The VAT levied on vaccines is a decision of the government as, according to a derogation that Malta obtained on accession, the country can choose not to charge the tax, the European Commission has said.
The issue was raised recently at the European Parliament by Labour MEP Glenn Bedingfield and repeated a few days ago by Labour leader Joseph Muscat who argued that vaccines, which are charged a minimum five per cent VAT, should also be zero rated.
Fielding a parliamentary question by Mr Bedingfield, Taxation Commissioner Laszlo Kovacs confirmed that Malta has the right not to charge VAT on vaccines.
"Since vaccines are pharmaceutical products the Maltese government can choose to apply a zero rate without the need to obtain any relevant authorisation from the EU," Commissioner Kovacs said.
When Dr Muscat raised the issue, the Parliamentary Secretary for Health Joe Cassar had insisted that despite obtaining a derogation on medicines there were certain requests that the EU would not budge on during the pre-accession discussions in 2003. One of these was VAT on vaccines, he said.
"It is very strange that Dr Muscat decided to bring up this issue now, when he was an MEP for almost four years," Dr Cassar said. Dr Muscat was using a sensitive issue like health as a political ploy, he added.
When contacted yesterday, Dr Cassar said he was given the information by the Health Department, adding that the issue was later clarified by the Finance Ministry.
In fact, in a statement released on Sunday, the Ministry said vaccines could be VAT free and said that it was currently revising the list of medicines to be included in the zero rated regime.
Effectively, the Commissioner said that the decision on what types of medicines are to be excluded from VAT is to be taken by the Maltese government.
Upon its accession to the EU, Malta had managed to negotiate a special derogation so that until the end of 2010 all medicinal and food products will not be charged VAT. Following intense negotiations by the Finance Ministry last year, Malta managed to transform this temporary derogation to a permanent one.
All the other EU member states except the UK and Ireland currently impose a minimum five per cent VAT on food and medicinal products.