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10.1 Oil, Gas and Mineral Extraction

Maltese tax law grants specific rules for companies that are engaged in the business of exploration for or production of petroleum profit from the sale or disposal of petroleum products. For this purpose, “petroleum” means all natural hydrocarbons liquid or gaseous including crude oil, natural gas, asphalt, ozokerite and cognate substances and natural gasoline.

In accordance with the Income Tax Act, gains or profits derived by a company from the production of petroleum for any basis year (being the year immediately preceding a year of assessment) are arrived at by deducting the recoverable costs as defined in the contract and not yet fully recovered by the contractor, from the total of the value of the cost recovery petroleum and of the share of profit petroleum, as defined in the contract, allotted to the contractor for that year, to which must be added any ancillary or incidental income for the same year . Where, after such deduction, a balance of unabsorbed recoverable costs remains, the amount of such unabsorbed costs must be carried forward to the following year and added to, and become part of, the recoverable costs for that year.

The tax rate on chargeable income is 35 percent.

Another important exemption with respect to petroleum profits is that dividends paid out of profits derived from the production of petroleum in Malta are exempt from tax in Malta.

10.2 Banking and Finance

Malta has a large banking and finance sector which provides significant tax revenue to the country.

Malta has special computational rules for ascertaining the income of companies undertaking the business of insurance.

For information on the taxation of Collective Investment Schemes, see Section 2.6.4.

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