Tax dodgers could soon get option of paying a fine instead of facing court
Fines will range from €10,000 to €1 million under proposed new law
Taxpayers who fail to declare earnings may soon be allowed to avoid criminal charges by paying a fine of up to €1 million, under new legislation proposed by the government.
The bill, announced on Friday, introduces measures giving those with unpaid tax arrears a choice: either face possible legal prosecution for tax evasion, or pay an additional fine and avoid criminal charges.
The government said the new fine would range from a minimum of €10,000 to a maximum of €1 million.
In addition to the new fine, the culprit will also have to pay the existing administrative fines imposed by tax authorities for unfiled taxes, as well as any interest on those penalties, Times of Malta understands.
They will also have to return their undeclared tax.
Paying the fine will “exempt the taxpayer from facing criminal proceedings for breaches covered by the agreement, while maintaining civil liability for any amounts not included,” the statement said.
It will also apply in cases where criminal proceedings are ongoing, with the statute of limitations put on hold while the fine is being established.
The government says the new rules aim to “improve the recovery of funds owed to the State, and deter financial crime,” with sources telling Times of Malta that tax authorities often struggle to recover unpaid taxes through legal channels.
The amendments will impact all of Malta’s major tax laws, including the Social Security Act, the Duty on Documents and Transfers Act, the Income Tax Management Act, the Value Added Tax Act, as well as introducing changes to Malta’s Criminal Code.
Two new criminal offences
Two new criminal offences will also be introduced to the Criminal Code through the bill, both intended to encourage the settlement of pending tax bills.
The first introduces a penalty of up to four years’ imprisonment or a €2.5 million fine for a fraudulent breach of agreement with a government department.
Meanwhile, a second provision will address “unjustified breaches” of these agreements, introducing a penalty of up to two years’ imprisonment or a fine of up to €500,000.