Administrative Penalties Issued by Malta’s Financial Regulators in 2016

In an effort to strengthen its financial regulatory framework, the Maltese government issued a total of €127,025 in administrative penalties to various companies and individuals in 2016.

Major Recipients of Administrative Penalties

• Company service providers: 12 out of 168 cases
• Credit institutions: Four separate penalties totaling €77,650

Common Reasons for Administrative Penalties

• Failure to submit annual compliance reports
• Lack of due diligence in identifying beneficial owners
• Inadequate monitoring of customer profiles

Enforcement Actions by Revenue Department

• Issued 4,042 warnings to employers who failed to submit documents and payments after deducting taxes from employee wages
• Prosecuted 392 individuals for failing to submit VAT returns, resulting in 163 judgments delivered

Investigations and Prosecutions

• Tax Compliance Unit is investigating 29 cases, with another 20 cases at the pre-audit stage
• Individuals who collect monies on behalf of the government and fail to submit such proceeds are often prosecuted by the Police Department
• Companies and directors have been found guilty of committing crimes against the Revenue Acts at both first and second instance courts

Challenges in Combatting Tax Evasion

• Constitutional Court decisions have ruled that additional taxes imposed for late filing and non-payment were punitive in nature and therefore not criminally prosecutable, creating difficulties in initiating criminal prosecutions in certain cases

Efforts to Combat Tax Evasion

• Dedicated unit within the Inland Revenue Department and VAT Department to handle tax-related investigations
• Police Department’s Economics Crime Unit plays a key role in prosecuting financial crimes
• Overall, Malta is taking a proactive approach to strengthening its financial regulatory framework and combating tax evasion.