Tax Commissioner Seeks Attorney General's Advice On Court Ruling

by Robert Lee, Tax-News.com, London

17 June 2003

The Maltese Department of Inland Revenue is currently seeking advice from the Attorney General following an Appeal Court ruling which stated that tax assessments must be filed on a taxpayer within eight years of the base tax year.

The ruling overturns a previous judgement made in 1991 which set the time limit for an assessment from the day it was drawn up by the revenue department. However, the new ruling states that the time limit does not commence until the notification is actually received by the taxpayer, a decision which could potentially affect many thousands of outstanding assessments and cause a major headache for the tax authority.

Commenting on the Court's ruling, Adrian Chetcuti, Inland Revenue Commissioner, told the Times of Malta: "Our stand in the past was that the assessment has to be completed within the eight-year period, but that the date on which it is served is not bound by the time limit." Consequently, any pending assessments referring to years prior to 1997 could be affected by the judgement.

However, Mr Chetcuti stressed that overall compliance between the taxpayer and the revenue department has shown a marked increase in recent years, and bureaucratic nightmare though this situation may be, the outstanding assessments represent a small minority. The Commissioner said that the introduction of self assessment in 1999, combined with tougher enforcement procedures and a generally more efficient tax collection system, has meant that around 93% of returns are filed on time.

These factors have combined to increase tax revenues from Lm110 million in 1998 to Lm200 million in 2002 with only minor changes to the tax brackets, Mr Chetcuti explained. It has been suggested that the stricter enforcement measures have also had a hand in this. In 1998, barely 900 Maltese taxpayers declared income over Lm12,000, whereas the most recent figures show that this has ballooned to 5,700.

Meanwhile, the Tax Commissioner refuted suggestions made recently by the president of the Malta Institute of Taxation Edwin Vella that new taxation laws were written in excessively complex language partly as a result of poor draftsmanship.

"It is not clear to which particular section of legislation he was referring," observed the Commissioner, "although I am glad to say that there are not many complaints. Of course, from our point of view it is obviously preferable to ensure that there are no loopholes or areas which are subject to misinterpretation."

Recommended