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Malta 'lost' €305m in VAT over seven years

Malta has lost a potential €305 million in VAT proceeds between 2000 and 2006, according to a new European Commission study.

In the seven-year period under review, Malta could have raked in €2.48 billion in VAT but managed to collect €2.18 billion.

The study calculates the VAT gap of the EU member states by working out the difference between the theoretical net VAT liability for the economy as a whole and the actual VAT receipts. The shortfall is the result of fraud and unpaid VAT liability due to insolvencies.

Malta's situation is similar to the other EU member states where the disparity in some countries is even higher than the 14 per cent attributed to Malta.

Moreover, the VAT gap varied during the years. It reached its highest peak in 2003, when it soared to 19 per cent of the potential VAT due, a huge leap over the previous year when the smallest gap was registered with four per cent.

Although the study, carried out by a UK firm, is quite comprehensive, the Commission explained that there were still difficulties to get the full picture.

"The theoretical VAT liability is calculated from national accounts data, published by national statistical offices, which are produced for purposes other than calculating a VAT liability," the Commission explained. "Although best efforts were made, it was impossible to capture all the complexities of the VAT system of each member state."

An EU official said that, although the study included some assumptions made by consultants, it still presented a pretty good picture of the potential VAT that member states were still not managing to collect. EU Taxation Commissioner László Kovács said the study confirmed estimates of VAT fraud that were made in the past and stressed the absolute need for the EU and member states to continue their efforts in fighting VAT fraud.

On an EU level, the study comes up with an estimated VAT gap varying between €90 billion and €113 billion in the period 2000-2006.

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Comments

G.Pisani (2 weeks, 3 days ago)
You can't compare Malta to other countries... We are too small so businesses can't make the bulk orders that other businesses example UK make so they don't get a better deal than businesses from the UK or other countries.

How many times you get an official VAT receipt from ebayers? In my case it was rare, you just get a printed paper made in Microsoft word!. I really believe if VAT is lowered prices are lowered thus increasing Maltese buying locally so more revenue to Malta.
Joe Vella (2 weeks, 3 days ago)
@ Alexander Morana

I am quite aware of the point you raised in regards to Canada and the USA. In Canada's terms The VAT was just reduced lately as well. Also,The eastern provinces have reached an agreement with the Federal government to charge a harmonise VAT tax of 15%. As far as the USA, there are many counties ans cities as well that levy some form of a sales tax as well.
lgalea (2 weeks, 3 days ago)
Charles Sammut
You are perfectly correct. This is apart form the membership fee which presently is €153,400 DAILY, all customs duties and levies whioch go to the eu while we pay the customs officers to collect them etc etc
S DEGABRIELE (2 weeks, 3 days ago)
are you saying that






















555


5





ARE SAYING THAT 305 MILLION EUROS WHERE STOLEN BY ANYONE GIVING A SERVICE
IF SO HOW MUCH INCOME TAX HAS BEEN AVIODED .
AND I WHICH TAXES ARE DEDUCTED DIRECTLY FROM MY WAGE PACK LIKE SO MANY OTHERS LIKE ME, HAVE TO CARRY THE BURDEN



Alexander Morana (2 weeks, 3 days ago)
Joe Vella, correction, Canada 6% which is referred as the Federal GST, and then the provinces add their sales tax, which vary from 7% to 8%. Only Alberta does not have a sales tax.
USA does not have a Federal sales tax, only the States have – Michigan – 8%
m. borg (2 weeks, 3 days ago)
At least five years of the seven were served by Dr Gonzi as PM and Minister of finance.

Dr Gonzi you let those millions slip through your "Par idejn sodi".

@martinelli
somebody already mentioned it, that is one of the sources from were a PL government will get its finances, better management of tax gathering and spending.
Nigel Lawrence (2 weeks, 3 days ago)
@G.Pisani

I buy a LOT of stuff from France, UK and Germany, where prices are a great deal cheaper than in Malta (INCLUDING the extra shipping charges). Now, suppose you tell me how I am avoiding VAT and WHY I should shop in Malta.

Joe Vella (2 weeks, 3 days ago)
@ Yolanda Tanti

Do you do your part every time you go shopping and ask for a VAT receipt each time you do?
Joe Vella (2 weeks, 3 days ago)
VAT Rate By Country (Source economywatch.com)

EU Countries:

Denmark 25%, Finland 22%, Germany 19%, France 19.6%, Ireland 21%, Italy 20%, Netherlands 19%, Portugal 20%, Spain 16%, Sweden 25%, United Kingdom 17.5%, Poland 22%.

Non EU Countries:

Argentina 21%, Canada 5%, Croatia 22%, Iceland 24.5%, India 12.5%, Mexico 15%, Russia 18%, People's Republic of China 17%, Uruguay 22%, Switzerland 7.6%, Norway 25%, South Africa 14%

From the above figures one can see that Malta's Vat rate is in-line with other countries and well below many others Countries rate.
David Buttigieg (2 weeks, 3 days ago)
@G Pisani

"Maltese tend to buy from ebay because they are cheaper (And most of the time VAT free!! "
VAT Free?????

You wish!!

If ordering from an EU country then you pay VAT to the country you bought from, otherwise you pay VAT at customs in Malta!
Yolanda Tanti (2 weeks, 3 days ago)
Dear Dr Gonzi - there goes your answer to the perennial question you keep asking the Opposition - "But where shall we get the money from?". With better administration and serious enforcement of VAT payments you could have done without the hefty W & E increases and this country would be much better off. Take my advice (1) start with Gozo as most people there have no idea what VAT is, and (2) clean up the corruption and the cobwebs from the VAT Department.
G.Pisani (2 weeks, 3 days ago)
VAT is the major player in destroying our businesses. Maltese tend to buy from ebay because they are cheaper (And most of the time VAT free!! hence the cheaper price) Our businesses cannot get the best price deals because they cannot order the quantity that other countries order so prices are higher and in addition to that we have to add 18% to the price. A country like ours the VAT rate should be lower 10-15% MAX in order for our businesses to be more competitive. I remember when the government gave a tax refund on computers seeing long queues at computer shops! That tells me that the VAT is the only thing the Maltese keeps buying from abroad. I think lowering the VAT would keep the Maltese buying from Malta and not from abroad, hence more VAT revenue.
D. Xerri (2 weeks, 3 days ago)
One Small Correction its not 305Euro Millions But 315Euro Millions - or have we already forgot that around 10 million or Maybe More were Stolen in the Vat Department Scandal ?
The Government has always succeeded and is Still Succeeding in Alienating people with Gimmicks making us forget the so many negatives and bad happennings in most of his Govt Depts and Results!
Charles Sammut (2 weeks, 3 days ago)
EUR305 million which remained in the pockets of the Maltese and not lost in the financial black hole which is the EU.
U. DAmico (2 weeks, 3 days ago)
The number billion has become quite frequent in recent news. Everyone is quoting billions in our economy and statistics, but on what grounds?

• S: (adj) billion (denoting a quantity consisting of one thousand million items or units in the United States)
• S: (adj) billion (denoting a quantity consisting of one million million items or units in Great Britain)
Are we taking UK billions or US billions?
Peter Bonnici (2 weeks, 3 days ago)
Does anybody know how much of this 305 Million were actually waived through amnesties in these 7 years?

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