Q & A – Value Added Tax

If the VAT return is filed with the Department without the accompanying payment, then the taxpayer will be subject to various penalties and interest.

Monthly interest of 0.52% of the tax due will start to accrue from the date that it becomes payable.  Further penalties are contemplated under the Act if the taxpayer is found guilty before a competent court.  These new measures are applicable as from 1st January 2014.

The changes brought about by Malta entry in the E.U. as regards VAT are many. By far the most radical is that goods ordered from the EU (intra-community acquisitions) by a VAT registered person do not attract VAT on entry into Malta. This does not mean that such goods do not have to be accounted for in the VAT records of the business. The concept of ‘Reverse charge’ will henceforth apply for such goods. In simple terms this means that although VAT is payable, this is immediately claimed back in the VAT return. This concept should affect the cash flow of importers in a positive way.

The point of sale system has to be certified by a practicing auditor.

Each POS system has to have a number of features which are laid out specifically in the VAT Act. Once an auditor is satisfied that it complies with the Act, he will issue an audit certificate which is to be sent to the VAT Department with a technical certificate issued by the supplier of the POS system.

The VAT Department will then issue an exemption certificate with an unique exemption number for that outlet.