Online filing of income tax returns

This year the Inland Revenue Department (IRD) has launched a new system enabling taxpayers whose income is known to the department not to file any annual income tax return form. This new system has benefited around 91 per cent of the employed and pensioner taxpayers.

The IRD has conducted a detailed review of all taxpayer profiles and, with information available from other third parties, such as the Value Added Tax (VAT) department and the Employment and Training Corporation (ETC), persons who are deemed low risk and who had a stable income over the past few years had their tax due calculated by the Inland Revenue Department.

This is possible because the department receives information on the amounts paid as emoluments from employers and any investment income where the 15 per cent final withholding tax (FWT) was not withheld from the relative payers.

Furthermore, this year, for the first time, information on dividends paid by public liability companies (plcs) was also considered and taxpayers were paid refunds where applicable without the need to file a tax return and self-assessment form.

Individual taxpayers, who still have to submit their income tax return, can now do so online over the Internet. This year the department has improved the online services for those wishing to submit their return online.

Taxpayers who do not have an e-ID can apply to obtain their IRD account from the department. Taxpayers can apply for this account over the Internet by completing the online form. Taxpayers need to enter their Income Tax Reference Number (which is usually their ID card number and is indicated as "Ref. No." on their income tax return) and a Personal Identification Number (PIN), which is printed on the front page of the income tax return.

When the form is complete, taxpayers need to activate their account following instructions given by e-mail. This will confirm the validity of the e-mail address that they have entered. A log-in name and password will be sent by normal post. The online service will show taxpayers all the related information that the department has in its information systems with respect to income earned during year ending December 31, 2006 (Year of Assessment 2007).

This information includes income from employment and pensions, interests for self and spouse where FWT has not been paid, deductions related to private school fees together with provisional tax and final settlement system tax payments.

This information will help taxpayers to verify their tax status and avoid mistakes or omissions that may incur additional taxes if left undeclared. The online return is simpler to complete. A questionnaire will reduce the complexity of the form. Thus, if a person is only employed, he or she can ignore the other fields in the questionnaire and the return presented for completion will feature only the employment income, which is already indicated.

The taxpayer needs only to accept the return. Where required, the tax return will also prompt you for the additional information: for example, for a person who has carried out trading activity during 2006, a profit and loss account will need to be completed and the net profit value will be pre-filled in the tax return automatically.

The online service also contains interactive information which provides an explanation about any errors or mistakes and also indicates the corrective action required. The Website also has additional information on how the tax return may be completed, which is available through a downloadable PowerPoint presentation.

When you submit your tax return online you will:

• have the tax due calculated automatically;

• receive an acknowledgement immediately;

• pay online (or through Internet banking facilities of both major local banks) any tax due; and

• view your tax statements, payments and tax return status as from Year of Assessment 2003.

Thus, you do not need to call at the department but you can fulfil all your tax obligations online from your home or office.

Further information is available from the Inland Revenue Department's Website at www.ird.gov.mt. If taxpayers encounter any problems during the process, they can contact the IRD by e-mail at ird.services@gov.mt.

The Inland Revenue Department accepts that this service can be improved by feedback from its users. Feedback, comments and suggestions are welcome and may be submitted to ird.services@gov.mt. The department endeavours to implement any suggestion as soon as it is technically feasible.

More than 1,600 taxpayers have applied for an account to date! If you are interested, you can apply online for this service, too. For this year only you have until July 31 to submit your tax return.