Article 13 of the Income Tax Act ("ITA") provides for taxation of temporary residents. A temporary resident is a person:
- who is in Malta for some temporary purposes only, and
- who does not have any intention to establish his residence in Malta and
- who has not actually resided in Malta for more than six months.
Such person will be subject to tax in Malta on income arising in Malta only (such as trading income for services rendered in Malta). This means that he will not be subject to tax on income arising outside Malta, irrespective of whether it is received in Malta.
The ITA does not define what constitutes a "temporary purpose". Therefore recourse is made to English Law. In Gaines-Coopers case, "temporary purpose" has been defined as a casual purpose lasting for a limited period of time. This is to be distinguished from the case of "a person who is in a country in pursuance of his regular habits of life". Thus if for example an individual comes to Malta for a limited time every year but he does so to be with his family and friends, he will not be considered to be as a temporary resident but rather as an ordinary resident.
