Tax evaders under investigation might use amnesty
The government has failed to include a clause in the Currency and Bank Deposits Registration Scheme which would have made ineligible those individuals already under investigation by the Inland Revenue Department and the Tax Compliance Unit.The legal...
The government has failed to include a clause in the Currency and Bank Deposits Registration Scheme which would have made ineligible those individuals already under investigation by the Inland Revenue Department and the Tax Compliance Unit.
The legal notice covering the scheme says that it is only applicable to individuals, defined as "physical persons".
Since the majority of the TCU's cases focus on companies this means that only a handful of its 70 cases under investigation could now be thrown out of the window - should the individuals concerned opt for the scheme. But with regards to those being investigated by the Inland Revenue Department, Parliamentary Secretary Tonio Fenech admitted that people under investigation could use the scheme - unless the department has already issued an assessment.
"The conditions for exemption contained in article 9B of the Income Tax Act that applied under the Investment Registration Scheme will apply mutatis mutandis to the present scheme under the proposed amendments to the Income Tax Act.
"Article 9B(3) makes it clear that the tax exemption will not apply where the relevant income has been assessed to tax. This is also reflected in the Guide for a Better Understanding of the Investment Registration Scheme, published by the Central Bank of Malta in March, 2002.
"In fact, the answer to question 80 states: 'The exemptions arising under the scheme only apply to income that has never been declared to the Inland Revenue Department. The exemption does not apply to any income that has already been declared in an Income Tax return by the applicant prior to registration. Similarly, no exemption is applicable in respect of any income that has already been charged to tax'. This means that in cases where the relevant income has been assessed to tax, even if the assessment is still under dispute, the tax exemption will not apply.
"However, in cases where a case was being investigated but where the tax was not assessed the scheme can be applied," Mr Fenech said.
Mr Fenech did not say how many cases currently under investigation could potentially be affected by the omission of this clause.
Sources said that it was possible that the clause was not inserted into the elgal notice to keep in line with previous registration schemes.
However, they pointed out that not all IRD investigations would have to stop if the individuals concerned applied to register their assets.
"It is not a general amnesty. There are certain limitations in the law. The IRD would have to see things on a case by case basis," the sources said.
"It may all be down to what is meant by 'in good faith'."
The president of the Malta Institute of Taxation, Antoine Fiott, said that the institute would be looking at the scheme and would be seeking clarification.
"Until then, it would not be prudent to comment," he said.
The legal notice covering the scheme says that it is only applicable to individuals, defined as "physical persons".
Since the majority of the TCU's cases focus on companies this means that only a handful of its 70 cases under investigation could now be thrown out of the window - should the individuals concerned opt for the scheme. But with regards to those being investigated by the Inland Revenue Department, Parliamentary Secretary Tonio Fenech admitted that people under investigation could use the scheme - unless the department has already issued an assessment.
"The conditions for exemption contained in article 9B of the Income Tax Act that applied under the Investment Registration Scheme will apply mutatis mutandis to the present scheme under the proposed amendments to the Income Tax Act.
"Article 9B(3) makes it clear that the tax exemption will not apply where the relevant income has been assessed to tax. This is also reflected in the Guide for a Better Understanding of the Investment Registration Scheme, published by the Central Bank of Malta in March, 2002.
"In fact, the answer to question 80 states: 'The exemptions arising under the scheme only apply to income that has never been declared to the Inland Revenue Department. The exemption does not apply to any income that has already been declared in an Income Tax return by the applicant prior to registration. Similarly, no exemption is applicable in respect of any income that has already been charged to tax'. This means that in cases where the relevant income has been assessed to tax, even if the assessment is still under dispute, the tax exemption will not apply.
"However, in cases where a case was being investigated but where the tax was not assessed the scheme can be applied," Mr Fenech said.
Mr Fenech did not say how many cases currently under investigation could potentially be affected by the omission of this clause.
Sources said that it was possible that the clause was not inserted into the elgal notice to keep in line with previous registration schemes.
However, they pointed out that not all IRD investigations would have to stop if the individuals concerned applied to register their assets.
"It is not a general amnesty. There are certain limitations in the law. The IRD would have to see things on a case by case basis," the sources said.
"It may all be down to what is meant by 'in good faith'."
The president of the Malta Institute of Taxation, Antoine Fiott, said that the institute would be looking at the scheme and would be seeking clarification.
"Until then, it would not be prudent to comment," he said.