A 15 per cent tax rate on the rent of residential property, announced in the last Budget, has finally been implemented.

Finance Minister Edward Scicluna yesterday said the legal measure was being introduced after Parliament reconvened, as it needed some amendments.

The current rate is of 35 per cent on income derived from rent.

The new flat rate, backdated to January 1, is aimed at encouraging more people to declare this revenue.

The 15 per cent withholding tax applies to residential property, including garages, but not places rented for commercial use.

The measure falls in line with the government’s aim to collect a little from the many and cut down on tax evasion in this sector, Prof. Scicluna said.

The measure, which also aims to encourage more people to rent vacant dwellings, was first announced by Deputy Prime Minister Louis Grech in June 2013 during a public consultation session at Castille.

He had said that the government wanted to make it easier for people to get out of the black economy and was intent on coming down harder with its penalties for those who persisted.

Asked what would happen if someone decided to register the property to benefit from the reduction but failed to declare revenue in the past years, Prof. Scicluna said undeclared rentals, if uncovered, would be subjected to a final tax of 35 per cent, calculated over the gross income, aside from penalties and interest.

He said there would be a one-time arrangement for people who wanted to regularise their position by declaring income from rents in previous years.

These people would need to declare their revenue for the past eight years, and then pay two years’ worth of rental tax on those eight years.

The amount of tax would be calculated at 15 per cent on the weighted average of eight years.

Meanwhile, in a separate bid to fight tax evasion, on Wednesday Malta joined 50 jurisdictions and signed the Multilateral Agreement on the Automatic Exchange of Tax Information in Berlin, under the aegis of the OECD. This means Malta will be able to ask these states for information about the financial accounts of its taxpayers.

In two years, the list will grow to 92 jurisdictions. Prof. Scicluna said people have until the end of November to declare any undeclared assets and pay 7.5 per cent on their value.