Anti-abuse provisions focused on the VAT Act 1998

Abstract

Purpose: The primary objective of this dissertation to analyse and outline the importance of existing anti-abuse provisions found within the Maltese VAT Act as well as other subsidiary legislation and amendments while also focusing on how effective they are in being exercised, enforced and monitored. This is done in light of the concerns raised as transactions become more sophisticated and new legislations like VAT grouping are introduced. Design: The objectives of the study were achieved through comprehensive literature review and a number of semi structured interviews conducted with local tax practitioners and the VAT department. Findings: Given the importance of VAT as a system and the negative impacts and distortions that VAT abuse has on MSs and their local competition, there are various existing anti-abuse provisions aimed at trying to prevent this. Such provisions consist of digital measures such as SAF-T, VIES and recaps, along with the RCM and other articles, schedules and subsidiary legislations found within the Maltese VAT Act, which depend upon enforcement, monitoring, training and education. Conclusions: The fight against VAT abuse is dependent upon the ability and commitment of a MS in introducing and enforcing anti-abuse provisions. Not all MSs are equally developing new tools against VAT abuse to the same extent and timing which would leave a MS like Malta at a disadvantage since resources within this area are lacking. Implications: Through continuous training and education, enforcement and monitoring, and a more robust VAT department, Malta can even its playing field to that of sophisticated MSs and move further as a country.