Tax Law Enforcement in Malta

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Malta runs a self-assessment procedure of tax where the taxpayers figures their own tax liability. The Income Tax Management Act (ITMA) necessitates that each taxpayer files a yearly return of income tax . Each of such return is to be joined by a computation consisting of:

  • the chargeable income of an individual for that year of assessment based on the data gave in the return,
  • the tax charge,
  • the tax payable or refundable for that year of assessment.

For the purpsoe of verification of information contained therein, the Commissioner for Revenue can demand documentation, including accounts, documents or books, from a tax payer and  can ask the taxpayer for attending personally or through his/her representative for the inspection of such data.

The law imposes some of the deadlines for the payment of tax for both natural and legal persons in order to ensure the on-time payment of taxes. In general, the tax has to settled same day on which the filing of return is done. But, there are certain particular circumstances, such as under the final settlement system, where the tax is not settled at return filing time and withheld at source from all compensations paid out by an employer to employee. The provisional tax can also be payable in the year prior to assessment year.

In case, the taxpayer makes a default in the submission of his/her income tax return, the Commissioner can determine the tax amount to be paid by that person for assessment year on the basis of an estimation. After such an estimation, if the taxpayer still makes default in such submission, the Commissioner can make an  assessment without  any notification to taxpayer that an inquiry is being conducted into his/her tax declaration and liability. In order to discourage not respecting the deadlines of tax payment, the ITMA imposes an extra tax and interest for delayed payment of tax.

When it appears to the Commissioner that the determination of payable tax has been done at a less amount than the amount at which it should have been done, then, he/she after consideration of such further books, returns and accounts, will make an assessment of the taxpayer to best of his or her judgement. When, in pursuance of a best judgment assessment, the Commissioner’s doubts are confirmed, he or she may continue making an additional assessments.