MAM objects to proposed income benchmark scheme

The Medical Association of Malta has taken exception to a scheme by the Tax Compliance Unit on income benchmarks for doctors, Stephen Fava, MAM president said yesterday.

The MAM will be writing to the unit asking it to clarify how it will be arriving at such benchmarks, Dr Fava said.

The Tax Compliance Unit recently wrote to a number of doctors asking them whether they were prepared to sign a contract establishing their income for the next three years. The agreement would be valid for income tax and social security purposes.

Once an agreement was reached between individual doctors and the unit, the agreement would be binding on both sides. Whoever signs such an agreement would not be taxed on any additional income from his or her profession.

The letter from the TCU states that those doctors who sign such an agreement under this scheme "will not normally be subject to an investigation for tax purposes regarding your professional activity as long as the agreement will be in force".

In a meeting held on Thursday, the MAM, which represents almost 600 doctors, concluded that the scheme suggested by the TCU binding doctors to pay tax and NI contributions on a specified income for the next three years would be unfair on a lot of doctors.

"The MAM appreciates that the task of the TCU is to curb tax evasion but applying such a scheme would be most unfair.

"To start with, it is not practical for doctors to bind themselves to an income for the coming years when there are so many variables involved in assessing one's income.

"Among the variables one finds the specialty of the doctor, the number of doctors operating in that sector and the number of hours a doctor works.

"More and more doctors are graduating, making competition harsher. A doctor's income would also be affected if state medical services were improved as, in fact, they should," Dr Fava said.

About two years ago, Dr Fava said, the MAM had been approached by the Income Tax Department asking it (MAM) to set up a number of benchmarks.

But even the MAM found it hard to arrive at benchmarks that would apply to different sectors of the medical profession.

"Our fear is that this scheme will penalise doctors in the lower income bracket.

"Moreover, the MAM finds it hard to imagine why doctors have been informed that they would not be investigated if they agree to the three-year scheme the TCU is suggesting.

"The MAM feels that investigations should only be carried out in those cases where the TCU suspects that an investigation ought to be carried out.

"One should not investigate for nothing," Dr Fava said.

The letter from the TCU informs doctors who were prepared to join the scheme that they should inform the TCU and discuss their income with tax officials.

"If you agree to take part in this scheme, the tax you will pay will be established during the discussion you will hold with tax officials".

A doctor who preferred not to be named said: "The TCU might expect a higher income than doctors are generating. The result would be that doctors would be forced to raise fees as had happened when doctors were no longer tax exempt and therefore could not recover VAT on items used in their practice.

"If the income tax department wants to raise tax from doctors among other professions, with unreasonable demands, the additional tax burden would in the end be carried by patients," the doctor said.