Updated 1pm, adds MDA statement
Any amnesty or other prescribed or conventional mechanism which effectively rewards defaulting taxpayers, is patently inequitable and should not be entertained, much less promulgated and implemented, two institutes warned on Saturday.
The Malta Institute of Taxation and the Institute of Financial Services Practitioners were reacting to a new measure that allows those with tax arrears due by January 2021 to pay any tax due on the transfer of property purchased before March 2021 against their arrears.
The measure has also been criticised by the Malta Chamber.
The institutes said in a statement that, if at all possible, the injustice inherent in this amnesty is all the more nefarious as the rules apply selectively favouring defaulting taxpayers who own immovable property situated in Malta acquired on or prior to March 31 and who choose to dispose of such property before the end of this year.
“Why the government has seen fit to promulgate these rules at the current time is beyond our comprehension,” they said.
They added that since Malta was greylisted earlier in the year, both institutes have been actively participating in and contributing to national efforts to procure Malta’s removal from the grey list.
In their opinion, this measure is not at all helpful.
“The lack of any prior consultation in connection with the rules and the government’s failure to explain the underlying rationale or justification for their introduction is regrettable,” they said.
They added that this compelled them to decry the rules and “the apparent motivations” underpinning their promulgation. They called on the authorities to recognise and reward compliant taxpayers and to proceed, as required, against all those in default.
They invited the authorities to reconsider “their implicit endorsement” of unlawful behaviour and repeal the rules with immediate effect.
Tax amnesty to defaulters puts Malta’s efforts to fight tax crime at risk - MIA
In a separate statement, the Malta Institute of Accountants also criticised the measure which it said is “tantamount to a tax amnesty” and “a slap in the face” to all professionals and entrepreneurs who operate their business in full compliance with legal and ethical considerations.
The measure, the institute said, also rewards defaulters who abusively failed to pay their dues towards society.
“Beyond ethical considerations, the MIA expresses deep concern that the enactment of the Legal Notice in question was carried out against the spirit of the collective effort of authorities, institutions, and professionals, to contribute to enhance Malta’s international reputation.
”The notice, it said, risks derailing the country’s efforts on one of the most pressing issues for the country, notably its commitment, both nationally and to the international community, to fight tax crimes.“
By rewarding defaulters that have abusively failed to abide by legal requirements, Malta is risking undermining the progress the country is seeking to make in this regard,” it insisted.
The institute said it has been working closely with the authorities to ensure that Malta strengthens its fight against money laundering and improve its reputation in this regard.
It said no stone should be left unturned to achieve this crucial objective and appealed to the government to withdraw the legal notice.
Measure will create unfair competition - MDA
In another statement, the Malta Developers Association dissociated itself from the measure.
It said that while it agreed that the government should find a way to collect tax arrears from defaulters, there are various ways of how this can be done without creating an unlevel playing field.
The measure as proposed, it said, will create unfair competition as anyone benefitting from such incentive will be in a position to offer his property at a better price to that of the developer.
It encouraged the government to consult the association before issuing such measures as they could impact the industry negatively. Besides, such measure is also discriminatory against people who are not owners of immovable property, it said.
The MDA said the impression being given that this an amnesty for developers is “absolutely unjust and unfounded”.
This is because developers pay their final withholding tax at source with every contract signed and, therefore, they will not be benefitting from the incentive.