An estimated half a billion euros worth of taxes went undeclared over a 10-year period, data published in parliament shows.
The figure of undeclared taxes has been on an upward trajectory since 2010, when some 13,358 people failed to declare an estimated €18.5 million in tax dues.
Undeclared taxes peaked at an estimated €105 million in 2019, thanks to 27,596 people reneging on their tax reporting obligations.
Over the 10-year period, €532.9 million in tax went undeclared, the figures show.
Finance Minister Clyde Caruana said in reply to a parliamentary question by PN MP Jason Azzopardi that the ever-rising figure of undeclared taxes was down to two reasons.
Firstly, Caruana said, the calculations were cumulative, meaning that unsettled dues continued to be counted in subsequent years.
Secondly, there has been a year-on-year increase in foreign workers, some of whom were either not aware of their initial tax reporting obligations, or left Malta before their first tax declaration was due.
2.39 per cent of the country’s GDP is lost to taxpayers stowing their assets abroad
The figure of unpaid taxes fell to €33 million last year.
Caruana said this reduction in undeclared taxes was due to Inland Revenue getting tax information for new workers automatically from employers, rather than relying on the workers filing an initial declaration.
Further data provided by Caruana shows fines for tax offences have been on a downward trend since 2014. For example in 2014, 23,149 people faced fines totalling €8.4 million for failures to declare or pay taxes.
The following year, 26,230 people were fined a total of €6.5 million.
While the number of people committing tax offences rose further in 2015 to 30,631, the total amount of fines imposed fell to €2.7 million.
The government has only recently bowed to international pressure to effectively treat tax evasion as a criminal offence.
However, a certain level of discretion still remains with the authorities as to whether tax offences are referred to the police for investigation or simply subject to a fine by Inland Revenue.
An undisclosed threshold exists determining whether tax offences will be referred to the police for a potential money-laundering investigation or fly under the radar as an administrative offence, resulting in a fine.
A 2019 study by the European Commission estimated that Malta had the highest amount of money lost due to international tax evasion, when compared to the size of the country’s economy.
The study estimated that 2.39 per cent of the country’s GDP is lost to taxpayers stowing their assets abroad.