Malta gazettes transfer pricing rules

On November 18, 2022, Malta gazetted Transfer Pricing Rules, 2022.

As per the rules, in ascertaining the total income of any company:

• where any amount incurred or due, in the year preceding the year of assessment under any cross-border arrangement to which the transfer pricing rules apply, differs from the arm’s length amount, it shall be deemed that the arm’s length amount was incurred or due as opposed to the actual amount incurred or due; and
• where any amount accrued or derived, in the year preceding the year of assessment under any cross-border arrangement to which the transfer pricing rules apply, differs from the arm’s length amount, it shall be deemed that the arm’s length amount was accrued or derived instead of the actual amount accrued or derived.

The rules provide for ascertaining the total income of a permanent establishment, situation in which the rules do not apply.

The rules provide that the Commissioner may issue a unilateral transfer pricing ruling in order to provide certainty in relation to the application of these rules to a cross-border arrangement. Further, the Competent Authority may enter into an advance pricing agreement with the relevant foreign competent authority. An advance pricing agreement may be of a bilateral or multilateral nature.

The transfer pricing rules will apply with effect from January 1, 2024.