The Malta Institute of Accountants has formalised the reconstitution of its thirteen committees and focus groups, and twenty working groups for a new two-year term, ensuring a fresh influx of expertise and perspectives within its setup, joining forces with already established members. The new committee formations, effective this January, play a major contribution in supporting the activity of the MIA and fostering professional growth and excellence within the accountancy community.

To mark this renewal, a networking event was held at Villa Arrigo, attended by over 160 members of these committees and groups, together with MIA Council members, management and staff, creating a platform for collaboration and exchange of ideas in preparation of the task ahead.

These committees and groups play a pivotal role by backing up the Institute in shaping the industry landscape by producing technical documents, consulting with members, responding to consultation documents, organising CPE events and staying abreast of proposed EU and national legislation. Together, they also play a key role in enhancing the visibility and branding of the Institute and the accountancy profession itself, while contributing to efforts intended to increase awareness about this profession among the younger generation.

The Committees cover core areas of the profession and various niches of the wider financial industry, including taxation, audit, sustainable finance, digital, ethics and financial reporting among others. On the other hand, the Focus Groups address the needs of specific communities within the accountancy profession, including Professional Accountants in Business, Small and Medium-sized Practitioners and the younger members.

Maria Cauchi Delia, MIA Chief Executive Officer expressed her sincere appreciation towards the outgoing committee members who contributed significantly to the Institute's growth and success. She highlighted the extraordinary input of the committee members particularly by supporting the MIA in proactively putting forward recommendations and providing feedback for draft legislation as well as industry standards originating from Malta and abroad.

In their previous term which came to its conclusion at the end of last year, the committees and groups totalled in excess of 500 hours of meetings, producing several technical documents, contributing to over 25 events and replying to some 25 consultation documents.

She also extended a warm welcome to the new members within the Institute's committees, focus groups and working groups, acknowledging their commitment to the cause and emphasising the collective responsibility to drive positive change within the industry.

Among the key areas of work for the two years ahead, Ms Cauchi Delia highlighted the commitment of the Institute to continue contributing towards the new financial services strategy as part of the activity of the Malta Financial Services Advisory Council, as well as leading its members through new realities determined by changes such as sustainability reporting, changes in taxation, the advent of new international standards as well as the digital transition.

“Your willingness to offer your time and expertise speaks volumes about your passion for our shared mission. Working together we can bring tangible change, shaping the future of the accountancy profession in Malta," concluded Ms Cauchi Delia.

EFRAG issued the following 3 draft ESRS IG documents for public consultation:

• Draft EFRAG IG 1: Materiality assessment implementation guidance here;
• Draft EFRAG IG 2: Value chain implementation guidance here; and
• Draft EFRAG IG 3: Detailed ESRS datapoints implementation guidance here and accompanying explanatory note here.

MIA would like to invite its members to contribute to this consultation process by sending their feedback to technical@miamalta.org by 25 January 2024. Comments received will be taken into consideration when drawing up MIA’s consolidated feedback.

Read more here.

The MFSA has released a Consultation Document on the National Implementation of Regulation (EU) 2022/2554 and Transposition of Directive (EU) 2022/2556 on Digital Operational Resilience for the Financial Sector.

MIA would like to invite its members to contribute to this consultation process by sending their feedback to technical@miamalta.org by 30 January 2024. Comments received will be taken into consideration when drawing up MIA’s consolidated feedback.

Read more!

Businesses need to think innovatively and break conventional boundaries to remain competitive in the face of widespread changes, particularly in the field of taxation. This key message echoed through the key speeches and exchanges during the Malta Institute of Accountants’ Annual Tax Conference.

The Conference dissected various tax reforms emanating from both European and national level, including various elements of corporate tax, sustainability reporting disclosures as well as changes in VAT and Customs formalities. The agenda for the Conference was developed by the Institute’s Direct and Indirect Taxation Committees

In her welcome speech, MIA Chief Executive Officer Maria Cauchi Delia said that the present fiscal changes sought to lead a global shift towards transparency, simplification and consistency. She detailed the Institute’s efforts throughout the past year to engage with stakeholders in Malta and abroad, respond to consultation documents related to major reforms and provide training to members.

