VAT exemptions for English language schools could be on the cards, but not any time soon, Tourism Minister Edward Zammit Lewis told the Times of Malta.
“It’s not something we are thinking of implementing right now, but I wouldn’t rule it out. I’m willing to have talks about this and in fact have discussed it with industry players,” he said.
Dr Zammit Lewis was reacting to calls by the Federation of English Language Teaching Organisations (Feltom) for numerous VAT-exemptions to make the local industry more competitive in the global market.
“More favourable VAT exemptions, as exist in other destinations, on tuition and services as well as simplified and more efficient procedures when it comes to issuing of visas can give the sector a much-needed competitive boost,” Feltom chief executive Genevieve Abela said last week.
Dr Zammit Lewis said such a reform would require approval from several other government entities, including the Finance Ministry. The matter had been raised by language schools in the past and he was sure it would remain one of the main items on the industry’s wish list.
Last month, this newspaper had reported that English language schools could be in for a tough summer as a weak sterling and favourable tax rates continued to put the UK, Malta’s main competitor, at an advantage. A spokesman for the federation – an umbrella organisation bringing together language schools teaching English as a foreign language – said that, when compared to the euro, a weak sterling “will encourage agents to send students to the UK as opposed to Malta”.
Ms Abela had insisted tax cuts could help weather the storm. She was speaking during the launch of the 2015 Feltom Industry Report, compiled by Deloitte, which found that language students accounted for about 10 per cent of last year’s tourist expenditure.
The annual report, covering Feltom’s 20 member schools, gives an overview of the €161 million sector’s performance. Ms Abela said lack of consultation with the federation was leading to missed opportunities. “With the exception of the Malta Tourism Authority, Feltom simply isn’t being backed by the authorities. It is evident from the lack of consultation and there needs to be more collaboration,” she said.
Asked about this, Dr Zammit Lewis was quick to describe the EFL sector as “very important”, insisting he consulted with all those involved in the sector.
David Bonnet, a Deloitte representative who conducted a survey in connection with the report, gave a breakdown of English language students’ economic impact on the island.
While there had been no major changes, he said the largest European market, Italy, saw a reduction of more than 2,000 student weeks last year. On the other hand, non-European students were on the increase. Colombian and South Koreans had seen the greatest rise.
There was also a drop among Russian and Libyan student arrivals, attributed to the instability in both countries. Although English language students are often thought of as youngsters, here to soak up the sun, with more time spent in Paceville night clubs than school classrooms, the survey found that, in fact, only a quarter of student weeks involved young visitors.