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.

These recommendations were presented by MIA representatives to the Hon Minister Clyde Caruana during a meeting held at the Ministry for Finance and Employment. Prior to the meeting, the Institute had consulted extensively with its Committees and Groups in drawing up such proposals.

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

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Rethinking and reforming the financial services industry was the underlying theme of the MIA Biennial Conference 2023, addressing the key areas that underpin the required reforms towards upgrading the competitiveness and reputation of the Maltese jurisdiction.

Stakeholders from regulators and authorities, and industry professionals looked at how the Financial Services Strategy seeks to address existing bottlenecks and identify where the economic opportunities of the near future lie.

Opening the Institute’s largest Conference on the calendar of events, with almost 400 people present, Ms Maria Cauchi Delia, MIA CEO, highlighted that the recently-launched financial services Strategy focuses on essential reforms and specific proposals to leverage Malta's unique advantages and enhance its position as a global financial hub with a distinct European perspective. “The key lies in strengthening and updating existing resources while exploring new opportunities for specialised financial products. Achieving this requires a robust legislative framework and clear regulatory guidelines to establish a solid foundation for the future”, she explained.

MIA President Mr David Delicata called on stakeholders to strive hard towards improving Malta’s reputation. “If we really want to promote Malta as a jurisdiction of quality, our country must continue implementing reforms related to the rule of law, governance, media freedom and others, and more importantly, make sure that such reforms are not solely seen as boxes to be ticked. The attractiveness of our nation starts first and foremost from here”, he said. He also dwelled on MIA's role in developing and implementing this Strategy, describing this as a clear demonstration of the Institute’s added value.

The Chairperson of MFSAC, Mr Joseph Zammit Tabona, emphasised that it is now time to commence the actual implementation of the Strategy. He explained how the Malta Financial Services Advisory Council (MFSAC) has presented a clear plan outlining the prioritisation of a set of reforms that can be completed within a span of 18 months. To ensure successful execution, some 20 working groups will be formed to closely monitor the Strategy's objectives. Additionally, a project management office will oversee the entire implementation process. These dedicated working groups will each focus on a specific subject-area in order to facilitate and expedite the process. Mr Zammit Tabona also insisted that the success of the Strategy relies on the input of practitioners and service providers.

Finance Minister Hon. Mr Clyde Caruana insisted that a new economic model for Malta will need to focus on technology and capital intensive industries, otherwise it will be very hard to sustain the current level of growth, citing the Financial Services Strategy as the right example of what we have to look at and work on - solutions which provide higher value-added. The Finance Minister continued that we need structural changes, not mere reforms. He also noted that there will be other challenges in the months ahead, particularly in terms of tax. Hon. Mr Caruana also explained that Europe is moving ahead at a very fast pace and will consolidate further economic and financial policies. He added that this will have a big impact on Malta and thus we need to make sure that the required changes are implemented.

Hon. Mr Jerome Caruana Cilia, Shadow Finance Minister, described this decade as crucial, requiring important decisions to be made regarding the country’s path forward. This applies to various sectors such as climate change, environment, foreign policy, and specifically, financial services. Hon. Mr Caruana Cilia argued that reform should be guided by the main pillars, these being the operating environment, technology and innovation, talent, and communication and promotion.

During the event, high-profile stakeholders from the public and private sector addressed various elements of the Strategy including taxation, sustainability, national payments infrastructure, asset management, capital markets, insurance and pensions as well as Fintech. Representatives from different regulators whose activity impacts the future of the industry, including the Financial Intelligence Analysis Unit, the Malta Business Registry, the Malta Financial Service Authority as well as the Commissioner for Revenue also addressed the Conference. The Conference also featured a number of international speakers, including the President of Accountancy Europe, Mr Mark Vaessen.

Mr Mark Bugeja, Vice-President of the Malta Institute of Accountants, while noting the flavourful agenda that ensued throughout the day, closed off the conference by saying that the industry and the profession will continue to grow and flourish but all stakeholders need to play a role in making it happen,.

The Biennial Conference 2023 was kindly supported by Epic, BNF Bank, the Malta Stock Exchange, Shireburn Software Limited and Finance Incorporated Limited.