MIA President Mark Bugeja highlighted the stronger collective push towards enhanced compliance and enforcement. He called on accountancy professionals and businesses to take the upcoming changes in their stride and seek to transform such challenges into new opportunities for growth.

A number of panel discussions delved into detail and provided insights into impending changes related to direct and indirect taxation. With regards to indirect taxation, the panel addressed issues related to the Intrastat Declarations, Recap Statements, Budget Implementation Bill, Central Electronic System of Payment information (CESOP), and the applicability of the newly introduced 12% VAT Rate. The discussion on direct taxation focused on the Unshell Directive and its requirements, as well as on the Subject to Tax Rule (STTR), this being one of the key components of Pillar 2. A separate discussion addressed the expectations in terms of required documentation and timelines with regards to Transfer Pricing.

The Conference also included an insightful exchange on where tax related issues are likely to become relevant to disclosures under the Corporate Sustainability Reporting Directive (CSRD). This discussion addressed issues such as the Carbon Border Adjustment Mechanism (CBAM) and the Emissions Trading System (ETS), while also making reference to the Blue Economy and how this presents further opportunities for the country.

The event was also addressed by Mr Joseph Caruana, Commissioner for Tax and Customs, who provided details on the transformation of Malta’s fiscal systems, which had the objective of sustaining public financing through efficient collection of taxes while ensuring increased attractiveness and competitiveness of the Maltese jurisdiction through reduced bureaucracy.

Mr Christopher Magri, Director General Customs Operations, gave details of how Customs Department was investing in technology and Artificial Intelligence to allow it to focus on the highest risk and ensure collection of taxes and duties which are due, while enhancing its role as protector of the Maltese and European frontier.

The Tax Conference was also addressed by the Minister for Finance and Employment Hon. Clyde Caruana who urged firms to seek innovative ways to increase their productivity, this being the way forward in the way of constant changes pushed from the European Union and beyond. His Opposition counterpart, Hon. Jerome Caruana Cilia focused on the need to enhance and improve Malta’s attractiveness while demonstrating a commitment to fairness which ensures that local businesses, regardless of size or industry, have equal opportunities to thrive.

The Malta Institute of Accountants has welcomed 157 new accountants as members after completing their respective qualifications through ACCA and the University of Malta over the previous academic year.

MIA CEO Ms Maria Cauchi Delia welcomed the new members to the Institute, describing it as a 4,000-associate strong platform which gives the profession a strong voice and its members the opportunity to exchange knowledge and experience, build contacts and receive support throughout their career. She encouraged new members to consider the various opportunities for participation offered by the Institute, particularly through its different committees and working groups, including the Young Members Group.

MIA President Mark Bugeja called on new members to stand for integrity, to uphold the highest ethical standards, and to strive to earn the trust of those who depend on the profession’s expertise. Recalling historically notorious cases of corporate misconduct, he highlighted the critical role of accountants and auditors in ensuring accurate financial reporting and enhancing public trust in business.

Mr Bugeja also called on accountancy professionals to embrace life-long learning. “The advent of cutting-edge technologies, such as automation, artificial intelligence and data analytics, underscores the importance of ongoing education. These advancements are reshaping the profession and staying current with technological trends is essential for professionals to effectively harness these tools in their work”, he argued.

During the course of the event, the Institute recognised the achievement of the top University of Malta graduate and ACCA affiliates in the presence of Prof Emanuel Said, the Dean, and Dr Lauren Ellul, the Head of Department, of the Faculty of Economics, Management and Accountancy at the University of Malta and Ms Magda Krupa Hernandez, ACCA Director Europe, Middle East and Americas.

These were Alessandro Mommo (1st in Malta Overall Performance September 2022 ACCA Top Affiliate), Darren Rapa (1st in Malta Overall Performance December 2022 ACCA Top Affiliate), Kimberly Galea (1st in Malta Overall Performance March 2023 ACCA Top Affiliate), Noor E-Mohammad Mustun (1st in Malta Overall Performance June 2023 ACCA Top Affiliate) and Annie Caruana (Best University of Malta Accountancy student).

Ms Krupa Hernandez expressed her pride at the ACCA’s partnership with the Institute and the teams which worked together to make the joint examination scheme practical and relevant. She called on new graduates to celebrate the moment but appreciate that this is not their final career peak but the beginning of a successful and rewarding process.

