The application of the Inland Revenue Department's guidelines on bad debt treatment in the food import sector

Abstract

Given the current credit situation within the Maltese economy, it has been established that one of the significant factors to be affected by such guidelines is the food import and distributors sector. This is so because these companies operate as wholesalers and have quite a hefty number of food retailers which form their client base. This dissertation concentrates on what impact the Inland Revenue Department's 2003 bad debt guidelines has had on the players of the mentioned sector. Due to the fact that literature on bad debts is limited to the 2003 Bad Debt Guidelines, the study had to be based on the statutes, questionnaires to food importers, interviews with tax partners in audit firms and also discussions with an official at the Inland Revenue Department who discussed the guidelines and who also highlighted the differences between the Maltese Income Tax Act and the British Tax Act in light of bad debts to be taken as an allowable expense. The research conducted has a tri-partite relationship formed between the food importers as the taxpayers, the Tax practitioners as the relevant professionals in the field and the Inland Revenue Department as the regulator.