Malta Income Tax & VAT Penalties

Malta Budget Report 2003
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Refund of Penalties imposed by the VAT and the Income Tax Departments

Context: 93/92% VAT & IT compliance re. submissions of tax declarations for VAT & Income Tax, payment settlements.

Current Penalty System: automatic penalty system triggered off on a first VAT / Income Tax contravention.

Measure: Law-abiders who default in extraordinary circumstances will be admonished and will only be penalised on relapsing.

Penalty on Duty on Documents:
discrepancies between contractual value of property & value determined by CIR

Current Penalty System: A penalty of ten times more the duty saved by the amount under-declared.

Measure: Reduction to twice the same duty evaded; further gradual reduction of penalty according to timeliness of payment.

Outstanding Balances from
VAT 1995 & from CET

Aim: To facilitate settlement by taxpayers of outstanding balances under the VAT 1995 & CET.

Measure: Reduction of c.15,000 assessments (Lm4.6 million in penalties) & reduction of penalties on a percentage scale linked to settlement time frame.

(interests due on outstanding tax are not affected).

Provisional Tax

Current System: Businesses declaring unexpected year-end profits which have not been declared for provisional tax purposes (due in April and in August), incur a penalty + interests for a whole year.

Measure: The penalty & interest on profits realized during the last four months of the year, which are not normal seasonal profits, will be calculated on 4 months not 1 year.

VAT Refunds

Aim: To help businesses’ cash flows.

Measure: VAT refunds due to an enterprise  providing exempt goods & services, will be made:

  • in 2003: within 4 not 5 months
  • in 2004: in 3 not 4months.

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