Additional Tax Rules, 2009

L.N. 98 of 2009

INCOME TAX ACT

(CAP. 123)

Additional Tax Rules, 2009

IN exercise of the powers conferred by article 96(4) of the

Income Tax Act, hereinafter referred to as “the Act”, the Minister

of Finance, the Economy and Investment has made the following

rules:-

(1) The title of these rules is Additional Tax Rules,

2009. (2) These rules shall apply with respect to additional

tax chargeable in terms of article 56(12)(c) for the year of

assessment 2009 and subsequent years of assessment: provided that

the provisions of the Schedule to the Act as in force immediately

before the coming into force of these rules shall continue to apply

with respect to additional tax chargeable in accordance with the

said article 56(12)(c) for years of assessment preceding the year of

assessment 2009.

For the Schedule to the Act, there shall be substituted the

following Schedule

“SCHEDULE

Article 56(12)(c)

Additional tax chargeable under article 56(12)(c)

1. In this Schedule

“additional tax” means the additional tax chargeable in

accordance with the provisions of article 56(12)(c) in respect

of a default or omission;

“endangered tax” means, subject to the provisions of item

12, the difference between the tax declared to be chargeable by

the taxpayer after taking into account any exemption, relief,

allowance or tax credits to which he may be entitled and the

tax actually chargeable after considering the same, but shall

not include any additional tax;

“default” means a default in furnishing a return of income

required to be submitted for the purposes of the Income Tax

Acts;

“omission” means the omission from any return of

income submitted for the purpose of the Income Tax Acts

of any amount which should have been included therein and

includes any act or omission which is deemed to constitute an

omission in terms article 56(12);

“tax professional” means an individual being the holder

of a warrant issued under the Accountancy Profession Act, or

a member of the Malta Institute of Taxation, or a member of

the legal profession in Malta who specialises in taxation, or a

partnership of such individuals the majority of whom are so

qualified: provided that the Commissioner shall be entitled to

request such proof as he may deem appropriate to the effect

that an individual qualifies as a tax professional as aforesaid.

2. Additional tax chargeable under article 56(12)(c) for

a default by an individual in furnishing a return in respect of the

year of assessment 2009 or any subsequent year of assessment shall

be calculated on the tax chargeable before taking into account the

additional tax itself on the total income of that individual for that

year at the amounts shown in Table A hereunder

TABLE A

Number of months from the date on which a

return is required to be submitted in accor-

dance with the relevant provisions of the

Income Tax Management Act Additional tax

Within 6 months €10

Later than 6 but within 12 months €50

Later than 12 but within 18 months

€100

Later than 18 but within 24 months

€150

Later than 24 but within 36 months

€200

Later than 36 but within 48 months

€300

Later than 48 but within 60 months

€400

Later than 60 months

€500

Additional tax chargeable under article 56(12)(c) for a

default by a person, other than an individual, in furnishing a return

in respect of the year of assessment 2009 or any subsequent year of

assessment, shall be calculated on the tax chargeable before taking

into account the additional tax itself on the total income of that

person for that year at the amounts as shown in Table B hereunder

TABLE B

Number of months from the date on which

a return is required to be submitted in accor-

dancewith the relevant provisions of the

Income Tax Management Act Additional tax

Within 6 months €50

Later than 6 but within 12 months

€200

Later than 12 but within 18 months

€400

Later than 18 but within 24 months

€600

Later than 24 but within 36 months

€800

Later than 36 but within 48 months €1,000

Later than 48 but within 60 months €1,200

Later than 60 months €1,500

Where a person proves that a default in furnishing a return

filed or due to be filed by him was due to a reasonable excuse, the

Commissioner shall remit the whole of the additional tax otherwise

chargeable in accordance with item 2 or 3 in respect of that default

Provided that

(a) an insufficiency of funds to pay any tax due, or

(b) when reliance is placed on any other person to

perform any task, the fact of that reliance or any dilatoriness or

inaccuracies on the part of the person relied upon,

shall not constitute a reasonable excuse for the purpose of this

item.

(1) Subject to the provisions of the other items of this

Schedule, additional tax chargeable under article 56(12)(c) for an

omission from a return shall be one point five per cent (1.5%) per

month of the endangered tax.

(2) Subject to the provisions of item 7, the rate of

additional tax per month as provided in paragraph (1) shall be

calculated for every month or part thereof, such period commencing

with the month during which the tax on the chargeable income for

that year was due and payable and ending with the month during

which the omission is rectified by a further return made under article

13 of the Income Tax Management Act or an assessment is made.

(1) When an omission from a return is rectified by a person

by means of the delivery of a further return made in accordance with

article 13 of the Income Tax Management Act before that person is

notified in writing by the Commissioner, in terms of subarticle (7) of

the said article, that an enquiry will be conducted into that person’s

tax declarations and liabilities -

(a) if that further return is delivered to the Commissioner

not later than twelve months after the relative tax return date,

the additional tax otherwise chargeable under item 5 for that

omission shall be fully remitted;

(b) in any other case, the rate of additional tax otherwise

chargeable under item 5 for that omission shall be zero point

one per cent (0.1%) per month of the endangered tax.

