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Exemption on Royalties Derived from Patents (Amendment) Rules, 2016 (L.N. 4 of 2016)

Exemption on Royalties Derived from Patents (Amendment) Rules, 2016 (L.N. 4 of 2016)

Article 12(1)(v) of the Income Tax Act provides for a tax exemption in relation to income received from royalties, advances and similar income derived from patents in respect of inventions, copyright and trademarks as may be prescribed. This exemption was only being applicable for income received from royalties derived from patents in respect of inventions as prescribed by Subsidiary Legislation 123.117 ‘Exemption on Royalties Derived from Patents Rules’ applicable from 1st January 2010. No specific legislation has been enacted with regards to the exemption on income received from royalties derived from copyright or trademarks and therefore the exemption for these two types of royalty income cannot be exercised.

The amendment issued on 5th January 2016 specifies that Malta Enterprise will not issue any further determination in relation to applications for tax exemption on royalty income from patents after 30th June 2016. In addition, persons who have been issued with a determination up to 30th June 2016 will continue benefiting from such exemption up to 30th June 2021 and the exemption will no longer apply after this date.

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