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Newsletter 3
January 2002

From the Editor

Dear Reader,

The end of the year is once again upon us, and this time of year normally makes us review the past twelve months and make resolutions for the coming year.

On the whole, for our office this year has been a milestone in the information technology area. As reported in Issue No.2 we have invested heavily in a new office management package that enhances our potential for managing better the services we provide to our clients. By the time of writing, this package has been fully implemented and our staff fully trained to make effective use of same.

For the local economy as a whole, this was an historic year in that we had two major bankruptcies whose fall out is being felt by one and all. The liquidity shortage that has been felt for the past 5 years or so, is being felt even more now. Most of the major suppliers in the country, having taking such a heavy loss as a result of the above, have become very unwilling to extend credit even to their old and trusted clients. When coupled with the more cautious approach being taken by the local banks whose fingers were also heavily burned by these business failures, one will appreciate why so many businessmen are reporting that this year was amongst the worst they have ever experienced.

On the bright side, our office has been experiencing an emergence of confidence and new initiatives during the past couple of months. Hopefully, this trend will continue.

I hope that this issue will, once again, be of interest to you all.

Regards
George Farrugia

Office News

As many of our clients are aware, at present the partners are visiting their offices and asking them some very awkward questions.

It is not very often that professionals go to their clients to ask them what they think of the quality of the service, are they getting value for money, do they think the reception is efficient or does the fact that some of our staff smoke in the office, bothers them.

These are just some of the questions (over 120 in all) contained in our CLIENTS PERCEPTION QUESTIONAIRE.

One foreign client told me, whilst interviewing him, that he can now understand how the Maltese have won the GEORGE CROSS because, he said, one has to be really courageous to ask these kind of questions.

The aim of this exercise is to make what we believe is already a good service an even better one. And the partners reasoned that the best people to tell us what makes a good service are the clients themselves.

We make it clear, from the start, that although it pleases us to get confirmation of what is good, what we want to hear is where, in the client’s opinion, we could improve.

The results, so far, have been very positive and we shall be publishing the final results, once the exercise is finalised. As each interview takes over three hours, and partners’ time being what it is, we expect to have the results in time for the April issue of this newsletter.

VAT Objection Condition declared Unconstitutional

On 30th November, 2001, the constitutional court declared that Article 4(c) of the Sixth Schedule to the VAT ACT of 1994 was unconstitutional.

As some of you may recall, this Article imposed the need to pay 25% of any contested tax in order for an objection to be considered valid.

This condition has been challenged before the court on the basis that it goes against the human right to a fair hearing of the taxpayer.

The Constitutional Court noted that this condition denied the taxpayer the access to proper administration of justice. And it continued that under the terms of the VAT ACT the taxpayer is being deprived of his right of appeal unless he could come up with a substantial portion of the tax he is appealing against.

The decision goes on to note that in this way this right of appeal was being reserved only for those who could pay this 25% deposit.

The court pointed out that once the law provided the citizen with a right of appeal, then, such right had to be accessible in a uniform and non-discriminatory manner to ALL.

The court goes on to quote from the European Court of Human Rights that the right of access to an appeal meant access in fact as well as in law. The high costs of an appeal might also be an infringement on the right to effective access to the courts, and therefore justice.

The court ordered that a copy of its decision be forwarded to the Speaker of the House.

New Wear And Tear Allowance Rates

After many representations from the accountancy profession that have been going on for several years, the Minister of Finance, the Hon.Mr.John Dalli announced in his Budget speech that , after 35 years without any revision, the Wear and Tear Allowances will be revised as from year of assessment 2002.

Through LEGAL NOTICE 298/2001, the new rates were published in the Government Gazette.

The new rates are:

Electronic Equip & Software 25.00%
Motor Vehicles 20.00%
Furniture, lifts, escalators 10.00%
Ships and vessels 10.00%
Construction Equipment 16.67%
Catering Equipment 16.67%
Aircraft 8.50%
Electrical & Plumbing installations. 6.67%
Cable and pipeline installations 5.00%
Communication equipment 16.67%
Air conditioning equipment 16.67%
Medical Equipment 16.67%
Water and elect production equip 16.67%
Other machinery 20.00%
Other plant 10.00%

As from the year of assessment 2002, the above rates are to be applied to the written down tax value of the respective assets.

In the case of new additions, the whole year allowance is permitted in the year of purchase. Likewise, no deductions will be allowed in the year of disposal.

When assets are transferred between two connected persons, the cost of such asset shall be the lower of:

• The transfer price and
• The written down value in the books of the seller

Investment Registration Scheme

The investment registration scheme, announced by the Minister of Finance during his last Budget speech came into effect on December 3rd, 2001.
This scheme is intended to encourage residents who, in the past may have transferred funds overseas without the necessary permit and on whose income they have not been paying the related income tax, to regularise their position under the Income Tax Act and the Exchange Control Act.

Social Corner

This year, as in the past, the highlight of the firm’s social calendar was the Christmas staff party which, in our case, includes husbands, wives ,boyfriend, girlfriend, children, etc…..

Also in line with the firm’s tradition, the newest recruit to the firm usually plays the honour of

This scheme applies to any investment held abroad as on 1st September, 2001 and will be open until 31st December, 2002.

Investments should be registered through the appointed agents including banks, stock brokers and persons licensed to give investment services by the Malta Financial Services Centre.

Anyone registering under this scheme would be given a registration certificate to exempt him/her from any possible persecution under the two laws mentioned above.

Mailing list

This publication is primarily intended for distribution to our clients, friends and
colleagues throughout the world.

Anyone wishing to receive a copy can drop us an e-mail at gfcltdkeyworld.net and we shall include his name on our e-mailing list.

Christmas father,( white beard and all) to hand out the present to all the kids present.

As these parties are held in popular restaurants filled with other patrons, this can be a very hilarious experience for everybody. You may be surprised to learn that this office issues no bill to those present for this entertainment.

Regards to all
Omar Azzopardi

New Telephone Numbering System

Our international friends are to note that MALTACOM has, from this month, introduced the 8-digit system for phone numbers in Malta by the addition of the 21 digits infront of the old numbers.
Anyone wishing to contact our office, please note this change.