17 March 2004

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Malta Cruise Network launched, tax hurdle to be resolved post-membership

By David Lindsay
Speaking to this newspaper recently Tourism Minister Dr Francis Zammit Dimech made it clear that Malta would await the clout that will come part and parcel to EU membership to resolve the problematic EU tax protocol on the cruise liner industry.
The issue had hit the headlines in mid-January when the Malta Federation of Associations of Travel and Tourism Agents reported the cancellation of 142 regular cruise calls to the Maltese Islands for this year alone, representing some 180,000 passenger/tourists.
The cancellations are the result of a European Union tax protocol, which allows cruise liners to operate their duty-free concessions only if their itinerary includes a port of call outside the EU.
Considering the fact that just over 375,000 cruise liner passengers visited Malta over the first 11 months of 2003, the cancellations would strike a grave blow to the sub-sector, possibly reducing its numbers by as much as half.
Commenting on how government intends to find its way around the stumbling block, Dr Zammit Dimech explained, “We have been presented with an excellent report carried out by consultants of the VISET Consortium on the issue and they are suggesting a two-pronged approach.
“The first segment of that approach would be to examine if any amendments to our own VAT legislation could be carried out that would exempt from VAT products for consumption on board. This would partly alleviate the problem. However, we obviously need to see whether that could be done and not least whether that has been some by some other countries.
“The other side of the approach would be for Malta now to raise that kind of issue once it is part of the decision making process of the EU.
“We do not think it is in the interest of an enlarged EU to have a rule that rigid, which basically implies that all cruise liners operating within EU countries must go through a non-European port of call as opposed to European ports of call.
“An EU with 25 countries as opposed to one of 15 might find that the issue is even more relevant than it was before, not least because you have two new Mediterranean countries joining the EU – Malta and Cyprus.
“We will make our input and of course we also know the EU is ultimately a union where different inputs are made across the same table, there’s equal decision making powers and soon Malta will make a case for itself there as well.”
The previous advantage Malta held as a non-EU member was large and was a key aspect in cruise operators’ choice to make Malta a port of call and was enough to offset Malta’s competitive drawbacks in the sphere such as the high port charges and passenger taxes.
Even worse, FATTA says it appears there would be further cancellations in the pipeline for this year.
The state of affairs has prompted cruise operators to drop Malta for other, higher profile ports in the EU that, while offering less appealing tourist attractions, nevertheless offer lower port charges and passenger taxes.

Malta Cruise Network launched
Just recently launched, the Malta Cruise Network is committed to gathering the local industry in a unified forum with collective interests to develop, deliver, market and promote Malta’s attractiveness for Cruise Tourism.
The network was founded by the major service providers in the industry: the Malta Tourism Authority, VISET plc (Cruise Terminal Operator) and Malta International Airport plc. It is partnered with over 25 local stakeholders, other large service providers and government departments. Partners include the Malta Shipyards, the Ship Agents Association, the Maritime Authority, the Association of Tour Guides and the Malta Hotels and Restaurants Association, all working together to open Malta as a gateway for cruising the Mediterranean.
The first step undertaken by the network is to send a delegation to attend ‘Seatrade’ (the largest cruise and ferry convention in the world) in Miami from 15 to 18 March. The network has taken a 600 square foot stand from where it will promote cruising to and from Malta.
As the heart of the Mediterranean, Malta has 7,000 years of history that has been cultivated around the sea. From the Phoenicians, the Romans, the Knights of St John, the French, to the British – all have brought their ships into Malta’s harbours. The shipping industry is centuries old, with the business of ship supplies to ship repairs being passed on from generation to generation.
In 2003, the island welcomed over 400 cruise ships and 380,000 cruise passengers, as well as 1.2 million traditional tourists. Its location is ideal for taking a cruise to experience everything the Mediterranean has to offer. Being one of the most southern points in Europe, one can enjoy everything the island has to offer all year round.
The Malta Cruise Network has the task of providing effective communication and synergy amongst stakeholders, ensuring a transparent framework for local business to flourish, and ultimately providing the ideal experience for the cruise passenger. The network also has a website: www.maltacruisenetwork.com.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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