Prof Emanuel Said elaborated on how today’s accountancy and audit professional play a much more significant role, as determined by evolving international standards, the forces of globalisation, mounting social expectations and demands for accountability, transparency and green credentials at many levels. Prof Said also placed emphasis on the need to secure stakeholders’ trust. “In any career choice we need to keep ethical values at the fore of our minds. It is not just what is legal, but what is right, fair and for the common good”, he remarked.

During the event, the MIA also celebrated this year’s winners of the Kevin Mahoney Award for exceptional voluntary work and sense of altruism. The award was awarded to Berta and Kevin Vella, who set up a foundation after the untimely death of their young daughter to help sick children with necessary medication and equipment as recommended by the Pediatricians at Mater Dei.

Technology can be a major enabler for firms as well as for authorities and regulators, a key tool to address skills shortages, reduce the administrative burden and contribute towards a compliance-based culture in the Maltese jurisdiction. This was a key message emerging during the Malta Institute of Accountants’ (MIA) annual Digital Conference.

Introducing the event, MIA CEO Maria Cauchi Delia argued that in a world where skills and human resource shortages continue to afflict the financial services industry and beyond, the use of technology and automation can fill in the gaps and allow accountancy and auditing professionals to upskill and focus on more specialised tasks. She highlighted how innovative EU legislation, including CSRD, requires electronic format reporting, putting the onus on authorities and firms to step up the digital transformation process to ensure compliance, simplification and quality.

MIA President Mark Bugeja explained how technology can enhance fiscal morality and public trust while enabling level playing field and the equitable distribution of resources, ultimately contributing to the stability and prosperity of economies and the overall well-being of society.

These views were echoed by the Commissioner for Tax and Customs, Mr Joseph Caruana, who explained how as part of the Malta Tax and Customs Administration (MTCA) strategy, the organisation is investing heavily in its technology infrastructure to build a new risk analysis system which exploits Artificial Intelligence and machine learning. He explained that MTCA is investing in technology to simplify compliance and make it easier to do business in Malta, thus sustaining the well-being of the Maltese-economy.

The MIA Digital Conference, hosted with the support of the MIA’s Digital Committee and Indirect Taxation Committee, placed emphasis on the impact of requirements stemming from VAT in the Digital Age proposal, known as ViDA, with a particular emphasis on digital reporting and e-invoicing and how these impact taxpayers, businesses as well as regulators. This matter was also discussed through the international perspective, with the participation of high-level officials from Poland and Italy also sharing their country’s experience.

Besides competitiveness and growth, representatives from industry and regulators also addressed the issue of how analytics and data governance can be leveraged for optimising Value Added Tax performance. Participating experts showcased how analytics provide insights into financial transactions and market trends, aiding informed decision-making. Simultaneously, robust data governance ensures data accuracy and compliance, reducing errors and enhancing overall VAT management efficiency.

Several speakers encouraged participants to reflect on the developments in the digital world and the accountancy industry, and to identify and plan to act upon the key changes that will impact businesses, particularly because of data-driven processes and compliance by-design. Failure to do so, would have dire financial consequences, and a heftier price to pay than that required to embrace change.

The Malta Institute of Accountants (MIA) has highlighted simplification, efficiency, reduced bureaucracy to facilitate business, compliance and competitiveness as top priorities in a set of proposals presented to the Hon. Minister for Finance and Employment Clyde Caruana, in view of the upcoming Budget 2024 and beyond.

The initiatives presented to the Minister included a combination of policy measures and fiscal incentives, which address industry bottlenecks. The proposals seek to improve administrative processes to enhance compliance and correctness whilst benefiting the business community and taxpayers, as well as the overall quality of the Maltese jurisdiction.

While elements having a direct impact on members of the accountancy profession continued to be central to the Institute's proposals, several of the recommendations put forward also look at the wider economic system and aim to serve the broader interests of both the business community and individual taxpayers.

The MIA highlighted the importance to continue strengthening further the relationship between accountancy professionals and the Malta Tax and Customs Administration (MTCA). This collaboration encompasses ongoing dialogue, consultation and the publication of guidelines, which are essential to improve the ease of doing business in Malta while ensuring adherence to the applicable regulatory framework.

