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AI helped taxman collect €1.6 billion in arrears
MaltaToday gets an inside look at the AI digitalisation drive raking in hundreds of millions in tax arrears every year
15 November 2026, 6:00am
Matthew Farrugia
Matthew Farrugia
4 min read
The MTCA is undergoing a digitalisation process that will make its operations more data-driven(Photo: James Bianchi/MaltaToday)
An AI-powered tax monitoring system has helped collect over €1.6 billion in arrears in less than four years since its introduction.
Figures provided to MaltaToday by the Malta Tax and Customs Administration (MTCA), show that in 2026 alone, €455.4 million in tax arrears were collected by September.
The new tax monitoring system powered by artificial intelligence was introduced in 2023, enabling the tax commissioner to become more efficient in identifying dodgers and laggards.
Last month, Finance Minister Clyde Caruana had announced that a few hundred people would be receiving letters from the MTCA asking about discrepancies between income generated and large purchases and taxes paid.
The action, in Caruana’s own words, was intended to “render unto Caesar the things that are Caesar’s”. The minister had said the AI-powered system was making tax evasion easier to identify.
The Commissioner for Tax and Customs Joe Caruana sat down with MaltaToday last week to explain how the MTCA acquired the high-end statistical analysis system, colloquially referred to as SAS, in 2022 and deploying it by the first quarter of 2023.
When asked how long it took for the system to pay for itself, Caruana chuckled and pulled out a piece of paper with a yearly breakdown of the tax arrears collected since 2023.
The numbers were so staggering that I had to clarify whether they were correct. In its first year, SAS helped the MTCA collect €374.8 million in tax arrears. The following year, the MTCA collected €431.3 million, and in 2025, the authorities collected €419.7 million.
The latest available data shows that by the third quarter of 2026, the MTCA collected €455.4 million, bringing the total of arrears collected since SAS’s introduction to over €1.6 billion.
The higher VAT returns collected over the years are especially noteworthy. In 2023, the taxman collected €196.9 million in VAT arrears. The following year, €183.6 million were collected, while in 2025 €165.5 in VAT arrears were identified. However, with 2026 not yet over, the MTCA has already collected €202 million in VAT arrears so far.
The improvement in tax collection is a direct result of better case selection, Caruana said, adding that compliance behaviour has also seen a marked improvement.
MTCA’s auditors have inputted more than 100 risk rules into SAS to filter out the problematic cases. The system then checks, for instance, whether the sales a business declares for income tax match its own VAT declarations. If there is a significant gap between the two, the system flags this as a risk.
SAS also identifies businesses that don’t submit returns on time, as well as filings with missing information, so the MTCA can follow up on each case. The system is then able to group taxpayers according to their compliance behaviour, identifying those who pay on time, those who pay late, and those who don’t pay at all.
This process, which is part of a broader digitalisation programme, is crucial in the MTCA’s effort to become more data-driven.
Since the technology was introduced, data has become sacred for the tax authorities. The digitalisation has enabled the administration’s auditors to follow a single, standardised process across all tax types, which wasn’t the case before.
Joe Caruana stressed that the system relies solely on numbers and behaviour, and not names, insisting that the enforcement drive is in no way a witch hunt. Cases are identified solely on the basis of risk by the technology but human intervention and expert judgement still remains central to each decision.
Commissioner for Tax and Customs Joe Caruana (Photo: James Bianchi/MaltaToday)
The system has effectively converted the MTCA from a reactive administration with a crushing workload into a proactive enforcer. In this way, the tax authorities can focus more on ensuring that taxpayers are compliant from the outset, rather than chasing them for their dues.
Looking ahead, Tax and Customs Commissioner Joe Caruana said the authority will invest further in digital tools in the future. He noted the MTCA is in the process of issuing a tender for technology that can enable it to monitor real-time VAT reporting. In countries that have already implemented similar systems, the VAT gap has been reduced by as much as 15% to 20%.
Matthew Farrugia is a journalist at MaltaToday
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