall be entitled to any set off, or other benefit or relief, in respect of any losses incurred by a finance leasing company, nor shall a finance leasing company be entitled, as a successor in title, to any set off, or other benefit or relief, in respect of any losses incurred by any other company. Restriction of group relief and entitlement to succession of losses.

(3)Any losses incurred by a finance leasing company can only be set off against profits from the same activity. 9.

(1)These rules shall only apply where no other benefits are being claimed on the same asset under any other legislation granting fiscal incentive schemes.

(2)The provisions of these rules shall not have effect where any transaction purporting to be a finance lease is an artificial or fictitious scheme to reduce, whether directly or indirectly, the amount of tax payable on the transaction.

(3)If a finance lease does not qualify as such under these rules for any reason whatsoever, the Commissioner may, at his absolute discretion, determine the manner of its treatment for tax purposes. Further conditions. 4 [ S.L.123.88 FINANCE LEASING SCHEDULE (Rule 4) Notification to the Commissioner for Revenue of a Finance Lease Contract Name and Address of lessor: ................................................................................. Income Tax Reg. Number: .................................................................................... Name and Address of lessee: ................................................................................. Income Tax Reg. Number: .................................................................................... Description of asset leased: ................................................................................... Country where asset will be used: ......................................................................... Annual lease payments: ........................................................................................ Date and period of lease: ....................................................................................... Tax residence of lessee: ........................................................................................ PURSUANT to the provisions of rule 4 of the Finance Leases Rules, notice is hereby given that a finance lease has been contracted between the above named parties. Details of the lease appear in the attached authenticated copy of the relevant instrument. .................................................... ................................. Finance Leasing Company / Lessee Date