DEDUCTION OF ADDITIONAL TAX (OMISSIONS) [ S.L.123.68 1
SUBSIDIARY LEGISLATION 123.68
DEDUCTION OF ADDITONAL TAX (OMISSIONS) 
RULES
1st January, 2003
 LEGAL NOTICE 126 of 2003.
Title and 
commencement.
1. (1) The title of these Rules is Deduction of Additional Tax
(Omissions) Rules.
(2) These rules shall apply in respect of the year of assessment
commencing on the 1st January 2003 and subsequent years of
assessment.
Interpretation.
Cap. 123.
"additional tax" means the additional tax chargeable in
accordance with the provisions of article 56(12)( c ) of the Act and
the provisions of the Schedule in respect of any omission;
"omission" means the omission, or deemed omission, from any
return of income submitted for the purpose of the Income Tax Acts
of any amount which should have been included therein;
"Schedule" means the Schedule to the Act;
Cap. 281.
"tax professional" means an individual being the holder of a
warrant issued under the Accountancy Profession Act, or a member
of the Malta Institute of Taxation, or a member of the legal
profession in Malta who specialises in taxation, or a partnership of
such individuals the majority of whom are so qualified: provided
that the Commissioner shall be entitled to request such proof as he
may deem appropriate to the effect that an individual qualifies as a
tax professional as aforesaid.
(2) Other words and expressions contained in these rules shall
have the meaning assigned to them in the Income Tax Acts and in
the Schedule to the Act.
Full remission of 
additional tax.
3. ( a ) Where the Commissioner is satisfied that -
(i) reasonable care has been taken by the person
preparing and submitting the return or by the
person responsible for its preparation and
submission; or
(ii) the amount of the endangered tax is not material,
he may remit the whole of the additional tax otherwise
due in accordance with the provisions of the Schedule.
( b ) The Commissioner’s discretion for the purpose of this
rule shall not be questioned in any appeal.
Where a person has 
taken reasonable 
care.
4. (1) For the purposes of rule 3, in determining whether
reasonable care has been taken in the preparation and submission of
2 [ S.L.123.68 DEDUCTION OF ADDITIONAL TAX (OMISSIONS)
a return, the Commissioner shall take account of:
( a ) whether a person has sought and relied on the written
advice of a tax professional; and
( b ) the complexity of the transaction which has resulted in
an omission from the return or the complexity of the
legal provisions concerned and the difficulties in their
interpretation.
(2) The original written advice, referred to in sub-rule (1)( a ), is
to be submitted together with the return by not later than the
relative tax return date.
(3) An advice, referred to in sub-rule (1)( a ), furnished by a tax
professional, shall not of itself constitute a binding interpretation of
the relative statutory provisions and views on their proper
application.
(4) Rejection by the Commissioner of advice furnished by a tax
professional shall not necessarily imply that a person has not taken
reasonable care, unless the said advice is considered by the
Commissioner to be spurious or frivolous.
Reduction of 
additional tax on 
voluntary 
disclosure.
Cap. 372.
5. Where an omission from a return is rectified by a person by
means of the delivery of a further return made in accordance with
article 13 of the Income Tax Management Act after that person has
been notified in writing by the Commissioner that an enquiry will
be conducted into that person’s tax declarations and liabilities, but
not later than the last day of the month immediately following that
in which the said notification is served, the additional tax shall be
at the rate of one point five per cent (1.5%) of the endangered tax
per month.
Reduction of 
additional tax by 
90%.
6. Additional tax chargeable shall be reduced by ninety per
cent (90%) of the full amount where the omission -
S.L. 372.14
( a ) is of income from an employment or office which is
included in a return submitted to the Commissioner in
accordance with the provisions of the Final Settlement
System (FSS) Rules; or
( b ) is of investment income, as defined in the investment
income provisions of the Act, subject to deduction of
tax at source, irrespective of whether such tax has been
deducted or not; or
Cap. 372.
S.L. 123.27.
( c ) is of gains from the sale of immovable property
chargeable under article 5 of the Act, and tax at the
stipulated rate has been paid in accordance with article
43 of the Income Tax Management Act and rule 6 of
the Capital Gains Rules.
Reduction of 
additional tax by 
50%.
7. Where an omission is not due to fraud, art, contrivance or
gross or wilful neglect, the additional tax chargeable for an
omission shall be reduced by fifty per cent (50%) of the full amount
and the circumstances in which the additional tax is to be so
reduced shall include where:
( a ) a person is or should be aware that an enquiry has been
DEDUCTION OF ADDITIONAL TAX (OMISSIONS) [ S.L.123.68 3
conducted into his tax declarations and liabilities and
on which the additional tax in respect of the omission
has been reduced according to the provisions of rule 6,
but he again omits, from a return submitted after the
outcome of the enquiry is known, an item which the
enquiry has indicated should have been so included; or
( b ) the omission is manifestly contrary to accepted
principles and practices of tax law or accountancy,
including, without limiting the generality thereof:
(i) over-claiming deductions against income
chargeable under article 4(1)( b ) of the Act;
(ii) claiming deductions for alimony payments when
no right for such deductions exists;
(iii) failing to declare alimony payments received;
(iv) excessive or unjustified claims for deduction
against rental income.
Applicability of 
reduction in 
additional tax.
8. The reductions contemplated in rules 6 and 7 shall be
applicable to the additional tax chargeable under the Schedule,
whether reduced in accordance with the provisions of rule 5 or not.
Maximum 
additional tax 
chargeable.
9. Where a reduction of additional tax is effected in
accordance with the provisions of these rules, the applicable rate of
additional tax referred to in item 5 of the Schedule shall be the rate
of additional tax so reduced.
Certain powers of 
the Commissioner.
10. Nothing contained in these rules shall prevent the
Commissioner from exercising any power vested in him to remit
such part or all of the additional tax chargeable as he may deem fit,
provided that:
( a ) the Commissioner may impose as a condition for any
such remission the requirement that the person
concerned shall not make another omission within
such period as the Commissioner may establish, as
well as such other conditions as he may deem fit;
( b ) should any condition imposed by the Commissioner in
accordance with the provisions of paragraph ( a ) be
infringed by the person concerned, any reduction of
additional tax granted by the Commissioner in addition
to the reductions contemplated by the other provisions
of these rules shall be forfeited;
( c ) if forfeiture is so due, under the provisions of
paragraph ( b ), any additional reduction made under the
provisions of this rule, but not under the provisions of
the other rules hereof, shall be deemed to have been a
suspension of liability to the said additional tax, and
not the cancellation of the relevant additional tax;
( d ) the Commissioner shall communicate in writing to the
person concerned any condition imposed under
paragraph ( b ), the consequences of infringement of
any such condition and, if such is the case, the fact that
forfeiture has been incurred.
4 [ S.L.123.68 DEDUCTION OF ADDITIONAL TAX (OMISSIONS)
Appeals.
Cap. 372.
11. Decisions taken by the Commissioner regarding the
application of these rules shall be subject to objection and appeal in
accordance with the provisions of articles 35 and 37, respectively,
of the Income Tax Management Act only as to whether, for the
purpose of rule 4(4), a tax professional’s advice is to be considered
as spurious or frivolous.
