VALUE ADDED TAX (REFUND OF EXCISE TAX ON TRADING STOCK) REGULATIONS

SUBSIDIARY LEGISLATION 406.01

VALUE ADDED TAX (REFUND OF EXCISE TAX ON

TRADING STOCK) REGULATIONS

1st January, 1999

LEGAL NOTICE 5 of 1999, as amended by Legal Notices 20 and 45 of

1999, 127 and 153 of 2000, 53 of 2001 and 426 of 2007.

The title of these regulations is the Value Added Tax

(Refund of Excise Tax on Trading Stock) Regulations.

L.N. 426 of 2007.

VALUE ADDED TAX

(REFUND OF EXCISE DUTY ON TRADING STOCK)

VALUE ADDED TAX

(REFUND OF EXCISE DUTY ON TRADING STOCK)

(1)

In these regulations unless context otherwise requires -

"the Act" means the Value Added Tax Act;

"excise tax" means excise tax on imports or excise tax on

products paid or payable in terms of the Customs and Excise Tax

Act;

"registered person" means a person who is registered in terms of

the Act but shall not include a registered person who is classified as

an exempt person or who is so classified up to 30 June, 1999;

"trading stock" means stock held for resale by a registered person

as on the 31 December, 1998 but shall not include stock on which

no excise tax has been paid.

(2) Other terms and expressions shall have the meaning

assigned to them in the Act.

VALUE ADDED TAX

(REFUND OF EXCISE DUTY ON TRADING STOCK)

(1) Subject to the other provisions of these regulations, a

registered person may make an application for a refund of excise

tax to be determined in accordance with the other provisions of

these regulations.

(2) An application for purpose of these regulations must reach

the office of the Commissioner, in the case of a registered person

who avails himself of the option referred to in regulation 4, 5, 6, 7,

or 8, by not later than 12 noon of the 30 July, 1999, or such other

later dates as the Commissioner may, for valid reasons, accept, and

in the case of a registered person who avails himself of the option

referred to in regulation 9, by not later than 12 noon of the 30 July,

1999, or such other later dates as the Commissioner may, for valid

reasons, accept

Provided that the provisions of regulation 12 shall not apply

where the application made for the purposes of the said regulation

reached the office of the Commissioner, in the case of a registered

person who availed himself of the options referred to in regulations

4, 5, 6, 7 or 8, after 12 noon of the 30 June, 1999, and in the case of

a registered person who availed himself of the option referred to in

regulation 9, after 12 noon of the 30 March, 1999.

(3) An application by a registered person who avails himself of

the option referred to in regulation 4, 5, 6, 7 or 8 shall be made on

the form prescribed in the First Schedule.

VALUE ADDED TAX

(REFUND OF EXCISE DUTY ON TRADING STOCK)

(4) An application by a registered person who avails himself of

the option referred to in regulation 9 shall be made on the form

prescribed in the Second Schedule.

(1) The application referred to in regulation 3(3) shall

include an itemised list of the goods held as trading stock by the

applicant as on 31 December, 1998 and shall show the cost at which

the applicant had acquired the said goods. Such goods shall be

classified by category showing

(a) Category A - goods on which excise tax on imports at

the rate of 15% has been paid;

(b) Category B - goods on which excise tax on imports at

the rate of 15% and excise tax on products at the rate

of 5% has been paid;

(c) Category C - goods which were subject to a levy under

the Local Manufacturers (Promotion) Act, and on

which only excise tax on products at the rate of 5% has

been paid;

(d) Category D - locally manufactured goods on which

only excise tax on products at the rate of 5% has been

paid;

(e) Category E - locally manufactured goods on which

excise tax on imports at the rate of 15% and excise tax

on products at the rate of 5% has been paid;

(f)

Category F - goods exempt from excise tax.

(2)

It shall also -

(a) include trading stock belonging to the applicant and

held on consignment by another person;

(b) not include, subject to the provisions of paragraph (c),

trading stock held on consignment by the applicant and

belonging to another person;

(c) include goods held on consignment by the applicant if

they form part of the trading stock belonging to a

person who does not have a place of business in Malta

and if the goods are imported goods on which the

applicant paid excise tax on imports.

This regulation shall apply in the case of imported goods

on which excise tax on imports at the rate of 15% has been paid

(a) where the applicant is an importer, such refund shall

be at the rate of 15% of the invoice cost of the taxable

goods paid on the importation of those goods by that

importer, inclusive of the cost of freight and insurance,

but excluding the excise tax on imports paid thereon;

(b) where the applicant is a wholesaler, such refund shall

be at the rate of 11% of the invoice cost, exclusive of

the excise tax on products paid thereon;

(c) where the applicant is a retailer, such refund shall be at

the rate of 15% of invoice cost, exclusive of the excise

tax on products paid thereon.

