13 July 2005

The Web

Labour calls on government to amend new VAT punishments

Karl Schembri

The Opposition is insisting with government to amend a Bill presented in parliament that would extend the powers of the VAT commissioner allowing him to register a hypothec on immovable property of VAT defaulters, Labour Deputy Leader Charles Mangion told The Malta Financial and Business Times yesterday.
But the amendment sought by the opposition falls short of scrapping the contested article in question altogether and rather seeks to remove the priority of the VAT commissioner over any bank hypothec in a bid to make it “more commercially friendly”.
Since it was reported in MaltaToday last Sunday, the Bill in question has infuriated businesses who are saying that, if enacted, the measure is bound to have serious consequences for the credit of VAT-registered individuals and companies at a time when many companies have cash flow problems.
The Opposition had already asked government to scrap the proposed measure last May but Parliamentary Secretary for Finance Tonio Fenech had insisted the proposal remain in the Bill.

Last Monday, Mangion asked government again to amend the proposed measure but it is no longer insisting on scrapping it altogether.
“We’re suggesting that while the VAT commissioner should have the powers to register a hypothec on immovable property on whoever fails to pay outstanding VAT, he should not take precedence over other creditors,” Mangion said. “We believe this would be a suitable compromise between collecting VAT due to the government and keeping regulations commercially friendly. Tonio Borg told us he would get back to us.”
According to the government’s proposal, the VAT Commissioner’s hypothec would also take priority over any bank hypothec. The new powers would allow the VAT commissioner to register a note of privilege for the outstanding VAT in the public or land registry, if a taxpayer fails to make payment within 30 days after the Commissioner Requests payment of any tax and administrative penalty.
Asked whether he felt businessmen were in a position to pay their VAT dues in the light of cash flow problems, Mangion said that “whoever collected VAT had to pay it to the VAT commissioner.”
But an irate director general of the GRTU, Vince Farrugia, said government “was looking for trouble” if the Bill was enacted when speaking to MaltaToday.
“All we hear from government are measures that continue to drown enterprise. If this is the attitude it is taking, we will be going back to the trenches. We have one of the highest compliance rates on VAT. Government is telling us to put on the armour of 1995.”
Farrugia also complained that this bill had never been discussed between the social partners within the Malta Council for Economic and Social Development. “I can’t understand how we can have considerable changes in VAT and these are not discussed with the GRTU.”
Farrugia said yesterday night on One News that he was reassured by Tonio Fenech that the proposal would not be enacted. Fenech yesterday was abroad on an Ecofin meeting with the prime minister.



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