15,000 VAT cases in court in past 3 years

The courts have heard over 15,000 VAT-related cases in the past three years, official figures show.

From the beginning of this year, 1,196 people who owe the VAT department over €50 have accumulated a collective bill of more than €11 million, according to figures tabled in Parliament.

Another 1,095 owe the department between €1 and €50 adding up to a total of €17,477.

Last year, a record 6,500 cases were prosecuted under the VAT Act, compared with 4,336 in 2007. In the first nine months this year, 4,420 cases have been heard in connection with VAT breaches.

The VAT department only resorts to the courts if an individual has consistently ignored reminders, a finance ministry spokesman said. Court cases can still be avoided, however, if the client settles his dues with the department.

The department may also take civil action through the use of judicial letters, garnishee orders and warrants of seizures. Between 2007 and 2009, over 9,700 notices were issued over late payments.

Just last month, a European Commission study revealed that Malta lost a potential €305 million in VAT proceeds between 2000 and 2008. Malta could have collected €2.48 billion in VAT but managed to collect €2.18 billion, the study said.

The VAT department hit the headlines for the wrong reasons earlier this year after a police investigation exposed an extensive web of fraud which involved employees, people acting as go-betweens and businessmen.

Last Friday, the Appeals' Court overturned the Attorney General's request to convert seven suspended sentences to a jail term and confirmed the sentences handed down to one VAT employee, one middleman and five businessmen.

Although the suspended sentences had caused controversy, Chief Justice Vincent DeGaetano said the courts were not there to satisfy public outcries.