In an effort to ease business cash flow pressures and improving business liquidity amidst the COVID-19 instability, the Government of Malta has introduced specific economic measures to address the said difficulties faced by various businesses. These measures include a scheme which features the postponement of tax payments which are due by the end of March and April 2020. No interest or penalties will be charged on tax payments that are postponed in terms of such scheme.
Who is eligible to benefit?
The underlying benefit is available to all companies and self-employed persons who have suffered significant financial strain and consequent cash flow difficulties as a result of the COVID-19 pandemic.
On the contrary, companies and self-employed persons which have failed to comply with their tax obligations (submission of documents/returns and payments) falling due by the 31st December 2019, are specifically excluded from benefitting from the measures introduced.
Forfeiture of benefit
The breach of any of the terms and conditions of the scheme by an applicant and the making use thereof under false pretences, will result in forfeiture of the benefit granted under the scheme. This essentially means that there must be a genuine case of financial difficulty whereby the applicant would be in a position to duly substantiate the lack of business liquidity resulting from the COVID pandemic.
Following such forfeiture, all dues together with any interest or penalties incurred, would need to be settled accordingly as demanded by the Commissioner for Revenue.
In relation to which taxes may payment be deferred?
1. Provisional Tax
Provisional tax payments which are due by the 30th of April 2020 are to be settled in four equal monthly instalments in the four-month period between May and August 2020.
2. Employee taxes
The employee taxes covered by the incentive include:
- Final settlement system tax;
- Social security contributions;
- Maternity fund contributions
Payments owed in relation to the above-mentioned taxes March and April 2020 must likewise be settled in four equal monthly instalments in the four-month period between May and August 2020.
3. Social security contributions of self-employed persons
Social security payments due by the 30th of April 2020 are to be settled in four equal monthly instalments in the four-month period between May and August 2020.
With respect to any VAT relative to the upcoming 15th March 2020 and 15th April 2020 deadlines, settlement must be made in two equal instalments with the two quarterly returns immediately following the quarter in relation to which the VAT was deferred.
No impact on submission deadlines by the scheme
It is important to note that the deferral applicable in terms of the scheme only applies vis-à-vis payment of tax and not in relation to submission of tax forms. The applicant would hence still be expected to submit all its tax forms within the normal deadlines established by the relevant laws; namely its:
- VAT returns; and
- FS5 forms for February emoluments in March 2020, and FS5 forms for March emoluments in April 2020.
How can one benefit under the scheme?
In order to benefit under the scheme, an online application form must be submitted by no later than the 15th of April 2020.
When accessing the application, the applicant will be required to select the applicable sector pertaining to the business. The drop-down menu feature includes the following business sectors in relation to which the applicant may avail of the tax deferral:
- Hospitality and tourism;
- Hairdressing, beauty treatment and physical well-being activities;
- Transport; and manufacturing
There is also the option for the applicant to select ‘other’, where the said applicant business does not operate in one of the above sectors.