Award in Elements of Maltese Taxation

The purpose of this unit is to provide the learner with a basic understanding of the Maltese VAT legislation. Throughout this unit, the learner will develop the necessary skills to prepare and submit accurate VAT returns and VAT declarations to the Office of the Commissioner for Revenue and to ensure that taxable persons are compliant with the tax legislation. 

The unit will provide learners with the knowledge of the VAT laws and their implications and how such laws and knowledge can be translated into specific actions and procedures within organisations. Learners will understand the rights and obligations of both taxpayers and the Malta Tax Authority (Commissioner for Revenue) and the implications of an organisation not adhering to the VAT laws and tax regulations. 

The unit will guide the learner on sourcing VAT material which can be used when guidance is required on technical VAT matters and for keeping up to date with changes in practice or with relevant legislation.

Overall Learning Outcomes 

• LO1 Explain the concept and role of VAT in the tax system. 
• LO2 Apply ‘the scope of VAT’ principle to determine tax liability. 
• LO3 Recognise the VAT registration and de-registration processes. 
• LO4 Record VAT in the books of a business. 
• LO5 Prepare VAT returns / declarations according to Maltese legal requirements. 
• LO6 Communicate VAT information to the relevant parties.

COMPETENCES KNOWLEDGE AND SKILLS 

Competences – At the end of the unit the learner will have acquired the responsibility and autonomy to: 

1. Comply with the Value Added Tax Act and relevant subsidiary legislation. 
2. Complete the main sections of a VAT return in accordance with the Value Added Tax Act (Article 10).
3. Complete a VAT declaration in accordance with the Value added Tax Act (Article 11). 
4. Prepare accurate VAT returns / declarations within the permitted timescales as requested by the Office of the Commissioner for Revenue. 

Knowledge – At the end of the unit the learner will: 

1. Be familiar with the VAT system and the role of the Office of the Commissioner for Revenue. 
2. Understand the process by which VAT is collected through the VAT supply chain. 
3. Be familiar with the different rates of VAT which are applied locally and the categories to which they are applied.
4. Know the implications of the five (5) conditions which must be observed for VAT to become due and payable on a supply in Malta. 
5. Be familiar with the VAT registration and de-registration process under Article 10 and Article 11. 
6. Know the implications of registering for VAT, particularly, with regard to compliance and deadlines. 
7. Be familiar with the way in which the ‘taxable value of a supply’ is ascertained. 
8. Be familiar with the books and records which a registered person must maintain for VAT purposes. 
9. Understand the effect of an invoice and a credit note in computing the input VAT and / or output VAT. 
10. Be familiar with communication with the Office of the Commissioner for Revenue on VAT matters. 11. Know the procedure to be followed in those instances when a registered person receives a ‘provisional assessment’ with which one does not agree. 

Skills – At the end of the unit the learner will have mastered the following skills: 

Applying Knowledge and Understanding 

1. Calculate the input and output VAT figures for standard-rated, reduced-rated, zerorated and exempt supplies from information supplied. 
2. Practice the meaning of ‘taxable person’ and ‘economic activity’ under different scenarios. 
3. Apply the ‘scope of VAT’ principle to a potential taxable person. 
4. Apply the entry and exit thresholds in the registration / de-registration process. 
5. Prepare a diagram showing how VAT is collected along the VAT supply chain at different stages of the production process. 
6. Practice the effect of an invoice, credit note and bad debt relief on the resulting VAT liability. 
7. Prepare and submit a valid VAT return under Article 10 based on a given scenario. 
8. Prepare and submit a valid VAT declaration under Article 11 based on a given scenario. 
9. Reconcile the outstanding VAT balance to the VAT control account. 
10. Prepare an information checklist which allows employees to check VAT rules on common forms of business income and expenditure. 

Communication Skills 

1. Inform managers by email or memo that a payment or refund of VAT is due to or from the Commissioner and explain its effect.
2. Explain to managers the VAT rules on bad debt relief. 
3. Communicate the changes required to a taxable person’s financial system as a result of an increase or decrease in the standard rate of VAT. 
4. Interact with the Office of the Commissioner for Revenue to ‘request a review’ (appeal) in those instances where a taxable person is in disagreement with a ‘provisional assessment’. 

Judgmental Skills and Critical Abilities 

1. Identify the difference between input VAT and output VAT. 
2. Assess whether a business should voluntarily register for VAT. 
3. Evaluate whether a business which makes exclusively zero-rated supplies should register for VAT. 
4. Distinguish between ‘exempt with credit supplies’ and ‘exempt without credit supplies’. 
5. Assess whether a person is liable to pay VAT in Malta by applying ‘the scope of VAT’ principle. 
6. Identify whether a business should register under Article 10 or Article 11. 
7. Distinguish between a ‘tax invoice’ and a ‘fiscal receipt’.

Learning Skills 

1. Undertake further studies to understand the scope of Value Added Tax.