Contrary to an announcement made last October by Government for this year’s national budget, a planned increase in interest payments due over unpaid income tax and VAT will instead be introduced in September.
Last October, finance minister Clyde Caruana had revealed that as of 1st June 2022, the rate of interest on late payment of income tax and VAT will be increase to 7.2 per cent annually, or 0.6 per cent per month. He also announced that amnesties on penalties for unpaid income tax and VAT will no longer be the norm and will only be accepted in specific circumstances.
BusinessNow.mt can confirm that the new interest rates will not be coming into force in June as originally planned, but will be taking place from September, as “other changes will also be introduced,” one senior source with inside knowledge told this newsroom.
With the war raging on in Ukraine, and Malta’s Government freezing the increase in energy prices to shield consumers in 2022 as well as subsidising the cost of grain for importers via a €30 million subsidy to stem the rising costs of food, it will be looking to be paid what is owed by way of taxes more aggressively.
After two years of providing pandemic related support, and the country’s national debt rising to €8.28 billion in 2021, or 57 per cent of GDP according to National Statistics Office figures, the finance ministry is likely scrambling to balance its budget.
Just one day after the new interest rates were announced last October, minister Caruana had revealed that many businesspeople visited the tax department to draw up tax agreements and settle unpaid bills.
Making matters more complicated, in April, the same minister announced that by 2025, Malta will have a new corporate tax regime in place, moving away from the current imputation system.
It is understood that the effective five per cent corporate tax rate charged to companies with foreign shareholding and the 35 per cent corporate tax rate for local companies – which the Labour Government had promised to reduce – will meet somewhere in the middle. That being said, a draft text of the new corporate tax regime is yet to be published.
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