What's happening at the IRD
A working group chaired by Mr Chetcuti was asked to propose ways in which to integrate the main revenue departments to make the best of the synergies between the IRD, the VAT Department and the Customs Department. It was also asked to propose ways to...
A working group chaired by Mr Chetcuti was asked to propose ways in which to integrate the main revenue departments to make the best of the synergies between the IRD, the VAT Department and the Customs Department. It was also asked to propose ways to integrate the Tax Compliance Unit, which falls under the Finance Ministry.
The report was presented to the parliamentary secretary for finance in February and included a number of options.
Over 140,000 taxpayers - mostly employees and pensioners - send in simple declarations, while less than 96,000 need to send in self-assessments. The Self-Assessment System introduced in 1999 brought about a huge improvement in compliance and around 92-93 per cent of the returns are now sent in time, up from less than 60 per cent under the previous system.
Legal amendments that have been introduced last month mean that even fewer taxpayers will have to file the annual return or the simple declaration: Instead, the IRD will send them the tax statement for the year showing their income and the tax liability, if any. They will only need to inform the department if they had any other income in the year of assessment which is not shown in the statement.
The pilot project was tried out last year with around 29,000 pensioners. This will now be extended to most of the taxpayers who have been sending in a simple declaration and perhaps even some of those who sent in a return. Thousands of taxpayers will no longer need to submit any forms at all. This will leave the department free to focus on the remaining returns.
As from last year, returns can be sent electronically through the internet - not only by companies but also by individuals. The system for individuals' returns will this year be based on an electronic identity and password generated by IRD, which has worked very successfully in other countries.
The system will greatly reduce the number of errors, as it will alert the user straight away if the wrong information is put in or if information is inadvertently omitted.
At present, 83 per cent of companies file online while 62 per cent file their FS returns online. Around 70,000 FS3s are sent this way, while 50,000 others are sent on a magnetic disc.
There is more discipline with regards to payments and around 95-96 per cent of declared tax is paid on time, encouraged by the knowledge that interest will be levied if late.
The IRD has incurred interest for its own late payment of refunds, although Mr Chetcuti was not in a position to say how much, noting only that the amounts were not large.
Tax revenue has grown for several reasons. Of course the economy has grown and there are more people working. But enforcement, backed by the introduction of new IT systems developed during the last few years, has also had its positive impact. From Lm110 million in 1999, it grew to Lm256 million last year. This year's revenue would have been around Lm13-14 million more but tax band reviews means the amount to be collected will be around Lm258 million.
The IRD is working with the Employment and Training Corporation on an internet-based system whereby information on the recruitment or termination of an employee will be updated electronically to both organisations' database. The system, which should be available later this year, at least for large employers, will be very beneficial and cost effective to all employers.
Until now, the IRD could get information from the VAT Department but not vice versa. This will soon be possible as a result of amendments that had gone through parliament recently.
The IRD is finalising a computer application, which will allow notaries to register the transfer of immovable property online. At present, contracts must be registered by them within 30 days, at the department's office in Merchants Street. The new system will enable them to do all this from their offices via internet, including payment of stamp duty and capital gains. This will save them a considerable amount of time and help with the validation of the data, such as identity card numbers. It will be phased in across a number of months.
The IRD is planning to open a call centre in Gozo, whose 10-12 staff will handle all incoming telephone calls and unstructured correspondence. Mr Chetcuti anticipates that the resources will be approved and allocated by the end of this year. Through the setting up of this centre the department will be in a better position to provide a more effective and efficient customer service.
Enforcement is biting, hard. In 2001, the amount of declared income from the investigated cases increased by just Lm797,000 but as the section grew, the amounts grew.
Last year, the department investigated 756 cases, as a result of which declared income was increased by Lm27 million. The amounts due on Lm18 million of that were paid straight away: This amounted to Lm6.5 million in tax, Lm4 million in fines and Lm2.1 million in interest. The tax due on the balance will probably be subjected to objections and appeals.
