This VAT alert is of particular relevance to taxable persons who have defaulted on their VAT compliance obligations and are consequently subject to interest and penalties.

Background

On the 13th of this month, L.N. 75 of 2015 was published, which extends the scope of the Remission of Interest Rules of 2014 to cover remission of Administrative Penalties as well.Through the Remission Rules, the Commissioner may, at his discretion, remit wholly or in part any interest and administrative penalties incurred by VAT-registered persons for the late payment of the VAT due or for other defaults or omissions arising from but not limited to, the incorrect submission of VAT returns/VAT forms/VAT declarations, the failure to submitting such documents and late registration. The interest imposed on the late payment of VAT is currently set at the rate of 0.54% per month or part thereof. The extent of the administrative penalties is dependent on the nature of the default or omission.  

The remission of interest and penalties is subject to the satisfaction of the Commissioner that the default was due to a reasonable excuse. Reliance on third parties to perform a task shall not constitute a reasonable excuse. In our view this captures instances when taxpayers instruct banks to effect payment and the transfer of funds by the banking system is credited in the government’s accounts after the VAT payment due date. In exercising his discretion, the Commissioner may impose any requirements that he may consider appropriate and the remission would be conditional on the fulfillment of such requirements.

The Remission Scheme is not bound by any deadlines.

Our offering

We are pleased to advise on the eligibility for the Remission Scheme, to assist with the application therefor, with the regularisation of VAT positions and to liaise with the VAT Department on matters affecting our clients.Should you require further information or clarification in respect of the aforesaid, or indeed to discuss any other VAT matter, kindly contact us.