Director denies there is lack of accountability at VAT Department

The Director-General of VAT, Joseph Sammut, has denied that there is lack of accountability and risk awareness in the VAT Department.

He was reacting to an audit of his department conducted in the wake of VAT fraud allegations. The report was completed in February last year but only tabled in Parliament today.

See - http://www.timesofmalta.com/articles/view/20110509/local/vat.364511

Mr Sammut said that since Malta joined the EU, the responsibilities of the VAT Department had been considerably increased. Border controls previously conducted by Customs were shifted to the VAT Department, while VAT harmonisation brought about further responsibilities and administrative burdens.

He said that in each year between 2005 and 2008, the VAT Department managed to increase its revenue collection from the previous year.

In 2009, the year of the crisis, VAT revenue dropped at a marginal 0.28 percent, but recovered again in 2010.

"Such a performance could never be achieved without accountability, and therefore, concluding that the general impression is that there is a lack of accountability is far from being an objective conclusion."

Referring to the board's comments on staff levels, Mr Sammut said that in the past two years the department recruited five accountants, five economic officers and a senior systems analyst. Training on VAT and eco-contribution legislation was given to newly recruited inspectors by officials at the Legal Section. Training also included investigation techniques.

He admitted, however that the VAT Department has 21 vacancies for inspectors and the last recruitment was of one official in November 2009.

Mr Sammut denied that it was only recently that VAT inspectors started working in pairs. He said this measure was introduced along with other preventive measures in 2007.

Mr Sammut said he was against outsourcing of risk management as this could create conflict of interest and jeopardise the operational capabilities of the VAT Department.

He said the risk assessment process was being revised to become more comprehensive.

Furthermore, in 2009, the VAT Department, Inland Revenue and the Tax Compliance Unit set up a risk assessment task force to select cases for investigation.

As regards the recommendation that the Central Liaison Office should form part of the Operations Department, Mr Sammut said this had been implemented.

With regard to files prepared for investigations, Mr Sammut said that because of the confidential nature of the files, these were handled in a separate registry, thus ensuring limited access. They were handled by one official and the system was not creating problems or strain on resources.

On the other hand, taxpayers' files – running into tens of thousand, were kept in another registry.

DE-REGISTRATION

On de-registrations, he said the VAT Department had adopted guidelines on how to treat balances due, but more human resources were needed.