The Island Car Dealers Association has warned that there is rampant tax evasion in the sale of used cars, as these are being sold by dealers without charging VAT.
“According to legislation, if you sell more than seven cars a year, you need to have a trading licence. But the reality is that with such bargains to be picked up overseas, a wide variety of businessmen from furniture importers to food wholesalers have decided to start selling cars as a sideline – but they bring the cars in as if they were for their personal use or they bring 10-11 vehicles in on transporters and claim they are just the shippers.
“But then they sell them on without charging VAT, competing unfairly with used-car dealers,” association president Chris Sammut said.
The extent of the abuse can be seen by doing a quick search on Maltese classified websites. Mr Sammut pointed out that the abuse should be easy to verify as the cars’ number plates are clearly visible and Transport Malta should be able to check the importation history and track the sales.
“And when a transporter comes in to Malta all the details should be taken and followed up,” he said.
The ICDA has a suggestion, which is unlikely to go down very well with the authorities: a different registration rate for official dealers and individuals.
The Business Observer on July 3 reported that 41 per cent of car purchasers rejected both new and used-car dealers, feeling that they were getting a better deal by going direct. The new car dealers believe the best way to ensure a level playing field would be to remove the registration tax completely.
The ICDA was set up two years ago. It represents around 60 dealers.