4th September 2009

Income Tax Amnesty Scheme

On the 4th September 2009 the Hon. Tonio Fenech, Minister of Finance, the Economy and Investment, announced an initiative whereby persons having and income tax balance up to basis year 2007 may benefit from a substantial reduction in penalties and interest due. This initiative is available both to individuals and companies and is split into two categories as follows:

Category 1 - Tax balance up to basis year 1997

Taxpayers with a pending tax balance for years up to basis year 1997 will benefit from a 25% reduction in penalties and interest given that the remaining 75% is paid by the 15th January 2010.

Category 2 - Tax balance from basis year 1998 up to basis year 2007

Taxpayers with an unpaid tax balance for the years from basis year 1998 up to basis year 1997, will benefit from a 90% reduction on pending additional tax and interest, given the pending tax balance is paid in full in one lump-sum payment by the 15th January 2010.

Upon submission of the respective income tax returns, the Department will send a letter quoting the income tax balance and the amount of the (reduced) penalties to be paid. Payment must be made together with the aforementioned letter duly signed by the directors of the company.

Conditions that must be satisfied in order to benefit from the scheme

• All outstanding income tax returns must be submitted by the 16th November 2009 (this implies that audited financial statements must also be presented since in order for an income tax return to be submitted it should be backed by audited and signed financial statements);
• The tax payment together with the (reduced) penalties must be paid in full by the 15th January 2010 (no installments are possible);
• The letter received by the income tax Department after submission of the respective income tax returns must be signed and sent to the Department together with the payment of tax;

Such initiative is intended to encourage the submission of outstanding income tax returns and to offer an opportunity for those who want to regularize their income tax payments on a voluntary basis.