L.S. 123.68 Regoli dwar Tnaqqis ta' Taxxa Addizzjonali (Ommissjonijiet)

(1)The title of these Rules is Deduction of Additional Tax (Omissions) Rules. Title and commencement.

(2)These rules shall apply in respect of the year of assessment commencing on the 1st January 2003 and subsequent years of assessment. 2.

(1)In these rules: "Act" means the Income Tax Act; Interpretation. Cap. 123. " a d d i t i o n a l t a x " m e a n s t h e a d d i t i o n a l t a x c h a rg e a b l e i n accordance with the provisions of article 56

(12)(c) of the Act and the provisions of the Schedule in respect of any omission; "omission" means the omission, or deemed omission, from any return of income submitted for the purpose of the Income Tax Acts of any amount which should have been included therein; "Schedule" means the Schedule to the Act; "tax professional" means an individual being the holder of a warrant issued under the Accountancy Profession Act, or a member of the Malta Institute of Taxation, or a member of the legal profession in Malta who specialises in taxation, or a partnership of such individuals the majority of whom are so qualified: provided that the Commissioner shall be entitled to request such proof as he may deem appropriate to the effect that an individual qualifies as a tax professional as aforesaid. Cap. 281.

(2)Other words and expressions contained in these rules shall have the meaning assigned to them in the Income Tax Acts and in the Schedule to the Act. 3. (

1. a)Where the Commissioner is satisfied that (
2. i)reasonable care has been taken by the person preparing and submitting the return or by the person responsible for its preparation and submission; or (
3. ii)the amount of the endangered tax is not material, he may remit the whole of the additional tax otherwise due in accordance with the provisions of the Schedule. *These rules have been revoked by Legal Notice 98 of 2009; however they are to continue to apply as if they have not been repealed with respect to additional tax chargeable under article 56

(12)(

1. c)for any year of assessment preceding the year of assessment 2009 - see rule 3 of Legal Notice 98 of 2009. Full remission of additional tax. 1 2 [ S.L.123.68 DEDUCTION OF ADDITIONAL TAX (OMISSIONS) (
2. b)The Commissioner’s discretion for the purpose of this rule shall not be questioned in any appeal. Where a person has taken reasonable care. 4.

(1)For the purposes of rule 3, in determining whether reasonable care has been taken in the preparation and submission of a return, the Commissioner shall take account of: (

1. a)whether a person has sought and relied on the written advice of a tax professional; and (
2. b)the complexity of the transaction which has resulted in an omission from the return or the complexity of the legal provisions concerned and the difficulties in their interpretation.

(2)The original written advice, referred to in sub-rule

(1)(a), is to be submitted together with the return by not later than the relative tax return date.

(3)An advice, referred to in sub-rule

(1)(a), furnished by a tax professional, shall not of itself constitute a binding interpretation of t he relativ e statu tory provi sions an d v iews on th eir pro per application.

(4)Rejection by the Commissioner of advice furnished by a tax professional shall not necessarily imply that a person has not taken reasonable care, unless the said advice is considered by the Commissioner to be spurious or frivolous. Reduction of additional tax on voluntary disclosure. Cap. 372. 5. Where an omission from a return is rectified by a person by means of the delivery of a further return made in accordance with article 13 of the Income Tax Management Act after that person has been notified in writing by the Commissioner that an enquiry will be conducted into that person’s tax declarations and liabilities, but not later than the last day of the month immediately following that in which the said notification is served, the additional tax shall be at the rate of one point five per cent (1.5%) of the endangered tax per month. Reduction of additional tax by 90%. 6. Additional tax chargeable shall be reduced by ninety per cent (90%) of the full amount where the omission - S.L. 372.14 (

1. a)is of income from an employment or office which is included in a return submitted to the Commissioner in accordance with the provisions of the Final Settlement System (FSS) Rules; or (
2. b)is of investment income, as defined in the investment income provisions of the Act, subject to deduction of tax at source, irrespective of whether such tax has been deducted or not; or Cap. 372. S.L. 123.27. Reduction of additional tax by 50%. (
3. c)is of gains from the sale of immovable property chargeable under article 5 of the Act, and tax at the stipulated rate has been paid in accordance with article 43 of the Income Tax Management Act and rule 6 of the Capital Gains Rules. 7. Where an omission is not due to fraud, art, contrivance or gross or wilful neglect, the additional tax chargeable for an DEDUCTION OF ADDITIONAL TAX (OMISSIONS) [ S.L.123.68 3 omission shall be reduced by fifty per cent (50%) of the full amount and the circumstances in which the additional tax is to be so reduced shall include where: (
4. a)a person is or should be aware that an enquiry has been conducted into his tax declarations and liabilities and on which the additional tax in respect of the omission has been reduced according to the provisions of rule 6, but he again omits, from a return submitted after the outcome of the enquiry is known, an item which the enquiry has indicated should have been so included; or (
5. b)the omission is manifestly contrary to accepted principles and practices of tax law or accountancy, including, without limiting the generality thereof: (
6. i)over-claiming deductions against income chargeable under article 4

(1)(

1. b)of the Act; (
2. ii)claiming deductions for alimony payments when no right for such deductions exists; (iii) failing to declare alimony payments received; (
3. iv)excessive or unjustified claims for deduction against rental income. 8. The reductions contemplated in rules 6 and 7 shall be applicable to the additional tax chargeable under the Schedule, whether reduced in accordance with the provisions of rule 5 or not. Applicability of reduction in additional tax. 9. Where a reduction of additional tax is effected in accordance with the provisions of these rules, the applicable rate of additional tax referred to in item 5 of the Schedule shall be the rate of additional tax so reduced. Maximum additional tax chargeable. 10. Notwithstanding the provisions of these rules, the Commissioner may remit such part or all of the additional tax chargeable for the year of assessment 1999 and any subsequent year, as he may deem fit, provided that: Certain powers of the Commissioner. Amended by: L.N. 160 of 2006. (
4. a)the Commissioner may impose as a condition for any such remission the requirement that the person concerned shall not make another omission within such period as the Commissioner may establish, as well as such other conditions as he may deem fit; (
5. b)should any condition imposed by the Commissioner in accordance with the provisions of paragraph (
6. a)be infringed by the person concerned, any reduction of additional tax granted by the Commissioner in addition to the reductions contemplated by the other provisions of these rules shall be forfeited; (
7. c)if forfeiture is so due, under the provisions of paragraph (b), any additional reduction made under the provisions of this rule, but not under the provisions of the other rules hereof, shall be deemed to have been a suspension of liability to the said additional tax, and not the cancellation of the relevant additional tax; (
8. d)the Commissioner shall communicate in writing to the person concerned any condition imposed under 4 [ S.L.123.68 DEDUCTION OF ADDITIONAL TAX (OMISSIONS) paragraph (b), the consequences of infringement of any such condition and, if such is the case, the fact that forfeiture has been incurred. Appeals. Cap. 372. 11. Decisions taken by the Commissioner regarding the application of these rules shall be subject to objection and appeal in accordance with the provisions of articles 35 and 37, respectively, of the Income Tax Management Act only as to whether, for the purpose of rule 4

(4), a tax professional’s advice is to be considered as spurious or frivolous.