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Changes in interest rate, administrative penalties and fines in the VAT Act

Act XIV of 2013

By means of Act XIV of 2013, an act to amend the Value Added Tax Act (Chapter 406), changes have been made to the current provisions concerning interest, administrative penalties and fines for criminal offences.  These changes affect:


- The rate of interest charged on late payment of VAT
- Administrative penalties for late registration
- Fines imposed by the Criminal Court for VAT offences.


Click here for the full version of Act XIV of 2013


Rate of Interest


By means of an amendment to article 21 of the VAT Act, the Minister may by regulations prescribe the rate of interest due on unpaid tax.  This provision shall come into force in a date that the Minister establishes by a notice in the Government Gazette.  The Minister for Finance has established the 1st of January 2014 as the date when the provisions shall come into force as per Legal Notice 51 of 2014. The current interest rate is 0.54% per month as per Legal Notice 52 of 2014​.


Administrative penalty for late registration


By means of an amendment to article 39 of the VAT Act, a threshold, based on two bands, is introduced as a capping for ‘late’ registration of persons required to be registered under article 10 and article 12 of the VAT Act.
For a person who fails to register in time under article 10, where the excess, if any, of the output tax over the deductions for the first tax period following registration is two thousand euro (€2,000) or less, the administrative penalty for late registration shall not exceed two hundred and fifty euro (€250).

Where the excess of the output tax over the deductions for the first tax period following registration is more than two thousand euro (€2,000) such administrative penalty shall not exceed twenty per cent of such excess.

For a person who fails to register in time under article 12, where the tax chargeable on the intra-community acquisitions or the services received or both such intra-community acquisitions and services received, in respect of which that person is required to make such application is two thousand euro (€2,000) or less, such administrative penalty shall not exceed two hundred and fifty euro (€250).

Where the tax chargeable on the intra-community acquisitions or the services received or both such intra-community acquisitions and services received, in respect of which that
person is required to make such application is more than two thousand euro (€2,000) such administrative penalty shall not exceed twenty per cent of such tax chargeable.

This provision has come into force on publication of the Act, i.e. on the 05 November 2013.



Per Diem Court Fine for late submission of Return


By means of an amendment to article 76 of the VAT Act, a distinction is now made between an offence consisting of not filing a VAT return and an offence consisting of filing a Vat return without payment.

The per diem fine, which was previously applied by the Court (following a judgement) to a person who fails to furnish a tax return or any additional return, statement or information or to produce any books, records, documents and accounts, or fails to pay any tax or administrative penalty due when required by VAT legislation will now be applied ONLY to offences consisting of non filing of a VAT return. 

Such per diem fine has been set at five euro (€5) for every day that the default continues after the lapse of the time fixed by the Court.

Article 77 has also been amended to set the per diem fine at five euro (€5) for every day that the default continues after the lapse of the time fixed by the Court to bring it compatible with article 76.

These provisions have come into force on publication of the Act, i.e. on the 05 November 2013.


Transitory Provision


The new provisions regarding the per diem fine in article 76 are also applicable to  cases where, on the day preceding the date of the coming into force of such provision, either no criminal proceedings will have been commenced or those proceedings are still pending before any Court.

In addition, in cases where a person has been sentenced to the payment of a per diem fine before the date of the coming into force of such provision, every amount of that fine per day shall be calculated afresh according to the new provision.

Finally, in cases where a person has been sentenced to the payment of a per diem fine under article 76, which offence does not consist of the failure to produce the VAT return  in terms of the new paragraph (c), that fine per day shall be cancelled.


8 November 2013​