The Finance Ministry has denied a European Commission claim that Malta's VAT collection mechanism is one of the most inefficient among the EU’s 28 member states.

The Commission said yesterday that according to its studies, in 2012 alone, Malta had the potential to raise an additional €241 million from VAT which, however, were lost.

But the Finance Ministry in a statement today said Malta’s VAT mechanism was actually one of the most efficient among the EU’s 28 member states.

"While the Commission estimates some €241 million were lost to tax evasion in 2012, the Ministry’s own estimates point to a loss of €34 million in 2012, and less than €11 million in 2013."

It said the reason for the large discrepancy was that, from this year’s report for 2012, the Commission as included all exported services supplied by the online gaming industry as non-recoverable VAT, while in practice, this industry is, up to now, exempted from charging VAT. The Ministry will be communicating this clarification to the European Commission.

The ministry said Malta should actually be at the top end of the list among the most efficient collectors of VAT. In 2013, Malta collected 8.1 percent of GDP in VAT revenues, a record percentage, even though VAT rates remained stable at 18 percent.

"This high level performance does not mean that tax evasion does not exist. In fact, various administrative and regulatory measures are being introduced so that tax evasion is minimised further," the ministry added.