No tax refunds if returns are not submitted

As from June 1 next year, no VAT or income tax refunds would be given if the due returns under both systems are not sent, the Finance Minister said in the Budget speech this evening.

He said the government was clear about its policies favouring fiscal morality and against tax evasion, and it would be we will be intensifying its efforts in this regard.

"We will start a process whereby the Inland Revenue Department, VAT Department and

Department of Customs join forces so that, amongst other things, information gathered by

fiscal entities can be used from the new entity's different sections.

"For this reason, whilst this amalgamation will improve the service given to the clients of these departments, these departments will be in a better position to enforce the fiscal laws

in our country. This will also allow for the introduction of a system of set‐offs in the financial system.

Mr Fenech said that after the experience of this year in the VAT Department, where a number of companies were asking for refunds on paid VAT, while failing to fulfil their filing obligations for income tax purposes in order to avoid scrutiny, as from the 1st

of June 2010, no refunds would be paid on VAT or income tax if the due returns under both systems were not sent.

" While I understand that this can create difficulties for those companies who have for years not submitted their return, especially their income tax return, I urge these companies to grab the opportunity offered by the scheme which we announced a few weeks ago to regularize their position," the minister said.

He said that the government would also address certain aggressive tax planning that had been noticed recently, and that had resulted in tax losses for the government.