The recent reforms carried out to the tax assessment and collection system in Malta : a critical evaluation

Abstract

Tax administration plays a critical role in restoring macroeconomic balance and promoting equity and efficiency. However, in order for such tax theory to be translated in practice, tax administration needs to be very well organised. Unfortunately, for many years, the local tax administration system was not in a condition to operate in an effective and efficient manner due to multiple shortcomings. Thus, reforms had to be undertaken. The mam reforms, which were introduced in 1999, can be summarized as follows; (i) the introduction of the self-assessment system and the new penalty regime, (ii) the declaration form, and (iii) the setting up of the Tax Compliance Unit. Three years after implementation a critical evaluation of these reforms could be attempted with the aim of determining their effectiveness and to provide recommendations as to what measures could be taken to further streamline the tax administration system. Since literature on tax administration is very limited, this study had to base itself on the local statutes and on interviews and discussions had with Inland Revenue and Tax Compliance Unit officials. Important data was also obtained through a questionnaire conducted within the Accountancy Profession. The scope of the questionnaire was to try to gauge the view of the profession about the reforms and their effectiveness.