Tax management of SMEs in Malta : an analysis

Abstract

Purpose: The study assesses the occurrence of TM and identifies the roles and responsibilities of those involved. The approach undertaken by those responsible as well as the factors that influence their approach are also analysed. Furthermore, the study evaluates how SMEs keep abreast of latest tax legislation, and whether they perceive that any benefits can arise when adopting TM. Design: Twelve semi-structured interviews were conducted with directors of businesses falling under the SME threshold. Findings: The study indicates that SMEs implemented TM and ensured its regular occurrence differently. This was mostly mitigated through follow-ups on the internal department or those involved in TM internally, as well as with an external tax practitioner. Furthermore, the findings acknowledge that, even though directors have such responsibility, the role of TM is not continuously carried out by them, but rather is carried out with the support of an external advisor. In fact, SMEs perceive themselves as adopting a proactive approach when undertaking TM. SMEs mainly keep abreast of the law through regular updates by their tax practitioners. Some have also shown concern over searching and being vigilant for the latest tax legislation, and relying on the tax practitioner for this thereby ensuring that they do not overlook any new updates. The benefits identified by SMEs have allowed them to enhance their approach and remain attentive. Conclusion: A general conclusion drawn from this study is that, even though directors are dutiful in their responsibility and are aware of what their responsibility entails, their role is mainly one which ensures proper oversight of fiscal matters. Consequently, this affects the work of management on tax since, at times, they might be unaware of the continuous efforts they need to make. While SMEs perceive themselves as being proactive, they rely greatly on the services of tax practitioners since they lack resources. Consequently, more time should be devoted to ensure that TM is effectively undertaken. Value: The study aims to contribute and promote TM practices by SMEs which allow business growth. The recommendations aim to enhance the approach adopted by SMEs.