No hiding now: Government cracking down hard on tax evasion, Caruana tells parliament

Finance Minister Clyde Caruana said government is cracking down hard on tax evasion, warning people will no longer be let off the hook for not paying their dues.

“No government before us has invested so heavily in the country’s tax collection system, and this was intentional,” Caruana told parliament during a debate on amendments to tax law.

Caruana said a newly implemented system has significantly increased surveillance on tax evaders, with 80% of people identified by the said system found of evading tax.

The newly implemented system, Caruana said, is able to scan all tax payers in Malta in a single day, helping authorities to pinpoint who has failed to pay. The scans are carried out on a monthly basis, he said.

The minister also said the system is able to compute audit trails, providing authorities with data to help identify irregularities.

He was also strong in his criticism of the Opposition over statements issued last week when it said the proposed bill “rewards tax evasion”, saying claims were untrue.

In a statement, Shadow Minister for Finance Graham Bencini expressed concern the bill appears to favour individuals with ongoing court cases related to tax evasion or unpaid dues owed to the state. He further alleged that one of the potential beneficiaries is a former client of the Prime Minister, and argued that instead of passing such legislation, the government should focus on offering more flexible payment schemes and reducing interest rates and penalties to support small and medium-sized enterprises.

Caruana said government penalties for tax evasion have increased considerably, with fines raised to 25% from 15% of the owed amount.

Using the example of someone who owes €1 million in taxes, Caruana said over and above the owed amount, the individual would have to pay a further €1 million, €136,000 in interest and the fine.

“This means government would have recouped a further amount of around €1.5 million,” Caruana told the House. “I have a duty to collect what is owed.”

He said throwing people in prison is useless, and by raising fines, government is collecting more money and ensuring people shy away from pondering whether to evade tax.

“When people came knocking for help, government never turned them down,” he said.

The minister also said the increased tax collection has contributed to Malta’s deficit going down, and this was stated by both the International Monetary Fund (IMF) and the European Commission.

Caruana concluded by saying he has kept true to his word when he had declared government would be cracking down on tax evasion.

“What needs collecting, will be collected,” Caruana said.

Addressing the House, Justice Minister Jonathan Attard said the bill is not just about offering a pathway to resolve fiscal and administrative shortcomings, but also about improving the efficiency of the justice system.

“What do we want as a country?” Justice Minister Jonathan Attard said. “Do we want people to repay what they owe—tax, interest and a significant penalty—or do we continue funnelling them through lengthy court processes that strain public resources and may yield less in return?”

He said the bill not only aims to establish a fairer system, but also to incentivise more people to come forward, settle their dues and pay supplementary penalties—ultimately strengthening compliance.