17 November 2004

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VAT derogation on Gozo Channel car tickets never negotiated

By Karl Schembri

Government did not negotiate for a derogation with the European Union that would exempt cars from VAT when commuting between Malta and Gozo.
This explains why the VAT Department is insisting that Gozo Channel begin charging VAT on cars and cargo using the ferry service, even though the government has, so far, decided not to raise the Gozo Channel fares.
Sources told The Malta Financial and Business Times that the VAT exemptions granted by the EU prior to Malta’s membership were only limited to “inter-island passenger transport”. Cars were not included in the exemption.
Questions sent to the VAT Department pertaining to why it was imposing taxes on the company right now and how much such taxation would amount to remained unanswered.
However, Department of Information Director Emanuel Abela said: “Government has no intention of increasing the Gozo Channel fares.”
The news broken by our sister paper MaltaToday about the VAT Department’s request to the ferry company to start paying 18 per cent VAT on the car and drivers’ fares has sent shock waves across the island of Gozo.
Gozo Channel Chairman Maurice Zarb Adami and Parliamentary Secretary Tonio Fenech have both confirmed that discussions over the new VAT surcharge are taking place “at a technical level”.
The company had already announced its plans to raise the car and driver fare from Lm6.25 to Lm6.50 next year, and then to Lm6.75 in 2006. This, however, was announced before the VAT Department requested the company to begin paying VAT.
Over 800,000 cars and cargo vehicles are expected to have travelled between Malta and Gozo by the end of this year.
Gozo Channel is expected to announce the outcome of its ongoing discussions with the VAT Department in the coming days.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
Tel: (356) 21382741-3, 21382745-6 | Fax: (356) 21385075 | E-mail