Blitz gives hundreds to VAT fraudsters

Dozens of companies have been caught in the act of not providing VAT receipts by the tax authorities.

Malta weather is informed that over the past few weeks, more than 250 catering establishments have been checked by agents of the VAT service.

Of these, around a third were caught not giving customers VAT receipts.

Shortly after the crackdown on bars and restaurants, authorities targeted beauticians, nail technicians and hairdressers, again carrying out some 260 on-site inspections.

Sources said almost half of these businesses had not issued VAT receipts.

It is understood that more business categories are planned for the coming weeks in a bid to crack down on abusers.

Failure to issue a receipt is a violation of VAT law and is subject to a fine of between €700 and €3,500.

Tax Commissioner Joseph Caruana said authorities wanted to send a message to businesses.

“The objective of these exercises is to get the message across to all economic sectors about the need to be compliant and to collect all revenue due to public coffers,” he said.

“These types of exercises that should continue across all economic sectors are aimed at bringing more discipline and ensuring compliance.”

The objective of these exercises is to spread the message in all economic sectors on the need to be compliant and to collect all the revenues due to the public coffers.

Caruana said the Tax Department’s Compliance and Investigation recently hired digital forensics experts who can detect fraud and suppress sales on digital point-of-sale systems.

Meanwhile, what was once the headquarters of the VAT department in Birkirkara is being converted into an investigation center to lead the fight against tax evasion.

The government believes it is losing huge sums through VAT fraud.

According to internal estimates compiled by the Department of Economic Policy of the Ministry of Finance, Malta is expected to lose between 120 and 150 million euros due to VAT fraud each year.

However, some members of Malta’s tax authorities believe this figure is far lower than the actual amount of money pocketed by VAT evaders rather than funneled into public coffers.

Some senior officials have said Malta weather the real figure could reach 300 million euros at the height of pre-pandemic economic activity.

Before the start of the COVID-19 epidemic, the tax authorities collected some 800 million euros in VAT from taxpayers each year.

According to the European Commission’s latest VAT Gap report, Malta lost around €164 million in revenue in 2019.

The VAT Gap is an economic formula that provides a measure of the effectiveness of VAT enforcement and compliance procedures by estimating the difference between the VAT paid and the actual VAT that should have been collected.

The greater the gap, the more tax is lost to the black market economy.

Earlier this year, Finance Minister Clyde Caruana warned that the government would not be lenient towards tax evaders, citing a figure of 5 billion euros in back taxes.

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