Local Update

Guidelines For Bad Debt Relief Claims Published By The VAT Department On 30 November 2014

On 20 November 2014, the VAT Department published its guidelines for bad debt relief claims. This means that Article 10 registered persons and persons who are no longer registered for VAT purposes may claim relief for bad debts as long as all of the following conditions have been satisfied:

  • A final Court judgement showing beyond doubt and to the satisfaction of the Commissioner that the debt can never be recouped;

  • The claim must be made by not later than 12 months from the date of delivery of the final judgement;

  • VAT in connection with the claim must have already been accounted for and paid to the Department;

  • All VAT returns and payments due as at the date of the claim must have been submitted by that date;

  • The debt must have been written off in the claimant’s day-to-day VAT accounts and transferred to a separate bad debt account;

  • The supply must have been made to the customer, or to a third party through the customer;

  • The value of the supply must not be more than the customary selling price; and

  • The debt must not have been paid, sold or factored under a valid legal assignment.

A claim in relation to supplies made to a customer before a transfer of business is effected cannot be requested by the new owner. The claimant must submit a written application and all relevant information. The tax relative to the bad debt relief will be deducted in the VAT return for the tax period following that in which the Commissioner has authorised the relief.

The Commissioner may request the sales ledger for the relevant tax period, a copy of the tax invoices and any other documents to ascertain the validity of the bad debt relief claim. He reserves the right to refuse or reverse a bad debt relief claim where it results that the claimant:

  • holds a security or was insured against the bad debt;

  • has received payment from a guarantor or other person; or

  • has assigned or factored the debt.

All or part of the authorised refund must still be repaid if payment for the supplies is received, must be properly accounted for in the taxpayer’s records and adjusted in the VAT return for the period in which the payment was received. In cases where the claimant is no longer registered for VAT, he is to contact the VAT Department for guidance.


Malta Voted As The Most Favoured Fund Domicile In Europe

For the second consecutive time, Malta has been coveted with Europe’s Most Favoured Domicile at the Hedge Funds Review 13th European Fund of Hedge Funds Awards 2014. The European Fund of Hedge Funds Awards remains the only signature event held exclusively for the European fund of hedge fund sector and as such continues to attract the top names from the industry. The Hedge Fund Awards are determined on the basis of a rigorous methodology that provides quantitative and qualitative analysis and voted by an impartial panel of judges which include top professionals from the funds industry.

Kenneth Farrugia, chairman of FinanceMalta and the Malta Funds Industry Association, said “Accession to the European Union eleven years ago, marked the start of Malta’s journey towards becoming the international fund domicile it is today. The island’s hedge fund industry has continued to grow year-on-year, solidifying its position as a fund domicile of international repute and I am delighted that Malta’s value proposition has been recognized once again this year by the judges of the well-respected and pre-eminent Hedge Fund Review Awards. Malta’s competitive advantage is evidently underpinned by the presence of an accessible and pro-business regulator, a strong operational infrastructure driven by high quality, legal, audit and fund consultancy services as well as the presence of service clusters in the asset servicing space. These critical success factors are frequently mentioned by fund promoters as the key criteria influencing their choice of Malta as a domicile.

Malta continues to be pro-active and innovative and the Malta Financial Services Authority has, earlier this year, issued rules for setting up of Loan Funds which were the first of their kind to be issued by a national supervisory authority in Europe and which in turn have spurred a number of enquiries by international fund promoters seeking to use investment fund vehicles to invest in loans. Their timely introduction also reflects the agility of the MFSA in responding to the needs of the industry which is equally recognized by international fund managers The MFSA has also recently issued a consultation document aimed at Private Equity Funds in order to further strengthen Malta’s appeal in this space.

Hedge Funds Awards 2014

Anatoli Grech, Executive Secretary of the Malta Funds Industry Association who was present at the awards ceremony said “The recognition of Malta as the Most Favored European Fund Domicile has been awarded for the second consecutive year. This clearly shows that Malta has further strengthened its reputation as a world class financial jurisdiction and its appeal to the various hedge fund stakeholders seeking to establish funds in a European domicile. This indeed augurs very well for the fund’s industry in Malta and all the industry’s stakeholders”.


Shireburn Introduces Electronic Payments Into Its Accounting Solution

Users of the Shireburn Financial Manager are now able to electronically process Euro payments to their local and Euro-Zone suppliers without the need to print cheques or effect manual bank transfers.

