MHRA calls for lower VAT on restaurant services

The Malta Hotels and Restaurants Association has invited the government to embark on discussions to reduce the VAT rate on restaurant services.

The association's call followed an agreement reached at the ECOFIN Council of Ministers meeting allowing member states the option to apply a reduced VAT rate to restaurant services on the basis that these were locally-supplied and did not create significant distortion of competition on the internal market.

This agreement, the MHRA said, came at an extremely timely moment when economic operators and consumers required fiscal relief. Restaurateurs needed to be better able to meet their tighter cost margins while consumers needed to maintain acceptable levels of disposable income.

It said discussions should seek to identify the best way to implement a reduced VAT rate whilst also putting into place the necessary regulatory oversight guaranteeing that overall pricing levels at local restaurants were cutback in proportionate terms to the fiscal reduction.

A reduction in the local VAT rate applied in restaurants would significantly boost consumer demand making eating out a more attractive proposition.

Lower VAT rates in restaurants would also consequently have a positive spill-over effect through increased employment opportunities in the local catering and hospitality sectors. This would translate into greater income tax and social security receipts improving government revenue, the MHRA said.