Updated | Task force to rein in black economy

Finance minister Edward Scicluna said that Malta’s growing economy has brought with it new challenges when it comes to economic activity that is not declared and fully in-line with the law.

The minister was speaking at the launch of the Joint Enforcement Task Force which will investigate cases of non-compliance with the laws governing economic activity. The task force, he said, will be its own entity and will work within existing legal frameworks where it will investigate cases and in the case of irregularities, pass them on to the relevant department.

"The task force comes in response to a number of business owners who have complained over the years and demanded there be a level playing field on issues of compliance with the law," Scicluna said.

Also present for the launch were Joseph Chetcuti, director general of the customs department, Marvin Gaerty, commissioner for revenue, Tarcisio Scicluna, director general for compliance and investigations under the commissioner for revenue, and Pierre Vella, MITA project manager.

Chetcuti said that the customs department, together with the VAT department and the Inland Revenue department, were the main departments connected to the collection of tax and will be working together on the task force.

"Other than fiscal issues, the task force will also be looking into issues of security, and health and safety," he said.

Scicluna added that the soft opening of the unit happened last month and there have already been a number of cases that have shown that when investigations are more focused, results are achieved.

"For the economy to grow without reaching a ceiling, we need foreigners to join the workforce, however, this opens up the possibility of abuse where, for example, a business might employ people without the necessary paper work,” Scicluna said, adding that this was a warning to employers for them to make sure that all their operations are carried out in a lawful manner.

If this is not the case, the task force will be investigating. "Nobody should be operating in Malta and not paying his contribution," he said.

Tarcisio Scicluna echoed the minister in saying that the idea behind the task force is to remove unfair competition facing those employers who follow the law while others do not.

While the task force will be investigating the black economy as well as issues of tax evasion, he also added that there will a significant amount of resources dedicated to education.

While there are a number of entities and individuals who abuse the system, Scicluna said that there was also a lack of understanding of how things should be done.

He also said that a number of officials will have to be trained in order for the task force to be up to the task of investigating a wide range of cases.

“The problem of the black economy is spread over many different sectors and it is therefore essential that those investigating are properly trained to investigate cases on a number of levels,” Scicluna added.

The finance minister concluded by saying that the government wants to make that it is able to collect revenue that is owed to it so that it can use it for the good of the nation, adding that it was not fair for people to avoid paying their fair share.

Malta Chamber welcomes tax evasion unit

Welcoming the setting up of a new unit, the Chamber said it had been extremely vociferous in the past on this subject, as it consistently argued that tax evasion deprived the state of substantial funds that could be used better, and it placed honest businesses at a disadvantage.

The Malta Chamber has always called for a competitive and liberalised environment, fairly and equitably regulated through market surveillance. Ultimately, the Chamber argued, this would result in upholding a competitive level playing field for all the business community.

"The Chamber is pleased that the concerned authorities have understood the importance of the Chamber’s arguments and have set up a unit that will target tax evasion. For this reason, the Chamber welcomes this development and offers Government all the help at its disposal for this project to be a successful one," it said.