New tax compliance obligations arise from Circular 2011/1 dated 15 February 2011 which has been issued by the Commissioner of Income Taxes. The circular states that as from 1 April 2011 annual income tax returns for all companies as well as for self-employed individuals with a turnover that exceeds €70,000 that are submitted to the Inland Revenue Department must be accompanied by a Tax Confirmation that is prepared and signed by an independent auditor or tax advisor. This requirement applies for all income tax returns submitted on or after 1 April 2011 regardless of the tax year to which the return relates and from this date, the Inland Revenue Department will not accept the submission of any income tax return if not accompanied by the relevant signed Tax Confirmation.
The Tax Confirmation is a certification given by the taxpayer’s auditor or their tax advisor that the tax computation within an income tax return has been prepared in accordance with the Circulars issued by the Inland Revenue Department. Please note that a false certification by the auditor or tax advisor will lead to a fine of €17.086 and/or up-to 5 years imprisonment.
In addition, from 1 July 2011, all income tax returns for all companies as well as for self-employed individuals with a turnover that exceeds €70,000 for the 2010 tax year and subsequent tax years may only be submitted to the Inland Revenue Department by way of electronic filing using the TAXISNET electronic system. The TAXISNET electronic system will not allow the electronic submission of any income tax return if the Tax Confirmation, which constitutes an integral part of the Income Tax Return, is not duly completed and signed. We will be contacting all clients closer to the time in order to obtain an authorization to register for the TAXISNET electronic system.
Income tax returns for all tax years up to and including 2009 that are submitted on or after 1 April 2011 will continue to be submitted in paper format however the Inland Revenue Department will not accept an income tax return that is not accompanied by the Tax Confirmation. Once the electronic system of the Inland Revenue Department is upgraded to accept such returns electronically, it is expected that the compulsory electronic submission of such returns will also be required.