Millions in delayed tax refunds, accountants told not to call taxation unit

The finance ministry’s International Taxation Unit is struggling with its backlog of tax refunds, leaving foreign investors irked at the months-long delay of millions of euros in tax refunds for non-resident company shareholders.

High-placed sources from Malta auditing sector called the situation a ‘farce’ not befitting of Malta’s reputed financial services hub, concerned at the “unexplained” delay in tax refunds to non-domiciled shareholders.

Evidence of this was an email sent this week by Aldo Farrugia, the director of the ITU to the Institute of Financial Services Practitioners (IFSP) – an independent association of financial services professionals – a copy of which was leaked to MaltaToday after being circulated to all accountants and auditors.

In his email, Farrugia indicates the troubles his department is facing and attempts to counter the onslaught of numerous telephone calls from auditors and accountants who are running after their client’s money.

“This week and the next, ITU is going to try to clear a fair bit of the backlog of refunds that have accumulated,” and asked the IFSP to “limit their telephone calls to the bare minimum.”

Obviously frustrated at the backlog, Aldo Farrugia says the IFSP’s members’ calls “take up a fair bit of our time, time which could be utilized in processing the pending claims.” Farrugia ends by asking the IFSP to “send emails” for queries instead.

Hundreds of foreign-owned companies moved to Malta in a bid to benefit from the advantageous tax regime, an attractive and competitive structure that promises tax refunds to international business and investments that set up base here.

But foreign shareholders are fretting over the breach of the same laws the Maltese government passed to attract their business, namely by not repaying income tax refunds within the obligatory 14 working days from the submission of a valid computation.

MaltaToday is informed that almost all the non-domiciled company shareholders have been left without their legitimate refunds, and the delays have now well dragged into months.

As things stand, the government would now be obliged to pay an interest of 0.75% for each defaulting month, according to the Income Tax Management Act.

Read more on MaltaToday's Wednesday edition