The Institute also reaffirmed the need for stronger consideration of sustainability in policy development. Addressing the skills and resource gap challenge currently impacting the profession, MIA representatives insisted that solutions should focus on attracting and retaining foreign professionals to maintain, and further create, value added to the industry and the wider economy.

Mr Mark Anthony Bugeja appointed as new MIA President

The Malta Institute of Accountants held its 59th Annual General Meeting on 5th October 2023 at Villa Arrigo, during which seven of its members were elected to its Council.

The elected members were Edmond Brincat, Mark Anthony Bugeja, Thomas Galea, Paul Giglio, Ronald Mizzi, Lucienne Pace Ross and William Spiteri Bailey. They joined Fabio Axisa, David Delicata, Jonathan Dingli, Shawn Falzon, Christopher Portelli and Annabelle Zammit Pace on the Institute’s Council.

During the AGM, members of the Institute exchanged ideas and opinions in a lively debate during which they voted on various motions intended to improve the Institute’s structure as well as its governance and transparency standards. Members of the Institute also voted to appoint the disciplinary proceedings setup where Mario Galea and Alan Craig were respectively appointed as the Chairperson and Deputy Chairperson of the Disciplinary Committee. Anthony Zarb was re-appointed as the Chairperson of the Appeals Board while Elvia George was appointed as Deputy Chairperson of the Appeals Board. Members also appointed the Appeals Pool which is made up of 10 Members.

Addressing the Annual General Meeting, outgoing President David Delicata underscored the significant accomplishments of the Institute in recent years. He highlighted the pivotal role played by the Institute in supporting national efforts to secure a timely removal from the Financial Action Task Force's grey-listing. He also referred to the continuous flow of regulatory changes stemming from international and local authorities: “Within this dynamic environment, the Institute has been actively engaged in assessing these proposals, offering expert advice, and ensuring that the concerns and needs of the profession are adequately represented. Simultaneously, the Institute has maintained open communication with its membership base, ensuring that they remain well-informed about the evolving regulatory landscape and its implications”, he explained.

David Delicata also spoke about the contribution given by the Institute towards the development of a financial strategy for Malta as well as efforts to address the existing skills gap, through engagement with authorities as well as through own initiatives to attract more resources to the profession, including a nationwide and multimedia education campaign.

Mark Anthony Bugeja appointed new MIA President

During the first meeting of the new Council held shortly after the AGM, the four Officers of the Council were elected. Mark Anthony Bugeja has been elected as the Institute’s new President, Lucienne Pace Ross as Vice-President, Jonathan Dingli as Secretary and Annabelle Zammit Pace as Treasurer.

Mark Anthony Bugeja, who had served as the Institute’s Vice President for the past year, extended his gratitude to the Council members for the confidence shown in him. He also conveyed his appreciation to the outgoing President, David Delicata, for his exceptional contribution over what has been a very demanding term.

Looking forward at the upcoming presidency period, the newly elected President highlighted several challenges facing the Institute and the accountancy profession. He has committed his effort and that of Council to continue enhancing the role and contribution of the Institute and the profession as a major stakeholder, and as a key driver in supporting Malta’s further growth as a dynamic, digital and sustainable economy in the years ahead.

The right to deduct or claim VAT on expenses incurred in conducting an economic activity (input VAT) is one of the most important considerations for VAT registered persons. At first glance, the process may look straight- forward: receive the invoices, record them in the VAT return and proceed to claim VAT back. However, quite a few conditions need to be satisfied for such a claim to be in line with the various provisions of the Maltese VAT Act.

For starters, not everyone is entitled to claim back input VAT – only those who satisfy certain conditions, mainly taxable persons who qualify, and actually register, for Maltese VAT under Article 10 of the Maltese VAT Act and who perform certain activities which carry a right to refund.

Consequently, the first issue is to determine which economic activities will be carried out and whether they entail a right of refund. In case of mixed supplies, wherein only some of the activities carry such right, one might need to enter the realm of partial attribution rules which regulate how to calculate the portion of the VAT incurred on general expenses that can be claimed back.