(1) Where the applicant is a wholesaler and the trading

stock consists of locally manufactured goods consisting mainly or

wholly of raw materials on which excise tax on imports has been

paid, such refund shall be at the rate of 5% of the invoice cost,

exclusive of excise tax on products paid thereon.

(2) An application by an applicant to whom subregulation (1)

refers, shall be made separately on the forms set out in the First

Schedule and shall clearly indicate that it refers to trading stock of

locally manufactured goods on which excise tax on imports had

been paid. The value of refund being claimed shall be entered in

lieu of Category F shown on page 1 of the First Schedule.

Where the applicant is a retailer and the trading stock on

which refund is being claimed were subject to a levy in terms of the

Local Manufacturers (Promotion) Act, and were therefore exempt

from excise tax on imports, but on which excise tax on products at

the rate of 5% has been paid, such refund shall be at the rate of 5%

of the invoice cost, exclusive of the excise tax on products paid

thereon.

Where the applicant is a manufacturer producing goods for

the local market, and the trading stock consists of -

(a) goods directly imported by such manufacturer and on

which excise tax on imports has been paid at the rate

of 15%, including such goods incorporated in work in

progress but excluding such goods as are incorporated

in finished goods, such refund shall be at the rate of

15% of the invoice cost of the taxable goods paid on

the importation of those goods, inclusive of the cost of

freight and insurance, but excluding the excise tax on

imports paid thereon;

(b) imported goods which were subject to excise tax on

imports at the rate of 15% but which were purchased

locally from third parties, including such goods

incorporated in work in progress but excluding such

goods as are incorporated in finished goods, such

refund shall be at the rate of 12% of the invoice cost,

but exclusive of excise tax on products paid thereon.

Where the applicant is a retailer and the trading stock

consists of loeally manufactured goods

(a) consisting of raw materials on which no excise tax on

imports had been paid, such refund shall be at the rate

of 5% of the invoice cost, but exclusive of excise tax

on products paid thereon;

(b) consisting mainly or wholly of raw materials on which

excise tax on imports has been paid, such refund shall

be at the rate of 10% of invoice cost, but exclusive of

excise tax on products paid thereon.

Where a registered person so opts, he may, in lieu of the

provisions of regulations 4, 5, 6, 7 and 8, apply for a refund of the

excise tax on trading stock by computing such refund in the

following manner

(a) where the registered person is an importer, at the rate

of 85% of the value of input tax refunded by that

registered person in terms of the provisions of article

78 of the Customs and Excise Tax Act;

(b) where the registered person is a wholesaler, at the rate

of 50% of the value of input tax refunded by that

registered person in terms of the provisions of article

78 of the Customs and Excise Tax Act;

(c) where the registered person is a retailer, at the rate of

100% of the value of input tax refunded by that

registered person in terms of the provisions of article

78 of the Customs and Excise Tax Act;

(d) where the registered person is a manufacturer, at the

rate of 75% of the value of input tax refunded by that

registered person in terms of the provisions of article

78 of Customs and Excise Tax Act.

Where a valid application for a refund in terms of these

regulations has been received by the Comnussioner, such refund

shall be effected

(a) in the case of an application to which regulation 4, 5,

6, 7, or 8 refers, by not later than three months from

the end of the month during which such application

was received by the Commissioner;

(b) in the case of an application to which regulation 9

refers, within fifteen working days from the date on

which such application was received by the

Commissioner, but in any case not earlier than the 1

April, 1999

Provided that in the case of a registered person who is

eligible to be classified as an exempt person but does not apply to

the Commissioner to be so classified, such refund shall not be

effected earlier than 1 July, 1999.

Where a registered person is a debtor to Govemment in

terms of the Value Added Tax Act, in terms of the Customs and

Excise Tax Act, or in terms of these regulations, or where such

person has failed to furnish a tax return in terms of any of the

abovementioned Acts, the Commissioner may set off such debts

against any refund due in terms of these regulations.

Interest at rate of 1% per month or part thereof shall be

due by the Commissioner to a person to whom a refund is due in

accordance with these regulations, from the date when the refund

becomes payable until the date when it is paid or when a cheque or

draft for the payment thereof is given or posted to that person by

the Commissioner.

An application to which regulation 3(3) refers -

(a) shall be signed, on every sheet thereof, by the

registered person, or, in the case of a body of persons,

by a principal officer of that body of persons and by

the person responsible for the accounting functions of

the business of the applicant;

(b) shall be certified by a certified public accountant in the

manner specified in the First Schedule, where the

amount claimed as refund in such application exceeds

eleven thousand and six hundred and forty-six euro

and eighty-seven cents (€11,646.87).