(2) Where an omission from a return is rectified

by a person by means of the delivery of a further return made in

accordance with article 13 of the Income Tax Management Act after

that person has been notified in writing by the Commissioner, in

terms of subarticle (7) of the said article, that an enquiry will be

conducted into that person’s tax declarations and liabilities, but

before that person is notified with an assessment in which additional

tax is charged for that omission, the rate of additional tax otherwise

chargeable under item 5 for that omission shall be zero point seven

five 0.75% per month of the endangered tax.

The maximum additional tax for an omission payable under

item 5 or 6 shall in no case be more than sixty times the applicable

rate in terms of the respective item.

(1) Where a return of income delivered by a person

contains an omission and

(a) that person has sought and relied upon the written

advice of a tax professional, insofar as the matter to which the

omission refers is concerned, and submits the original written

advice together with the return by not later than the relative tax

return date; or

(b) that person proves that the omission was not due to

any fraud, art, contrivance or gross or wilful neglect

the Commissioner shall remit the whole of the additional tax

otherwise due in accordance with this Schedule in respect of that

omission.

(2) An advice, referred to in paragraph (1)(a), furnished

by a tax professional, shall not of itself constitute a binding

interpretation of the relative statutory provisions and their proper

application.

(3) The Commissioner shall not be required to remit the

additional tax in accordance with item (1)(a) if he determines the

advice in question to be spurious or frivolous: provided that the

Commissioner’s decision under this paragraph shall be subject to

review by the Board of Special Commissioners in any appeal filed

in connection with the relative assessment.

(4) Without prejudice to paragraph (1)(a), the fact that

an omission was due to the complexity of a particular transaction or

to the complexity of any particular provision of the law shall not, of

itself, be considered as a valid ground for the remission of additional

tax under paragraph (1)(b).

The additional tax chargeable under article 56(12)(c) shall

be in addition and without prejudice to interest chargeable under

article 44(2A) of the Income Tax Management Act, but no such

interest shall be charged on the said additional tax.

When a person files a declaration prescribed for the making

of an election under article 12 of the Income Tax Management Act,

and he is not a person to whom that article applies and subsequently

submits a full and correct return, he shall be deemed for the purposes

of article 56(12)(c) and of this Schedule to have omitted from his

return all his income except for that income referred to in article

12(2)(b) of that Act and to have rectified that omission when he

submits the full and correct return.

When a person to whom article 12 of the Income Tax

Management Act applies files a declaration prescribed for the

making of an election under that article after the date prescribed

therefor, he shall for the purposes of article 56(12)(c) and of this

Schedule be deemed to have made a default in furnishing a return

and that default shall continue until a return is furnished.

(1) When the Commissioner, having determined the

amount of tax payable by a person for a year or years of assessment

on the basis of an estimate made under article 31(3) of the Income

Tax Management Act, gives notice in writing to that person, in

terms of article 13(7) of that Act, that an enquiry will be conducted

into his tax declarations and liabilities, and that person subsequently

furnishes a return of income in respect of the said year or years,

that person shall be deemed to be subject to additional tax for an

omission in addition to any additional tax to which he may be liable

for a default.

(2) For the purposes of calculating the endangered tax

for an omission to which the person referred to in paragraph (1)

shall be subject, the said endangered tax shall be considered to be

equal to the tax calculated on the total income, deducting therefrom

any credits, as declared in the said return.

(3) Where an assessment or an additional assessment

for a year or years of assessment is made under article 31(5) of the

Income Tax Management Act on a person referred to in paragraph

(1), for the purposes of calculating the endangered tax, the tax

calculated on the total income, deducting therefrom any credits, as

declared in the said return, shall be considered to be zero

Provided that the additional tax for omission as resulting

from paragraph (2) above shall be deducted from the amount of the

additional tax as resulting from this paragraph.

(1) The Commissioner may remit such part or all of the

additional tax otherwise chargeable in accordance with this Schedule

in respect of a default or an omission as he may deem fit.

(2) The Commissioner may impose any condition that

he may consider appropriate for any remission under paragraph (1),

including the requirement that the person concerned shall not make

another default or omission within such period as the Commissioner

may establish or that the said person shall make a payment of tax

in such amount and within such time as the Commissioner may

determine.

(3) Should any condition imposed by the Commissioner

in accordance with the provisions of paragraph (2) be infringed by

the person concerned, any reduction of additional tax granted by

the Commissioner in addition to the reductions contemplated by the

other provisions of this Schedule shall be forfeited.

(4) If forfeiture is due under the provisions of paragraph

(3), any additional reduction made under the provisions of this item,

but not under the provisions of the other items, shall be deemed to

have been a suspension of liability to the said additional tax, and not

the cancellation of the relevant additional tax.

(5) The Commissioner shall communicate in writing

to the person concerned any condition imposed under paragraph

(2), the consequences of an infringement of any such condition in

accordance with paragraph (3) and, when such is the case, the fact

that forfeiture has been incurred.

(6) The use of the Commissioner’s discretion under this

item shall not be questioned in any appeal.”.

3. The Deduction of Additional Tax (Omissions) Rules and

the Deduction of Additional Tax (Default in Furnishing Return)

Rules are hereby being repealed

Provided that the provisions of the said rules shall continue to

apply as if they have not been repealed with respect to additional

tax chargeable under article 56(12)(c) for any year of assessment

preceding the year of assessment 2009.

€0.75