Malta: Commissioner For Revenue (CfR) Announcements

Guideline in relation to the deadline of reporting of Financial Account information

The CfR has announced that due to the current exceptional circumstances brought about by the COVID-19 pandemic it is increasingly difficult for Reporting Malta Financial Institutions to ensure operational continuity while simultaneously adhering to the reporting obligations as outlined in regulations 30 and 41 of the Cooperation with Other Jurisdictions on Tax Matters Regulations. Consequently, an extension for the submission of the report containing Financial Account information relating to Reporting Year 2019 will be granted, to provide sufficient flexibility to such Reporting Malta Financial Institutions whilst ensuring that there will not be a negative impact on Malta's international commitments in relation to the automatic exchange of Financial Account information. The following shall have immediate effect and shall supersede Section 12.1.1 of the Implementing Guidelines on Automatic Exchange of Financial Account Information [Version 2] for Reporting Year 2019 only.

The CfR announced that in line with regulations 30, 41 and 45 of the Cooperation with other Jurisdictions on Tax Matters Regulations, Reporting Malta Financial Institutions must report the information specified in Section I of Annex I to the Regulations and the information specified in Article 2(2)(a) and Article 3(2) of the FATCA Agreement on U.S. Reportable Accounts by not later than 30th June 2020 in relation to Reporting Year 2019.

Moreover, the announcement reads that tt is within the responsibility of the Malta Reporting Financial Institution to submit the required information within ample time prior to the deadline to ensure a successful submission. Failure to submit the required information by the specified deadline will result in imposition of penalties in terms of Regulation 44(1)(d) of the Regulations.

COVID Wage Supplement Payroll implications

The Office of the CfR has, on Saturday 4^th April 2020, published guidance on the implications of the wage supplement on Payroll and SSC reporting.

The guidance clarifies that the wage supplement (?800 or less according to eligibility) will replace the normal wages of the employee and is therefore taxable in the hands of the employee.  For payroll purposes the amount of the supplement will be added to any income received by the employee during the pay period.

The wage supplement paid to employers will not be treated as income of the employer for Income Tax purposes, hence is not taxable nor tax deductible in the hands of the employer.

Regarding Social Security Contributions, the guidance clarifies that upon transfer of the wage supplement to the employer, the Government will retain 10% SSC which will in effect constitute a 'prepayment' of the employee's share of SSC. The employer will then calculate what is due in totality to CFR i.e. the employer's and employee's share (Maternity Contribution and taxes) and deduct from that total amount the amount of SSC retained by CFR as a prepayment. The total due to CFR less the SSC retained when the wage supplement was paid, will be shown in box D5 on the Form FS5.

With regard to FS3/FS7 Reporting, employers will report the wages supplement paid to employees in the normal FS3 forms.  The FS7 will be modified to show the amounts paid to employers and the SSC withheld from the wage supplement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.