This facility, available in the new SFM SEPA module, increases productivity by removing the need to prepare and sign cheques, reduces costs while also enhancing controls and auditability. The move away from cheque payments towards electronic payments ensures a faster, cheaper and more secure, fully audited and authorised payment process.

The SFM SEPA module allows businesses to manage electronic SEPA payments more efficiently, directly from within SFM. Payments to suppliers are posted as usual and authorised users are able to export a SEPA file, ready for upload on their bank’s on-line payments portal for authorisation by a signatory. Remittance advices are also able to be printed or sent to suppliers via email to notify them of the payment.

“Shireburn’s SEPA Module is yet another example of how Shireburn responds to evolving business needs and market requirements,” said Franco Galea, Operations Director at Shireburn Software. “Thousands of companies that depend on Shireburn’s accounting system will now be able to further boost their productivity, reduce costs and controls.” The Shireburn SEPA module supports payments through Bank of Valletta, HSBC Bank Malta, Banif Bank, Lombard Bank Malta and APS. The SFM SEPA module was unveiled among some 200 of Malta’s top accounting professionals at the Malta Institute for Accountants (MIA) Conference held on the 6th and 7th November.

For more information about the Shireburn Financial Manager SEPA Module or other business solutions, companies may contact Shireburn on +356 2131 9977, [email protected] or visit shireburn.com/sepa.

About Shireburn Software

Shireburn Software is a software products company, specialising in the development of business software solutions and their support, both locally and overseas. Solutions include accounting, payroll and HR, inventory and retail, eCommerce, business intelligence and document management amongst others. www.shireburn.com.

About SEPA

SEPA (Single European Payment Area) is a banking industry framework which simplifies bank transfers denominated in Euro to a bank account in a SEPA member country. SEPA allows anyone to affect cashless payments in Euro to anyone located within the Euro-Zone, using the same bank account and instructions as if they were affecting a local payment. This makes paying Euro-Zone creditors easier, cheaper and more efficient. More information regarding SEPA can be obtained from: http://ec.europa.eu/internal_market/payments/sepa/

Nexia BT Announces Growth And New Developments

During the last year, Nexia BT experienced an exceptional growth in its revenue and workforce. This expansion will enable the firm to maintain its strong presence in the market, face new challenges and achieve more targets in the coming years.

Nexia BT has four service lines – Audit, Tax, Advisory and Corporate services, and comprises five units, each with its own head. The Group is pleased to announce a range of new consulting services in the field of Information Technology including IT system and compliance audits, IT Project Management and IT Managed Services.

Nexia BT believes that information technology is at the core of modern organisation’s business model, often driving mission critical systems which necessitate planning, monitoring and control to avert information leaks and vulnerabilities while in compliance with legislation and regulation applicable to the industry.

IT audits are being carried out by CISA certified personnel with several years’ of IT industry experience with entities and organisation worldwide across different business verticals.

Malta Completes Its Securitisation Cell Company Regs, Ready For ILS

Malta has completed its Securitisation Cell Company regulations which bring together the special purpose reinsurer concept with protected cells. Malta launched its ambitions to become a domicile for the ILS and cat bond sector in 2013, before finalising and bringing into law its regulations governing the formation and domicile of Reinsurance Special Purpose Vehicles (RSPV) at the start of 2014.

It then followed up with a consultation for a proposed set of regulations for ‘Securitisation Cell Companies’ (SCC) as Malta looked to ensure it had a flexible range of options for reinsurance, catastrophe bonds and insurance-linked securities (ILS), as well as other forms of securitisation. The SCC regulations have now been completed and brought into force making Malta the first European Union member state to legislate for the use of protected cell companies as securitisation vehicles.

Consultation On The Proposed Amendments To The Insurance Business Act And Insurance Intermediaries Act

On 22 December 2014, the Malta Financial Services Authority (MFSA) has published a consultation document that highlights the main changes to be effected to the Insurance Business Act (Cap.403) as a consequence of transposing the provisions of the Solvency II Directive. Following the transposition exercise, it is proposed to carry out amendments to the Insurance Intermediaries Act (Cap.487), in order to retain consistency between the two legislations.

Licence holders are kindly asked to submit any comments that they may have in relation to the attached draft legislations, in writing, by not later than Friday 23rd January 2015. These comments are to be sent in writing to the Insurance and Pensions Supervision Unit on [email protected]. Copies of this Consultation Document are available to download from the MFSA Website.

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