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Malta might reduce VAT imposed on restaurants

  • Категория: News

Fitch Ratings agency awarded Malta A+ stable rating and predicts the growth of GDP up to 5.6% next year, so the government is considering some budget proposals. Mitigation of some consumption taxes might improve the quality of life of the Maltese and attract more tourists to Malta.

The first step will be probably an increase of annual tax refund from 200 to 340 euro. Thus, taxpayers and simultaneously consumers will get an additional cash flow to spend.  Reducing VAT on dining will contribute to the country’s welfare as well. So far, the government is considering a two-year experiment, during which the tax on beverages will decrease to 13% and from 18% to 7% on food. The same practice has been successfully implemented in Greece.

For now, Malta’s dining industry is more expensive than in many European countries, including neighbouring ones. Spain and Italy charge 10%, Poland – 8% (but 23% on all beverages), Netherlands – 6%, Luxembourg – 3%. Surprisingly, despite high taxes imposed on the restaurants, hotels in Malta are subject to only 7% tax for accommodation and meal served.

Moreover, tax relief has a chance to provide access to the restaurants for the low-income families, make Malta more attractive for the tourists, as well as create another important economic effect. At the moment, restaurant owners are facing high rents, high taxes, and low salaries. Thus, tax evasion and employment of immigrants sometimes take place. Tax relief might encourage tax compliance, employment of skilled staff and higher quality of the services. To sum up, if introduced, the experiment has all chances to affect positively the economy of Malta.

Source: maltatoday.com

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