Tax Payment Deferral Scheme

  • By:Melissa Speigner
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In response to the negative effect of the pandemic of COVID-19 the Maltese Government has introduced a number of fiscal measures to support Maltese entrepreneurs.  We outline below the main measures, which are directed at improving liquidity and easing the pressure on cash flow, particularly by way of a tax deferral whereby tax can be paid at a later date without incurring any penalty or interest.

 

Eligible taxes

The eligible taxes are provisional tax, employee taxes (FSS tax, NI and maternity fund contributions), maternity fund payments and social security contribution of self-employed persons and VAT. The deferral is applicable to the taxes which are due in March and April 2020.

 

Period of deferral

Eligible taxes, apart from VAT, should subsequently be settled in four equal monthly instalments between May and August 2020.

VAT is to be settled in two equal instalments with the two quarterly returns immediately following the quarter during which VAT should have been paid but would have been deferred under this scheme.

No interested or penalties shall be applicable in respect of deferred eligible taxes.

 

Eligible persons

The scheme is open to companies and self-employed persons that suffer a significant downturn in their turnover as a result of the economic constraints arising from the coronavirus pandemic and, as a result face substantial cash flow difficulty.

Apart from the specifically mentioned sectors of education, event planning, hospitality and tourism, hairdressing, beauty treatment and physical well-being activities; transport and manufacture, applications are also open to other businesses that may be significantly impacted by the economic constraints.

 

Restrictions

Companies and self-employed persons which have failed to comply with their tax obligations failing due by the 31st December 2019 are not eligible to apply for the scheme.

The benefit granted under this scheme shall be forfeited if the beneficiary is found to be in breach of any published terms and conditions. In case of forfeiture, beneficiaries will have to settle their taxes as demanded by the Commissioner for Revenue and such payments shall be subject to interest or penalties as stipulated by law.

 

No impact on submission obligations

Persons who benefit from this tax deferral scheme, are still required to submit documents and returns by the due date as required by law.

 

Application process

A company or self-employed person wishing to benefit under this scheme should apply on the Malta Enterprise website.

 

European Union (Adoption of Temporary Framework)

On a European level, the European Commission has adopted a Temporary Framework to enable Member States to use the full flexibility of the State aid rules to support the economy further to the COVID-19 outbreak. The Temporary Framework comprises 5 types of aid:

  1. Direct grants, selective tax advantages and advance payments of up to €800,000 for a company to address its urgent liquidity needs;
  2. State guarantees for loans taken by companies from banks;
  3. Subsidized public loans to companies;
  4. Safeguards for banks that channel State aid to the real economy, with aid being considered as direct aid to the banks’ customers, and not to the banks themselves;
  5. Short-term export credit insurance to be provided by the State where needed.

 

Source:

https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-response/economy_en; https://ec.europa.eu/commission/presscorner/detail/en/ip_20_496

 

Our services

We may clarify any query that there may be with respect to this tax deferral scheme, and we may assist you with the application process.

 

Contact

[email protected]

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