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Dan F
11-02-2009, 12:38 PM
I guess VAT is in only in Europe right?

Well, I'm registered as an exempt person. From what I know and have written on the official VAT document, is that those who do not exceed the threshold 24,000 euros, are vat exempt. Now, since I'm not used to these English terminologies I would like some explanation on what is VAT exempt? :o

This is the information I've found on our VAT website, which I'm finding it difficult to understand:


What are the conditions for a business to be able to register as an exempt person?
A business is allowed to opt for registration as an exempt person when the turnover of the business is below the thresholds established by law. If you are a person whose turnover is below the established entry threshold for your type of business activity then you may apply to register under article 11 of the VAT Act in order to be exempt from charging VAT when you supply taxable goods or taxable services.

This would mean that you would not be able to claim deduction or any input VAT that you incur in your economic activity. You will also have an identification number with out the MT prefix.

The turnover of a business is the total value of sales, excluding:
Exempt without credit supplies
The transfer of a business as a going concern
The sale of fixed assets
Supplies made to the business and deemed to be made by that business under the reverse charge provisions

The three applicable thresholds are:
€14,000 as from 1st January 2008; in the case of a service provider, where the value of the service has a very high content of value added, i.e. the value of the goods incorporated with the supply are minimal, e.g. services of an accountant or a lawyer
€23,500 as from 1st January 2008; in the case of a service provider where the value of the service includes goods which are incorporated in the value of that service, e.g. an electrician or catering services
€35,000 as from 1st January 2008; in the case of suppliers of goods

The thresholds for each economic activity pertaining to the same category are assigned by the Department and apply across the board for that category.

A person who is registered as an exempt person is required to:
Issue fiscal receipts or tax invoices, as the case may be, on all supplies made by him
Submit a declaration (simplified tax return) at the end of each calendar year which must be submitted by the 15th February of the following year

If you are registered under article 11 as an exempt taxable person and you intend to make Intra-Community Acquisitions and pay VAT thereon in Malta , then you need to register also under Article 12 to obtain a valid identification number for this purpose and qualify for such an arrangement. You are obliged to register under Article 12 if the total value of such purchases exceeds the threshold of 10,000 Euros since the start of the calendar year.

If you need further information you may read the leaflet entitled Intra-Community Acquisitions by 'Exempt' Taxable Persons and Non-Taxable Legal Persons. Top

3 I am registered as a non-exempt person. How can I change that classification to that of an exempt person?
A person who has not opted to be classified as an exempt person on registration will not be eligible to be so classified before the lapse of twelve calendar months from the date of his registration. Such person may apply for classification as an exempt person when his annual turnover falls below the following thresholds:
€11,600 as from 1st January 2008; in the case of a service provider whose supply has a high value added, e.g. an accountant or a lawyer
€18,600 as from 1st January 2008; in the case of a service provider whose supply includes a supply of goods incorporated in the value of the service,
€27,900 as from 1st January 2008; in the case of a supplier of goods.

Does it mean that I should not give the VAT I've charged?

Evan
11-02-2009, 02:03 PM
VAT is not only Europe. Perhaps more craftily worded "There is no VAT in the United States?" And the answer is yes -- we have no VAT in the USA.

As for an interpretation of this law, I would probably want an understanding of the entire process in order to provide such an opinion. Certainly though if you've charged VAT, it should be remitted.

Is there a number of a government agency you can call to speak with somebody? They SHOULD clarify.

Dan F
11-02-2009, 02:10 PM
Yes contacted already, but thought of asking here anyways :)

Evan
11-02-2009, 02:30 PM
Did they give you an answer, or were they equally as puzzled? It's amazing when the government doesn't even know their own laws!

Dan F
11-02-2009, 02:42 PM
No reply yet. Should have asked the day I've applied for VAT :p But since it's my first business experience I'm still getting used to certain things.

David E
11-03-2009, 04:19 AM
Hi,

If you can provide some background on the sales you are making, I may be able to help. I am a retired international VAT and GST consultant.

I often use this site VAT Services and Information | TMF (http://www.tmf-vat.com/european-vat) to test if registration is required in the first place - although though do not give total guidance. I also use the UK's HMRC (tax authorities) site.

Look forward to hearging from you.

Regards

David

Dan F
11-03-2009, 06:01 AM
I'm Maltese and have just started a computer repair business. It's illegal to do ANY kind of business without VAT registration, so I guess it's always required.

As I already mentioned before, I'm registered as a VAT EXEMPT person, as the probability is that I won't overcome the threshold mentioned above. The difficulty I have is that I don't know all the benefits of VAT exempt persons.... if you can call them benefits. In simple turns, I don't know what's the difference between non-exempt and exempt.

From what I can understand is that a VAT EXEMPT person does not need to pay the VAT (18% in our case) at the end of the year. If this is the case I would also need to know if it's the same thing if I had to resell software or hardware to my clients.

As I already said as well, I should have asked immediately, but I just didn't think about it due all the hassle I had that day hehe. Yesterday I've sent them an e-mail but didn't get any reply yet.

Thanks for your replies :)

Dan F
11-05-2009, 06:51 AM
I'm still with no reply from the VAT department... wow.

I've asked on a local website, and got this answer:


In Malta, a business is allowed to opt for registration as an exempt person when the turnover of the business is below the thresholds established by law.

There are two types of exempt supplies:

1. Exempt with credit, where no VAT is charged on the value of the supply but the registered person is entitled to claim back input VAT incurred in the provision of that supply

2. Exempt without credit, where no VAT is charged on the value of the supply but the supplier is not entitled to claim back input VAT incurred in the provision of that supply. In this case the supplier is not required to register with the Department.

Source: VAT Department - Ministry of Finance - FAQ (http://vat.gov.mt/faq_eng.asp?lang=en)

So basically if you are VAT EXEMPT it means that you do not have to charge VAT on the products that you are selling. You can still NOT charge VAT on any products you sell, even if you are non-exempt (just as we are seeing recently with GO and Vodafone top-up cards) however you will then still have to pay the amount from your profits.