"At present the Tax Compliance Unit has 24 officials while the IRD has 15 revenue officers. There is more than enough work for all of them. The more people you have, the more cases you can investigate. So I do not see any overlapping, even though the work is similar."
The report was presented to the parliamentary secretary for finance in February and included a number of options.
Over 140,000 taxpayers - mostly employees and pensioners - send in simple declarations, while less than 96,000 need to send in self-assessments. The Self-Assessment System introduced in 1999 brought about a huge improvement in compliance and around 92-93 per cent of the returns are now sent in time, up from less than 60 per cent under the previous system.
Legal amendments that have been introduced last month mean that even fewer taxpayers will have to file the annual return or the simple declaration: Instead, the IRD will send them the tax statement for the year showing their income and the tax liability, if any. They will only need to inform the department if they had any other income in the year of assessment which is not shown in the statement.
The pilot project was tried out last year with around 29,000 pensioners. This will now be extended to most of the taxpayers who have been sending in a simple declaration and perhaps even some of those who sent in a return. Thousands of taxpayers will no longer need to submit any forms at all. This will leave the department free to focus on the remaining returns.
As from last year, returns can be sent electronically through the internet - not only by companies but also by individuals. The system for individuals' returns will this year be based on an electronic identity and password generated by IRD, which has worked very successfully in other countries.
The system will greatly reduce the number of errors, as it will alert the user straight away if the wrong information is put in or if information is inadvertently omitted.
At present, 83 per cent of companies file online while 62 per cent file their FS returns online. Around 70,000 FS3s are sent this way, while 50,000 others are sent on a magnetic disc.
There is more discipline with regards to payments and around 95-96 per cent of declared tax is paid on time, encouraged by the knowledge that interest will be levied if late.
The IRD has incurred interest for its own late payment of refunds, although Mr Chetcuti was not in a position to say how much, noting only that the amounts were not large.
Tax revenue has grown for several reasons. Of course the economy has grown and there are more people working. But enforcement, backed by the introduction of new IT systems developed during the last few years, has also had its positive impact. From Lm110 million in 1999, it grew to Lm256 million last year. This year's revenue would have been around Lm13-14 million more but tax band reviews means the amount to be collected will be around Lm258 million.
The IRD is working with the Employment and Training Corporation on an internet-based system whereby information on the recruitment or termination of an employee will be updated electronically to both organisations' database. The system, which should be available later this year, at least for large employers, will be very beneficial and cost effective to all employers.
Until now, the IRD could get information from the VAT Department but not vice versa. This will soon be possible as a result of amendments that had gone through parliament recently.
The IRD is finalising a computer application, which will allow notaries to register the transfer of immovable property online. At present, contracts must be registered by them within 30 days, at the department's office in Merchants Street. The new system will enable them to do all this from their offices via internet, including payment of stamp duty and capital gains. This will save them a considerable amount of time and help with the validation of the data, such as identity card numbers. It will be phased in across a number of months.
The IRD is planning to open a call centre in Gozo, whose 10-12 staff will handle all incoming telephone calls and unstructured correspondence. Mr Chetcuti anticipates that the resources will be approved and allocated by the end of this year. Through the setting up of this centre the department will be in a better position to provide a more effective and efficient customer service.
Enforcement is biting, hard. In 2001, the amount of declared income from the investigated cases increased by just Lm797,000 but as the section grew, the amounts grew.
Last year, the department investigated 756 cases, as a result of which declared income was increased by Lm27 million. The amounts due on Lm18 million of that were paid straight away: This amounted to Lm6.5 million in tax, Lm4 million in fines and Lm2.1 million in interest. The tax due on the balance will probably be subjected to objections and appeals.
"At present the Tax Compliance Unit has 24 officials while the IRD has 15 revenue officers. There is more than enough work for all of them. The more people you have, the more cases you can investigate. So I do not see any overlapping, even though the work is similar."