Out of €185 million estimated to be due in tax arrears to the government, it is believed that €27 million cannot be collected and another €45 million from pre-1999 balances are due from liquidated companies, the parliamentary Public Accounts Committee was told yesterday.
Mario Borg, Commissioner of Inland Revenue said that while taxpayers had assessed themselves to owe €361 million since 1999, the Inland Revenue Department estimated that the correct figure owed was closer to €258 million.
One difficulty of tracing old documents had been resolved in 2004 when every document submitted started being scanned.
VAT Department Director-General Charles Vella said the the department was owed a backlog of €597 million since 1998, but experience had shown that these figures appeared to be inflated. In actual fact the department thought that only €31.6m were actually collectible.
In view of the proposed merger of the IRD and VAT, Mr Vella said one of the first aspects that were being worked on was the streamlining of 'chasing', particularly through electronic systems. Officials of both departments sometimes met in court and realised they were chasing the same persons.
Mr Borg concurred that every action was now being taken within the context of the merger, with priority on collection of dues.
Mr Vella said the VAT department worked on three thresholds in its assessment of small businesses: €14,000 a year for services that did not add value, €24,000 for services that added value, and €35,000 for sales of goods. One of the most common abuses was for someone to open a small business, then ask for a change of registration with a view to pulling back VAT payments.
He repeatedly said that interest on unpaid VAT were considered as revenue, but fines for late payment were just a deterrent. VAT legislation gave the commissioner powers to mitigate fines, but he could not touch interests.
Another aspect that this first meeting of the PAC considered was direct orders approved retroactively. Joe Croker, representing the Treasury, said that since 2011, when it had been decided not to authorise retroactive direct orders, the incidence had been heavily reduced. Cases were currently being refused outright.
Director-General of Contracts Frans Attard said that direct orders should be approved only on exceptional basis. There were specifications on who could approve a direct order and in what circumstances. The maximum allowed was €130,000 for the purchase of services or supplies and €5 million for works. If the amount involved was over €6,000, the direct order could be approved only by the Minister of Finance, not by a minister for his or her own ministry.
At the end of the meeting, Electricity and Water Conservation Minister Konrad Mizzi was asked to give the PAC an opportunity to know more about the call for expressions of interest, which the Government was unwilling to lay on the Table of the House.
Dr Mizzi countered that the PAC existed to scrutinise completed processes examined by the Auditor-General. He had no problems answering questions, but the proper forum was the House in plenary session.
He said he would seek advice on the request and revert at a subsequent meeting of the PAC.