Malta To Raise Fines For VAT Offences

by Robert Lee, Tax-News.com, London

07 April 2005

Tonio Fenech, Parliamentary Secretary at the Maltese Finance Ministry has revealed that the government is to crack down on VAT evasion by increasing fines for those who fail to issue VAT receipts.

Speaking to reporters at the Inland Revenue Department, Mr Fenech stated that the current penalty regime was too lenient, and did not do enough to deter VAT non-compliance at all levels of business.

"The fines have to be raised drastically. People have to realise that with higher tax compliance, the country will be able to sustain its social security services, including health in particular,” he argued.

At present, fines stand at Lm100, Lm150 and Lm200 (EUR233, EUR350 and EUR465) for the first, second and third offences respectively.

Mr Fenech continued:

"Those who abuse by not issuing a VAT receipt range from the small, one-man, back room operation to professionals."

"After the time-limit expires, the VAT department has the legal backing and obligation to take defaulters to court. We do not now expect any organisation to come out criticising the department if the court sends VAT defaulters to prisons."

Fenech also hinted that the government is giving consideration to changing the income tax brackets in the next budget, although he did not offer any specific details regarding such plans.

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