The Maltese Parliament has proposed a new legislative bill introducing comprehensive amendments across several key fiscal statutes. The objective of this bill is to reinforce tax compliance mechanisms, strengthen enforcement capabilities, and establish a formal structure for out-of-court settlements between individuals and government departments.
One of the most notable changes is to the Criminal Code, which introduces two new offences. The first offence concerns the fraudulent breach of agreements with government departments. Individuals found guilty of such conduct may face up to four years’ imprisonment and/or a fine of up to €2.5 million. The second offence targets breaches of these agreements without just cause, punishable by a maximum of two years’ imprisonment and/or a fine not exceeding €500,000.
The Social Security Act is also set to be amended through the introduction of a new article that provides for a special settlement mechanism. The agreement entails the payment of an additional penalty ranging from €10,000 to €1,000,000. Upon successful completion, all criminal liability is extinguished, and any prosecution is suspended during the period of negotiation.
Similarly, the Duty on Documents and Transfers Act will be amended to include a corresponding mechanism. The revised provisions allow for agreements that mirror those established under the Social Security framework, including the imposition of penalties equivalent to those in criminal proceedings. Furthermore, any resulting settlement amount will be deemed an executive title, enforceable under civil procedure.
The Income Tax Management Act will see the addition of a new article that adopts the same structure. It permits taxpayers to enter into legally binding agreements with the Commissioner for Tax and Customs. Once the terms are fulfilled, individuals are shielded from criminal prosecution for related breaches.
The Value Added Tax Act will also be amended to introduce an out-of-court settlement process. This allows VAT defaulters to regularise past declarations and settle their dues through an agreement that includes an additional penalty payment, which must fall within the €10,000 to €1,000,000 range. As with the other statutes, compliance with the agreement results in the extinguishment of criminal action.
The purpose behind these proposed reforms is to combat fiscal evasion more effectively and to promote voluntary compliance. By establishing a statutory framework for structured settlements, the law seeks to encourage cooperation with revenue authorities while ensuring that penalties reflect the gravity of financial misconduct.