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No tax assessments based solely on benchmarking

The tax authorities aim to achieve a personal relationship with taxpayers and benchmarks will only be used as a basis for discussion between the Tax Compliance Unit and individuals under investigation.

Finance Minister John Dalli yesterday reiterated that no assessments would be issued to generalised categories. "The system is not an ‘ex-officio’. No assessments will be issued based solely on the benchmark criteria," he said.

The minister was speaking during a press conference in which he presented the Finance Ministry’s annual progress report.

Mr Dalli insisted that every tax paying person is liable to be investigated by the Tax Compliance Unit.

Furthermore, the Finance Minister reiterated the government’s resolve to combat money laundering and fraud. He described the recently-launched repatriation of funds scheme as an attempt to give people a chance to regularise their position before international laws come into place.

"We know how the international banking laws regulating the sharing of information are going to evolve. All countries including tax havens such as Jersey, the Cayman Islands, Barbados, Switzerland and others will agree to share information on the bank deposits of foreigners. The scheme we launched is an eye opener for Maltese residents who have cash deposited in foreign banks."

Mr Dalli made it amply clear that the scheme will not act as a cover-up for funds obtained through criminal activity, fraud or any other illegality.

Highlighting the achievements of his ministry, Mr Dalli said that the fiscal imbalance, will this year amount to 5% of the Gross Domestic Product. This marks a significant reduction from the 12% it stood at in 1998.

The Gross Domestic Product is expected to top Lm1,660 million by the end of the year contributing greatly to the increase from income tax and VAT. Government income from Income Tax is expected to reach Lm163.2 million, which is Lm53 million more than the 1998 figure. VAT is expected to rake in a further Lm116 million this year signifying a jump of more than Lm40 million from the 1998 amount.

The report states that the Self-Assessment system brought about a compliance rate in access of 90% and increased the efficiency of the Income Tax department.

Referring to VAT infringements the report states that 263 people were found guilty by the courts and were fined a total of Lm72,600.

When asked by journalists whether he expected the deficit to be lower than the budgetary estimate, Mr Dalli preferred to stick to the projected estimate. He added that the government was burdened further this year with wage rises in the public sector and lower car imports meant less revenue for government.

The annual report states that the ministry is conducting studies to assess the viability of public sector employees working with the private sector on public projects.

Mr Dalli spoke about the privatisation process and said that the Privatisation Unit was working hard on the privatisation of the Freeport, Lotto Department and Malta International Airport.

On the Freeport privatisation the government is now waiting for the firm bid of the shortlisted companies, while the strategic partners to be involved in the MIA process have to submit their bids by the end of the month.

Speaking about the Lotto Department, Mr Dalli said the government would shortly evaluate the firm bids submitted by the shortlisted companies.

"At the end of the month, the government is expected to take a decision to start the final discussions," he said.

The annual report states that last year the Lotto Department registered a profit of Lm6.6 million. The department also received Lm2.5 million by way of tax on income from casinos.

As regards the government’s 25% stake in Bank of Valletta, Mr Dalli said that the government was sounding out the interest of foreign banking corporations interested in purchasing the 25% shareholding. The Finance Minister said that the process is expected to continue until the beginning of next year.

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt