LM40 million more with TCU around

By Kurt Sansone

Acting as the intelligence arm of various tax collecting departments, the Tax Compliance Unit is expected to increase Government revenue by Lm40 million over a five year period in recouped taxes.
Finance Minister John Dalli, yesterday said that the time when government was impotent in front of tax evasion was over. "It is time for this country to have a culture where everyone pays his due and respects the tax laws. The main thrust of the TCU is to instil a new mentality rather then act as a tax policeman."
The Tax Compliance Unit will be fully operational by the year’s end and initially the unit will be gathering information from five different government departments.
Access to the electronic systems of the public registry, the customs department, the VAT department, the licensing department and the Malta Financial Services’ registry of companies will enable the TCU to create a profile of taxpayers.
The second phase of the project will see the TCU having access to additional departments and institutions to enable the unit to retrieve data related to trading licenses, registered boats at the Maritime Authority, bank interest on funds held in foreign accounts, capital transfer duty paid and accounting systems.
The data obtained will enable the TCU to cross check income tax declarations with other sources in a bid to weed out tax evaders.
Minister Dalli made it clear that despite the extensive data-gathering function, the TCU would not be able to investigate individual taxpayers. Once the TCU gathers the data and highlights discrepancies in an individual’s declarations the information is then passed on to the relevant tax authorities to carry on their investigation according to current tax regulations.
Mr Dalli added that the relationship between the taxpayer and the relevant departments will remain a personal one, ruling out mass witch hunts on categories of individuals.
The current system in place has the ability to issue taxpayer profiles on all individuals every three months. However, the TCU will not be profiling each and every taxpayer every month. The important message relayed by the TCU is that it has the capability to profile anybody in detail.
Apart from issuing reports on its own accord, the TCU could be asked by government departments such as VAT and customs to provide profiles on suspected tax evaders.
The TCU is currently investigating 36 cases. Almost half of them have been concluded and the reports will soon be passed on to the relevant tax authorities to take action.
When asked, the head of the TCU Paul Barbara, said that the electronic systems in place were constructed with privacy laws in mind. "The implementation team included an expert on privacy law to ensure that privacy legislation is respected. Furthermore, within the TCU itself access is controlled and restricted with each computer having an electronic audit trail," Mr Barbara said.
Mr Barbara explained that during the first two quarters of 2002 the TCU will focus on developing a ‘modus operandi’ for continually updating the data in its databases and give feedback to the different departments providing the information.