From experience, there are quite a few misconceptions associated with this mechanism, such as that it can be applied to all the expenses incurred. This is not the case since for specific expenses solely attributable to a specific supply or group of supplies with the same right of refund, one either claims VAT in full or does not claim any of it depending on the nature of activities to which it is related.

The computation of the partial attribution mechanism is another important aspect which obliges an Article 10 VAT registered person to use the previous year’s ratio as a provisional ratio for the current year.

Once the current year is over and the definitive ratio is known, it is possible to perform any adjustments triggered by a difference between the provisional and definitive ratio in the appropriate boxes (40 or 41) of the first VAT return ending in the following calendar year. At times this might prove to be problematic, especially if it is being applied for the first time and if no proper records and workings are kept.

Blocked deductions are also another important consideration which prohibits the claiming of VAT on certain expenses, even if they are genuine business expenses. At this point, it is important to highlight the difference between VAT and corporate tax considerations with respect to what can be claimed back or deducted for tax or VAT purposes. Sometimes these are mixed, giving rise to an incorrect VAT treatment which, if discovered, may lead to interest and penalties.

Another key factor is the timing of the VAT claim. While in practice this is usually based on the invoice date, it is not always the case especially in cases of deposits, requests for payments from professionals or warrant holders and invoices from suppliers who are authorised to account for VAT using the cash accounting system.

Additional obligations apply in cases of input VAT claimed on capital goods (fixed assets) which satisfy certain conditions wherein the original amount of input VAT claimed back may need to be adjusted in the subsequent years, if certain conditions are satisfied.

Finally, due care needs to be given to collecting the appropriate evidence and format backing such VAT claims.

Find out more during the MIA's 3 hour Webinar.

Although I pen this appreciation under my name, I know that I echo the sentiments of my fellow colleagues and leaders (past and present) who have worked for (and with), Mr Joseph N Tabone, the founder of Joseph Tabone & Co, later to become the firm it is today, KPMG in Malta.

Much has been said about Mr Tabone’s significant achievements in business. To me (and many others who have been employed by the firm he established in the late 60s), he will be remembered as a central figure during the earlier years of my career. Interviewed directly by him in 1985 and employed by his firm in early 1986, I look back today at my early days working under his leadership as the building blocks of what followed, through to my appointment as a partner with KPMG in 1998 and, currently, its Head of Audit. Coincidently, his celebration of life coincides with my retirement as a partner with KPMG in Malta later this year.

From my very first day, Mr Tabone left an impression on me on what being a true ambassador of the firm was all about and how to protect its image. He truly personified every aspect of a client-focused strategy, yet remained true to our firm and professional obligations when serving the stakeholders to whom we report.

Many, including colleagues from years back, gathered on the 19 August at St Gregory’s Parish Church, not only to mourn his loss but also to celebrate a life well-lived – one with purpose, dedication, and an unwavering commitment to excellence. The gathering was a beautiful testament to the impact Mr Tabone had on the business community and the lives of those who, in one way or another, connected with him. It was evident from the memories some of us shared after Holy Mass, and the diverse group of those who gathered in prayer during the service, that Mr Tabone was much respected and admired and had touched the lives of many people in more ways than one.

Mr Tabone was not merely a visionary entrepreneur or a successful executive. He was a beacon of inspiration and made significant contributions to our profession (he twice served as President of the Malta Institute of Accountants). He possessed that unique ability which sees beyond the horizon, to envision possibilities where others saw obstacles, and to turn dreams into reality. What made him stand apart was not just his business acumen, but also his commitment to integrity and ethics. Mr Tabone did not measure success solely in terms of financial results, but also by the impact he had on others. He truly believed in creating a positive change, not only within his firm but also in the wider business community in which he served. He recognised that the key to building a successful business also required fostering a culture of collaboration, innovation, and respect, nurturing talent, inspiring creativity, and empowering those around him to reach their full potential.

My thoughts and sympathies go out to Mr Tabone's family during this difficult time. May his soul find eternal peace and may the legacy he left behind bring us all who have been fortunate enough to have known him, comfort, inspiration, and guidance towards a future filled with purpose.

Author: 

Hilary Galea-Lauri
Partner | Country Head of Audit | KPMG in Malta