Value Added Tax (VAT) is a tax on the consumption of goods and services that is collected by businesses on behalf of the government. This tax is applied worldwide, but with different regulations and rates in each country. The fundamental structure of the VAT systems is similar across countries, but with some variations in rates and exemptions. In Malta, VAT is regulated by the VAT Act and is in accordance with the EU VAT Directives.

Locally, businesses that are registered for VAT are required to comply with VAT regulations to avoid penalties and fines. The standard VAT rate in Malta is 18%, with reduced rates of 5% and 7% for some supplies of goods and services and licensed letting and use of sporting facilities. Natural persons and legal entities involved in economic activities must apply for a VAT number in Malta, unless exempt to do so.

Depending on the business activity, there are three categories of VAT registrations in Malta, each with different obligations. VAT registration in Malta is done through the Commissioner for Revenue, who issues a VAT Certificate holding the VAT number.

Once registered, businesses in Malta must charge VAT on all taxable supplies of goods and services they provide, and they must submit periodic VAT returns and pay any VAT owed to the authorities. VAT returns in Malta are submitted electronically on a quarterly basis. These returns must include details of all VAT transactions, including the VAT charged on sales, and the VAT paid on purchases. Businesses are required to keep proper VAT records for a period of six years.

In addition to the quarterly VAT returns, businesses in Malta must also submit an annual VAT return. This return must reconcile the total VAT charged and paid during the year and must be submitted within six months from the end of the financial year.

It is important for businesses in Malta to comply with VAT regulations, as failure to do so can result in penalties and fines from the tax authorities. Businesses that are unsure of their VAT obligations or require assistance with VAT compliance can seek advice from a qualified accountant or tax advisor such as Accounting Services. An accountant can be very helpful in complying with VAT requirements for several reasons because VAT regulations can be complex, you require accurate record-keeping, you require to file VAT returns on time.

Overall, having an accountant to assist with VAT compliance can help ensure that your business follows all relevant regulations, avoid penalties and interest charges, and maximize VAT refunds where applicable. Reach out to us today for more info: https://accountingservices.com.mt/contact/.

Fairwinds Management Limited is a MFSA licensed firm offering Business Solutions in Malta. As part of our services, we offer Accounting, Administration, Corporate and Legal solutions.  Fairwinds Management also manages the brand Accounting Services. More information about us and our key services please visit our website. You may reach Fairwinds Management on +356 2704 0903 or info@fairwindsmanagement.net.

Article written by Ms Charlene Sciberras, B.A. (Hons), guest writer, a marketing and business administration specialist with a special focus on corporate, accounting, and legal matters.