In lieu of the certification referred to in regulation 13(b), a

certified public accounta nt may opt to make the following

certification

"In accordance with paragraph (b) of regulation 13 of

the Value Added Tax (Refund of Excise Tax on

Trading Stock) Regulations, I/we have conducted a

verification and valuation exercise on the attached

application.

In order to ascertain that the application is free of any

material misstatement, I/we have conducted this

exercise in accordance with International Standards on

Accounting and Auditing. This exercise included

assessing and accounting principles used and

significant estimates made by the applicant, as well as

evaluating the overall presentation of the application.

More specifically my/our tests consisted in the

performance of sample tests on the existence,

ownership, cost, cut-off and categorisation of stock,

and on the calculations contained in the application, as

well as a review of the overall reasonableness of the

stock figures. I/we believe that such an exercise

provides a reasonable basis for my/our opinion.

In my/our opinion the application has been drawn up

in accordance with the provisions of the Value Added

Tax (Refund of Excise Tax on Trading Stock)

Regulations, and the information contained in such

application and in the accompanying statements is

fairly stated in all material respects.".

Every application to which regulation 3 refers, shall be

accompanied by an authorisation signed by the applicant

authorising the Commissioner of Inland Revenue to furnish any

information in his possession relating to information declared or

required to be declared in such application which the

Commissioner of Value Added Tax may request for the purpose of

verifying the said information.

The Commissioner may request any applicant to give such

information or clarification and to produce such import documents,

purchase invoices, accounts and other records relating to the

trading stock of that applicant, and may carry out such

investigations as he may deem necessary for the purpose of

determining or verifying the correctness or otherwise of the amount

due or paid as a refund to that applicant in accordance with these

regulations.

(1) Notwithstanding the other provisions of these

regulations, where it results to the Commissioner at any time that

any amount claimed as refund or paid by the Commissioner in

accordance with these regulations has not been properly computed

or that it was computed on the basis of incorrect information, the

Commissioner may revise the amount and, subject to the provisions

of subregulation (2), any amount which results to have been

excessively paid by the Commissioner shall be repayable by the

applicant to the Commissioner within thirty days from the date he

is served with a notice by the Commissioner requesting the said

repayment.

(2) Where the revision is occasioned by information which

results to have been grossly misreported, the relative application

for a refund shall be treated as having been invalidly made, and no

refund shall be due to the applicant, and any amount paid by the

Commissioner shall be repaid by the applicant to the Commissioner

in full and immediately upon a demand by the Commissioner.

(3) Any person signing or certifying any application which

results to be invalid in terms of subregulation (2) shall be jointly

and severally liable with the applicant for the repayment due by the

applicant, unless such person proves that he was not aware and

could not have been reasonably expected to be aware of such

misreporting.

(4) Where any false or incorrect statement or claim constitutes

an offence under the Act or under any other law, the liability to a

repayment in terms of this regulation shall be without prejudice to

any liability for any penalty which may be imposed for the said

offence.

An application for refund in terms of these regulations

shall not be deemed to have been submitted unless it is full and

complete in all material respects, including the signatures required

to be appended thereon in terms of these regulations.

(1) Subject to the other provisions of these regulations, an

application for a refund in accordance with these regulations shall

be accepted in full on the condition that the applicant will make a

change in the prices, if such a change is necessary, which shall be

fairly commensurate with such a refund, otherwise chargeable by

him on and after 1 January, 1999, for the sale of goods in respect of

which the refund is claimed.

(2) Where an applicant was required to make a change in the

prices and such change was not fairly commensurate with the

amount of refund claimed in the application for refund, the amount

of refund claimed shall be deducted by the applicable percentage as

shown hereunder

(a) where the difference between the actual change and

the expected change does not exceed twenty-five per

cent of the expected change, by the actual resulting

percentage;

(b) where the difference between the actual change and

the expected change exceeds twenty-five per cent but

does not exceed one hundred per cent of the expected

change, by thirty per cent;

(c) where the difference between the actual change and

the expected change exceeds one hundred per cent of

the expected change, by thirty-five per cent

Provided that the Commissioner may adjust the applicable

percentage to be deducted to reflect the changes expected to be

made in respect of the class of economic activity of applicants.

Regulation 12 shall not apply in all cases where the

provisions of regulation 18(2) apply.

VALUE ADDED TAX

(REFUND OF EXCISE DUTY ON TRADING STOCK)

Amended by