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Companies servicing the government now able to offset tax bill against money owed

As from Friday 10th May 2019, Companies that offer services to the government started to be allowed to offset payment to one government department against money owed to it by another under a new offsetting scheme.

The new system was something that has been requested for a long time, by MEA, through Budget’s proposals submitted to the government and one which was promised by the previous administration.

Under the new scheme, companies who are owed money by the government for services rendered will be able to use this balance to offset payments, such as VAT or income tax payments owed to the government.

The scheme will only apply to payments greater than €10,000, and it is hoped that it will improve both the government and private sector’s liquidity.

The measure, which was announced in the last budget, came into force on Friday 10th May 2019.

The scheme would be available to companies on a voluntary basis, and will be open to companies, partnerships and those who are self-employed.

Any payments owed to the government will be able to be offset under the scheme.

For an application to be accepted, the government creditor and debtor must be the same legal person, meaning that personal tax bills can’t be offset against payments owed to a company the same person owns.

Applications will be first be vetted with a process of reconciliation carried out before an agreement between the two parties is entered into.

There will also be a cut-off date after an agreement is reached and after which no payments can be affected between the two parties.

Each government department will have an appointed person who will evaluate and process applications.

Here are step by step how one can access information about the scheme:

STEP 1             Access the Ministry of Finance official website:

STEP 2             Scroll down website homepage till you find:  POPULAR TOPICS



STEP 4             Then click on OFFSETTING PROCEDURE where you will be able to download the 4 documents                         listed:

  • Applikazzjoni tal-offset   xlsx
  • Guidance notes   pdf
  • Linji Gwida    pdf
  • Offsetting application form    xlsx


STEP 5             For more information contact OFFSETTING HELPLINE on 25998351


For further information, you can touch base with MEA’s SME Helpdesk via email:, or call on 21222992.


16/05/2019 MEA
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