The government is planning to introduce a scheme of reduced penalties for those wishing to settle the payment of VAT arrears, Finance Minister Tonio Fenech announced in the Budget speech this evening.

The scheme is believed to be modelled on a recently-closed scheme on the payment of income tax arrears. It applies for those who were in arrears up to October 15 and they are to submit their return by January 15, along with their payment.

Mr Fenech also announced that pensioners working part-time for the government will benefit from an income tax rate of 15% - as is applicable in other sectors.

Government employees who do part-time work for a separate government entity will also benefit from the 15% tax rate on their part time work, since the government will no longer be considered as a ‘same employer’.

Mr Fenech said the deadline for payment of the 15% tax for part-timers will be extended from February 15 to June 30, to allow more time for the settlement of tax payments.

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