Obligations of service providers under a contract for
service.
1. I have been engaged under a contract
for service with the Institute for Education. What is required by me to fulfill
obligations concerning, paperwork especially regarding income tax and vat
matters?
Engagement with the Institute, on contracts for service are
on a part-time self-employed basis which imply the following:
· Contractee requires to register with Jobsplus Corporation as
a part-time self-employed person unless he is already registered.
· Regarding income tax no tax will be deducted at source and
contractee is required to take care of taxation matters himself. In this regard
it may be beneficial to the contractee, depending on his personal
circumstances, to use the TA 22 form to pay tax at 15% annually by the end of
April of each following year.
· Regarding VAT, in accordance with the Fifth schedule, Part
two, Item 12(3) of the VAT Act, tuition given privately by teachers
acting in an independent capacity in subjects normally taught in the course of
education provided by a school or university is considered as an exempt
without credit service. Persons exclusively engaged in providing exempt without
credit services are not required to register under the VAT Act and consequently
will not be required to furnish a fiscal receipt to the Institute upon
receiving payment. However, these persons are required to provide a reasoned
declaration that they are not VAT registered. However, persons who are already
VAT registered, will still be required to furnish the Institute with a fiscal
receipt upon payment, even though the service rendered is exempt without
credit.
2. What is regarded as tuition by the VAT authorities?
The Institute for Education has made formal
enquiries with the VAT department and has obtained written confirmation that services
listed below considered to be an integral part of the tuition process are also
to be considered as exempt without credit in line with the
Fifth schedule, Part two, Item 12(3) of the VAT Act.
List of exempt without credit
services:
Assessments including
dissertation assessments, proposal assessors, internal verification, dissertation
supervision and co-supervision, teaching practice visitor/practice placement
visitor, in-class co-teaching , tutorial, recognition of prior learning,
micro-placement visitors, revision of paper.
3. What should I do if the services to
be rendered under the contract for service are not exempt without credit?
If the services being rendered by you
in an independent capacity (self-employed) are not considered as exempt without
credit, VAT registration will be required and there is also the requirement to
furnish the Institute with a fiscal receipt upon receiving payment.
Further VAT registration may differ
depending on the personal attributes of the contractee;
- it may be an Article 10 registration which implies
charging output VAT, claiming back input VAT and submission of quarterly
VAT returns generally with payments
- it may be an Article 11 registration, commonly
referred as registration as an exempt person, which implies no obligation
to charge output VAT, no right to claim back input VAT and submission of
annual VAT declarations with no payments
- Article 11 registration is restricted to Maltese
established persons who do not exceed the small undertakings thresholds
as follows:
The economic activity of a person registered under article 11
continues to qualify as a small undertaking as long as the turnover of
that person for the relevant period does not exceed the Entry Threshold.
This information has been provided for guidance purposes only. It is
always advisable to seek advice on these matters from competent authorities and
specialised professionals, to ensure appropriate treatment according to
personal circumstances.