VAT Amnesty Scheme – Remittance of Interest and Administrative Penalties

VAT Amnesty Scheme – Remittance of Interest and Administrative Penalties

During the Budget Speech, the Ministry of Finance launched a limited time-window VAT amnesty scheme with the aim of encouraging VAT registered taxpayers to regularise their position with the Department. Legal Notice 456 of 2011 enacted this scheme.

The remission of interest and penalties applies separately to pending returns and balances under the first VAT system (the VAT Act, 1994), the former Customs and Excise Tax (CET) system, and the current VAT system.

With effect from 1 January 2012 interest and administrative penalties shall not continue to accrue on amounts of tax due in any tax period under the CET and the VAT Act, 1994.

The scheme excludes the possibility by any registered person to claim any refund in respect of interest or penalties which were already paid to the VAT Department. It is also important to note that where a person has benefitted from a remittance of interest under this scheme, in the case of a future VAT refund which becomes due to that person within 6 years from this remission, the VAT Department reserves the right to deduct the amount of the interest previously remitted in terms of the scheme from any interest due by the Department on the VAT refund.

The scheme is applicable to any person registered under articles 10, 11 or 12 who have failed to submit VAT returns falling due up to 15 October 2011 and/or who has balances due to the VAT Department.
Persons registered under Article 10

A person registered under Article 10 would be entitled to avail himself of the scheme if he:

owes arrears in respect of period(s) in respect of which the VAT return was due no later than 15 October 2011;
has submitted all VAT returns which were due by 15 October 2011 by not later than 15 January 2012;
submits all VAT returns falling due on 15 November 2011 and on subsequent VAT return due dates on time together with payment in full (if applicable);
withdraws any pending VAT appeal by 15 January 2012; and
pays the arrears (net of remission) by following any of the schedules indicated below:

Payment schedule Remission
Amount paid in full by 15/03/2012 80% reduction in interest and penalties
Down payment of 30% of the amount paid by 15/03/2012 and the remaining amount paid by 15/05/2012 in equal monthly instalments 70% reduction in interest and penalties
Down payment of 30% of the amount paid by 15/03/2012 and the remaining amount paid by 15/08/2012 in equal monthly instalments 60% reduction in interest and penalties
Down payment of 30% of the amount paid by 15/03/2012 and the remaining amount paid by 15/02/2013 in equal monthly instalments 50% reduction in interest and penalties

The percentage remission as set out above is calculated on the total amount of interest and administrative penalties due. However, where the remaining balance due for a particular period is less than the total interest and administrative penalties for that period, the percentage remission is computed on the amount of the remaining balance due.
Persons registered under Article 11 or 12

A person registered under Article 11 or Article 12 who has failed to submit a required VAT declaration is entitled to a reduction of the accrued administrative penalties as long as by 15 January 2012:

all pending declarations are submitted; and
€10 in respect of each default is paid.

The remission of interest and administrative penalties will not take effect before the registered person effects the final payment as scheduled.