Recent developments
While Malta has not yet formally adopted Action 8-10 of the BEPS project, the current international practice and the recent developments signal a change in the near future. The Budget Measures Implementation Act, 2021, includes a new enabling provision (article 51A) that empowers the Minister for Finance to introduce detailed transfer pricing rules. As a result of this provision, the introduction of such rules in Malta appears imminent. More specifically, the enabling provision paves the way to a partial or full implementation of BEPS actions 8-10.
The enabling provision clearly stipulates that the rules will provide a legal basis for an at arm‘s length pricing of intercompany transactions.
Additionally, Malta has indirectly introduced Transfer Pricing rules by adhering to international conventions and relevant EU directives. For example, Malta‘s double tax treaties use the OECD Model Tax Convention as a basis. Article 9, which codifies the Associated Enterprises definition, stipulates a requirement to adjust any intercompany transactions to an arm‘s length standard.
We expect more guidance and implementation of transfer pricing requirements in the very near future. The current developments are in line with our observation in various other jurisdictions.
Our take
We expect full implementation of transfer pricing requirements in the near future. In this respect, we advise Multinationals and advisory firms to prepare for the formal introduction of Transfer Pricing requirements. This includes a consistent and coherent filing process, the utilization of benchmark studies to determine whether intercompany transactions are at arm‘s length, and potentially the filing of Country-by-Country reports.
Please feel free to reach out to our transfer pricing and tax technology experts. We‘re happy to help you prepare for the new transfer pricing requirements.
Please feel free to reach out to our transfer pricing and tax technology experts. We‘re happy to help you prepare for the new transfer pricing requirements.
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