A proactive approach to staying compliant and confident
In Malta, there is no fixed formula for when a tax audit may be triggered, any taxpayer could be selected for review. That unpredictability makes preparation not just important, but essential.
The good news? With the right steps, you can reduce risk, avoid surprises and respond with confidence if an audit does happen.
How can you be prepared?
- Stay organised
- Know your timelines
- Consult early
- Consider a tax health check
Stay organised
Strong record-keeping is the foundation of audit readiness. The more organised your information is, the more the tax audit process will be efficient, and the more likely a desirable outcome is achieved. The taxpayer is presumed innocent unless proven guilty. However, the necessary information must be readily available to demonstrate such innocence.
Know your timelines
In Malta, the tax authorities can issue an income tax assessment up to five years after the end of the year in which the return (or a further return/adjustment form) is submitted (i.e. broadly 5 years from the relevant financial year, in which the tax return or any subsequent adjustment form is filed ). However, where there’s non-disclosure or wilfully misleading information, this time limit does not apply. That’s why it’s crucial to:
Keep records for at least five years from the end of the financial year in which the tax return or a further return (i.e., adjustment form) is filed with the tax authorities
File returns and submissions on time (late filing may result in criminal charges)
Be mindful that other legislation may require longer retention periods
Avoid disposing of documents immediately after the five-year mark
Ensure that the right records are retained particularly on key transactions in case of a tax enquiry
Consult early
Working with a tax advisor can help you spot risk areas before they become audit triggers. They can pinpoint areas of concern in your behaviour and financial records and recommend ways to address them proactively. By way of example, a common pitfall that is sometimes overlooked is that the submission of an adjustment form may reset the clock on the retention period. Advisors can also help ensure that your documentation and declarations hold up to scrutiny; while helping you navigate complexity with clarity.
Consider a tax health check
To assess how well prepared you are for a tax audit, you can consider undergoing a comprehensive health check covering Income Tax, VAT and FSS with your advisors. This includes a detailed review of your financial records and tax compliance processes, identifying potential gaps or risks before they become an issue.
By identifying gaps or risk areas early, you can address them on your own terms, rather than under audit pressure.
How can we help?
We support individuals and organisations in preventing, managing and resolving tax audits and enquiries—across corporate, personal and VAT domains. From routine tax enquiries to in-depth tax investigations or assistance in bringing your tax affairs in order, our dedicated and multi-disciplinary tax dispute resolution team can guide you through every step of the process. Our lawyers, tax specialists, economists and accountants on team are uniquely positioned to give you clear, straight-talking, and solid tax advice to help you achieve compliance and the best possible outcome - including helping you avert the problem from occurring in the first place.
Above all, we help you move forward with clarity—so you can stay compliant, avoid unnecessary risk, and stay focused on your business goals.
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