Uncollectable tax runs into billions, NAO analysis shows

A whopping €4.5 billion in VAT payments and penalties remained pending by the end of 2020, the findings of a National Audit Office analysis show.

Of this amount, €4.3 billion were deemed not collectable.

Additionally, a further €1.2 billion of income tax dues were estimated as not collectable by the end of 2020.

The aggregate amount of outstanding VAT and income tax is equivalent to almost 40% of Malta’s gross domestic product in a single year.

The NAO analysis titled ‘An Analysis on Revenue Collection Financial Year 2020’ was tabled in parliament on Wednesday afternoon. It is a follow-up exercise to that conducted in 2016.

The analysis focussed on the revenue collected by the Finance Ministry from income tax, social security contributions, VAT, capital transfer duty and customs.

The NAO said that despite restrictions caused by the pandemic, 1,467 investigations were conducted by the Commissioner for Revenue (CfR) in 2020. These included 120 full audit probes that raised €29 million in assessments, 307 audit investigations in specific areas and 564 cases which were referred by the Financial Intelligence Analysis Unit from which €8.2 million were recouped.

The NAO report said that seven cases were referred to the police for investigation since they related to tax evasion.

The Joint Enforcement Unit within CfR also performed a total of 532 inspections of construction sites and businesses, which triggered criminal action against 180 taxable individuals.