VAT administration made easier

The government yesterday put into practice a series of measures aimed at facilitating the administration of VAT for the self-employed and small companies.

Details of the measures, originally announced during the last budget, were given at a news conference by Finance Minister John Dalli.

Small businesses and self-employed employing an average of five people and whose turnover does not exceed Lm250,000, will be entitled to VAT refunds within 30 days of the declaration date.

Mr Dalli said about 1,000 people were expected to benefit from this scheme.

Registered people who satisfy the conditions of the scheme and whose declaration period came to an end on January 31 would receive VAT refunds by April 15.

Refunds due to an enterprise which provides goods and services which are VAT exempt will be made in four, instead of five months this year, and in three, instead of four months, in 2004. This would help the cash flow of the enterprises involved, Mr Dalli said.

The minister said this arrangement had been extended to all registered people who provide products and services with credit, such as farmers and meat sellers.

Current tax legislation provides for an automatic system of penalty administration for both the VAT and Income Tax departments.

This system will be reviewed so that it can become more flexible.

The VAT department was also preparing details for a scheme which provides for a reduction in administrative penalties.

Mr Dalli explained that as soon as Malta joined the EU, there would be a radical change in VAT.

VAT on taxable products imported into Malta from member states would no longer be collected at the import stage as at present, but only once the product was sold.

In the case of goods imported from third countries, the current procedure would be retained.

The manufacturing industry, in particular, would be helped in more ways than one through EU membership, since operators would not need to pay VAT on imported raw materials.