Record-keeping Obligations for Malta-Registered Companies
In terms of the Companies Act, Chapter 386 of the Laws of Malta, aside from an obligation to keep (i) a register of members; (ii) a register of debentures; (iii) minutes of proceedings of general meetings; and (iv) minutes of proceedings of board meetings, a Maltese company is required to keep accounting records with respect to the following:
(a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;
(b) the assets and liabilities of the company;
(c) if the company’s business involves dealing in goods:
(i) statements of stocks held by the company at the end of each accounting period of the company;
(ii) all statements of stock-takings from which any such statement of stocks has been or is to be prepared; and
(iii) except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased, showing the goods and the buyers and sellers in sufficient detail to enable all these to be identified.
Such records must be sufficient to show and explain the company’s transactions
Such records must be sufficient to show and explain the company’s transactions and must (i) disclose with reasonable accuracy, at any time, the financial position of the company at that time; and (ii) enable the directors to ensure that any balance sheet and profit and loss account prepared by the company complies with the requirements of the Companies Act.
Accounting records are kept, for a minimum period of 10 years, at the registered office of the company or at such other place as the directors think fit, and shall be at all times open to inspection by the officers of the company. In the event that such accounting records are kept at a place outside Malta there must be kept, at a place in Malta, such accounts and returns as will disclose with reasonable accuracy the financial position of the business of the company at intervals not exceeding six months and will enable the company’s balance sheet and profit and loss account to be prepared.
Failure to comply with the above-mentioned obligations exposes every defaulting officer of the company to a fine (multa) of not more than €11,646.87, unless he shows that he acted diligently and that, in the circumstances in which the company’s business was carried on, the default was excusable.
In accordance with the provisions of the Commercial Code, Chapter 13 of the Laws of Malta, every trader must keep trade books together with, by order of date, the original of all letters, invoices and telegrams received by him, and a copy, whether hand-written or type-written, or a press-copy, of all letters, invoices and telegrams forwarded by it for a period of five years to be reckoned, in the case of trade books from the date of the last entry made in each book.
In terms of the provisions of the VAT Act, Chapter 406 of the Laws of Malta, every VAT registered company must keep the following records and documents:
(a) proper accounts and records of its economic activity;
(b) value added tax account;
(c) annual value added tax account;
(d) copies of all tax invoices issued;
(e) all tax invoices received;
(f) any documentation relating to importations and exportations;
(g) copies of all fiscal receipts issued;
(h) all credit notes, debit notes and other documents issued or received which evidence an increase or a decrease in the consideration for any supplies or for importation.
Every VAT-registered company must keep proper and sufficient records of all transactions carried out in the course of any economic activity to enable the date, the value and the nature of such transactions, the tax chargeable thereon and the deductions allowable in respect thereof, for a period of six years from the end of the year to which they relate.
Income Tax Management Act
In terms of the provisions of the Income Tax Management Act, Chapter 372 of the Laws of Malta, every company must keep proper and sufficient records of its income and expenditure so as to enable its income and allowable deductions to be readily ascertained.
The following documents must be retained for a period of not less than nine years from the appropriate transaction date:
(a) proper accounts in respect of (i) all sums of money received or expended and the matters in respect of which the receipt or expenditure takes place; and (ii) all sales, purchases or services rendered, as well as any other transaction, act or operation pertaining to the trade or business;
(b) profit and loss account or equivalent annual statement;
(c) balance sheet.
In terms of Article 9 of the Information to Employees Regulations, Subsidiary Legislation 452.83, every employer must keep a register/s showing the following information, in respect of each employee:
(a) the name, address, sex, a legally valid identification document number and date of birth of the employee;
(b) the occupation of the employee;
(c) the date of commencement of employment;
(d) the nature of the contract of employment namely whether the contract is of an indefinite or of a fixed duration and in the case of fixed term contracts of employment the date of termination of such contract;
(e) the time, paid for at ordinary time rates, during which the employee is employed;
(f) the time, paid for overtime or higher rates, during which the employee is employed;
(g) the periods of daily and weekly rest accorded to the employee;
(h) the total wages paid to the employee each week; and
(i) any change or update in the conditions of the employee’s occupational status.
In the case of employees who are outworkers, or whose wages consist of a share in the profits or of a commission on sales or payments made or received by the employer, employers or the persons giving out work to the outworker, as the case may be, shall keep a register or registers showing:
(a) the name, address, sex, a legally valid identification document number and date of birth;
(b) the date of commencement of the agreement;
(c) the nature of the work;
(d) the rate of wages;
(e) the total amount of wages paid to the employee;
(f) the place or places where the employee ordinarily works if such place is not under the control and management of the employer; and
(g) the hours of work and daily and weekly rest awarded to the employees in so far as the employer is by law required to observe any such conditions of employment.
Every employer shall retain all the registers and records pertaining to an employee for a period of three years subsequent to the date of the relevant record.
Any person contravening the provisions of the afore-mentioned regulations would be guilty of an offence and liable on conviction to a fine of not less than €116.47 and not more than one thousand and €1,164.69.
Duty on Documents and Transfer Act
In accordance with Article 7 of the Duty on Documents and Transfers Act, Chapter 364 of the Laws of Malta, every document mentioned in the said Act must be preserved by the owner thereof for at least four years after the day on which duty thereon has or ought to have been paid, and any person who destroys, mislays or fails to produce any such document before the lapse of the said period shall be liable to the same penalty as if the duty had not been paid.