PRESS RELEASE BY THE GOVERNMENT OF MALTA Government tables bill to amend various tax laws to strengthen tax enforcement and combat financial crime

The Government has tabled a Bill in Parliament to amend various tax laws. This legislative proposal marks an important step in the Government’s ongoing efforts to modernise Malta’s fiscal enforcement framework and strengthen the national response to tax evasion and financial crime.

The Bill introduces amendments to several revenue laws, including the Social Security Act, the Duty on Documents and Transfers Act, the Income Tax Management Act, the Value Added Tax Act, and also includes complimentary amendments to the Criminal Code. Its objective is to enhance the investigative and enforcement powers of the Commissioner for Tax and Customs, establish a statutory framework for the out-of-court settlement of fiscal obligations, improve the recovery of funds owed to the State, and deter financial crime through the introduction of new criminal offences and stricter penalties in cases of breach of agreements with Government departments as provided for in the Bill.

A key feature of the Bill is the introduction of a harmonised mechanism across all major tax laws, allowing taxpayers to regularise their position through formal agreements with the Commissioner. These agreements require the payment of additional penalties ranging from €10,000 to €1,000,000 and exempt the taxpayer from facing criminal proceedings for breaches covered by the agreement, while maintaining civil liability for any amounts not included. The mechanism also suspends the statute of limitations during the negotiation period and apply even in cases where criminal proceedings are pending, provided no final judgment has been delivered.

The Bill also introduces the legal concept of “connected breaches.” These are breaches of law that are linked to or committed in furtherance of a primary breach of a fiscal law. A connected breach may include acts committed as part of a premeditated plan to violate tax laws, actions taken to obtain the means to commit the breach, or conduct intended to facilitate or conceal the offence. However, the term “connected breach” is clearly defined in each of the amended Acts and explicitly excludes offences listed under Sub-title IV of Title III of Part II of Book One of the Criminal Code from being classified as connected breaches under the out-of-court mechanism. The excluded offences include extortion, bribery, corruption, trading in influence, and abuse of authority or official duties.

The Bill further proposes the creation of two new criminal offences under the Criminal Code. The first addresses the fraudulent breach of agreements with Government departments of the type provided for in the Bill and is punishable by up to four years’ imprisonment or a fine of up to €2.5 million. The second concerns unjustified breaches of such agreements and carries penalties of up to two years’ imprisonment or a fine of up to €500,000. These provisions are intended to safeguard the integrity of the settlement process and discourage abuse.

This Bill reflects the Government’s commitment to a fair, efficient, and modern tax system. By combining administrative flexibility with robust enforcement, the proposed legislation supports national efforts to ensure compliance, recover public funds, and uphold the rule of law. The Government looks forward to a constructive debate in Parliament and the timely approval of this important reform.