The Malta Developers Association (MDA) has added its voice to the widespread condemnation by industry stakeholders of a property tax exemption that they view as being a reward to people who pay late.
The exemption is detailed in Legal Notice 419, which states that those who have tax arrears that were due by January 2021 will be allowed to pay any tax due on the transfer of property purchased before March 2021 against their arrears and thereby be exempt from tax on property transfers to the extent that they are in arrears.
In a statement, the MDA disassociated itself from the exemption, and said that while it agreed that the Government should find a way to collect tax arrears from defaulting taxpayers, the “discriminatory” legal notice created an un-level playing field.
“The current measure will create unfair competition, as anyone benefiting from such an incentive will be in a position to offer his property at a better price to that of the developer. The MDA encourages the Government to consult the Association before issuing such measures as what are meant to be incentives for some, directly and negatively impact the industry.”
The association insisted that the exemption is not an amnesty for developers in any way, because “developers pay their final withholding tax with every contract signed and therefore, as developers who pay their tax at source will not be benefiting from such incentive.”
Meanwhile, the Malta Insitute of Accounts, the Malta Institute of Taxation and the Institute of Finacial Services Practitioners all issued statements decrying the tax amnesty, with the common theme being that this new measure goes against Malta’s efforts to be removed from the FATF grey list.
The Malta Chamber was the first to raise objections to the tax break last week, saying that paying taxes late was an extremely damaging practice that needed to be discouraged, not rewarded.
Indeed, the exemption appears to contradict recent statements made by Finance Minister Clyde Caruana, who has made collecting unpaid taxes his battle cry.
The change could hit smaller establishments negatively
The new rules come into effect from 1st January 2024
Only competent authorities or subject persons will have access to information on Beneficial Ownership