How much is really due?
The National Audit Office regularly gives alarming totals showing the tax revenue due for collection. The latest figure was Lm269.7 million (excluding Lm13.5 million denominated in foreign currency).Mr Chetcuti believes the real collectible figure...
The National Audit Office regularly gives alarming totals showing the tax revenue due for collection. The latest figure was Lm269.7 million (excluding Lm13.5 million denominated in foreign currency).
Mr Chetcuti believes the real collectible figure would be around Lm50 million.
Of the Lm269.7 million, Lm118 million relate to pre-1999 returns which will be reduced considerably after issuing outstanding assessments and the finalisation of objections and appeals mainly against best of judgement assessments.
"From experience I would say that around Lm30 million would be really due for the pre-1999 Self Assessment System," Mr Chetcuti said.
The picture is also slewed by the fact that Lm129.5 million of the Lm151.7 million due under the Self Assessment System refer to claims based on estimates which are automatically generated when people for whatever reason do not submit their return. Once the return is filed, the estimate is replaced by a fresh claim based on the declared income. "Again, I would say from experience that a very small amount of this is actually due - perhaps a few million lira. This is because most of those who don't submit returns are people whose circumstances have changed - say they got married and now fall under a married computation. And the estimates are on the high side as this is a way to ensure that the recipient is motivated to send in the correct return! So the major part of the Lm129.5 million is just a paper balance.
"This leaves around Lm22 million of which Lm3.8 million is under objection, leaving Lm18 million realistically due from 1999-2005.
"This is why the Lm269.7 million figure is a bit misleading. The figure comprises also amounts which are considered uncollectible.
These include those cases where the department had to issue estimated figures as taxpayers failed to file their annual tax return under the Self Assessment System, and the ex-officio assessments issued in the 1980s. Moreover, the department has a substantial amount of tax payments held in suspense until the respective assessments are issued; this will continue to reduce the outstanding balance by further amounts. The position and the procedure have always been explained to the Public Accounts Committee; the figures change whenever returns are filed or when objections against the ex-officio assessments are settled."
What about what it owes? The IRD owes refunds of Lm17 million for the pre-1999 years, a figure that could change once the backlog of assessments is worked out.
By the end of May, beginning of June, Government has committed itself to sending out letters informing taxpayers when their refunds will be paid to them. Some settlements will be immediate but others will be made in up to three instalments, depending on the amount. The IRD is also committed to paying all the refunds within 36 months of the notification.
Why has it taken so long? In the past, only Lm3 million a year was allocated by the budget to IRD. Refunds will now be paid from the money it collects - as happens for post-1999 amounts.
"This is another load off the department's shoulders, another drain on its resources that will finally be sorted out. This has been a long time coming and I am glad that an end is in sight," Mr Chetcuti said.
Mr Chetcuti believes the real collectible figure would be around Lm50 million.
Of the Lm269.7 million, Lm118 million relate to pre-1999 returns which will be reduced considerably after issuing outstanding assessments and the finalisation of objections and appeals mainly against best of judgement assessments.
"From experience I would say that around Lm30 million would be really due for the pre-1999 Self Assessment System," Mr Chetcuti said.
The picture is also slewed by the fact that Lm129.5 million of the Lm151.7 million due under the Self Assessment System refer to claims based on estimates which are automatically generated when people for whatever reason do not submit their return. Once the return is filed, the estimate is replaced by a fresh claim based on the declared income. "Again, I would say from experience that a very small amount of this is actually due - perhaps a few million lira. This is because most of those who don't submit returns are people whose circumstances have changed - say they got married and now fall under a married computation. And the estimates are on the high side as this is a way to ensure that the recipient is motivated to send in the correct return! So the major part of the Lm129.5 million is just a paper balance.
"This leaves around Lm22 million of which Lm3.8 million is under objection, leaving Lm18 million realistically due from 1999-2005.
"This is why the Lm269.7 million figure is a bit misleading. The figure comprises also amounts which are considered uncollectible.
These include those cases where the department had to issue estimated figures as taxpayers failed to file their annual tax return under the Self Assessment System, and the ex-officio assessments issued in the 1980s. Moreover, the department has a substantial amount of tax payments held in suspense until the respective assessments are issued; this will continue to reduce the outstanding balance by further amounts. The position and the procedure have always been explained to the Public Accounts Committee; the figures change whenever returns are filed or when objections against the ex-officio assessments are settled."
What about what it owes? The IRD owes refunds of Lm17 million for the pre-1999 years, a figure that could change once the backlog of assessments is worked out.
By the end of May, beginning of June, Government has committed itself to sending out letters informing taxpayers when their refunds will be paid to them. Some settlements will be immediate but others will be made in up to three instalments, depending on the amount. The IRD is also committed to paying all the refunds within 36 months of the notification.
Why has it taken so long? In the past, only Lm3 million a year was allocated by the budget to IRD. Refunds will now be paid from the money it collects - as happens for post-1999 amounts.
"This is another load off the department's shoulders, another drain on its resources that will finally be sorted out. This has been a long time coming and I am glad that an end is in sight," Mr Chetcuti said.