Towards more efficient tax enforcement systems, with particular reference to Value Added Tax

Abstract

Recent trends in Malta are showing that addressing the country’s inefficiencies in its tax collection and enforcement systems ranks high on the government’s agenda. Tax | evasion is an unethical practice, leading to a decline in government’s income and a consequent increase in the tax rate of the honest taxpayer. This dissertation has looked at the problem from the administrative perspective, both within the local scenario as well as its international aspect. It has sought to analyse in particular and in sufficient detail the various public structures which administer VAT that are operating at the moment. An overview of the most common tax evasion practices has been included to give a clearer picture of what tax departments need to look out for during their investigations. Recent trends which are challenging the : authorities have also been listed. This analysis has been complemented by a closer look at what corrective action 1s currently being considered by the Maltese government as well as the European Union and the OECD to stop various tax evasion and tax avoidance schemes. Issues such as what Malta needs to implement in the light of its accession to the EU, as well as whether Malta should continue to move its revenue base from a tax on income to a consumption tax, have also been touched upon. The core of the solution to inefficient tax enforcement systems in Malta seems to lie mainly in international cooperation and training; serious, prompt, and dedicated action by the relevant tax authorities; and vigilance for tax evasion trends that may develop.