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Malta has the third lowest VAT rate among the EU’s 27 members, according to the latest data published in Brussels.

Giving details of the new applicable VAT rates as from the start of this year across the bloc, a document released by the European Commission shows that, at 18 per cent, Malta still enjoys one of the lowest rates in the EU, almost three percentage points below the average, which stands at 20.9 per cent.

Due to the ongoing financial crisis, many member states had to revise their VAT rates upwards over the past two years. In all, 14 out of the 27 members raised the standard rate by at least a notch, and in places like in Ireland and Hungary even by two percentage points.

According to the Commission, only Cyprus and Luxembourg have a lower VAT rate than Malta. The overwhelming majority of member states, tax consumption at higher rates with Sweden, Denmark and Hungary topping the list.

Malta, Ireland and the UK are the only EU member states that still charge no tax on foodstuffs and pharmaceuticals. This concession had been given to Ireland and the UK many years ago and was successfully negotiated by Malta prior to its accession to the EU in 2004.

In a Green Paper by the Commission last year, it was clearly stated that zero rates, like the ones enjoyed by Malta, should be abolished to lower the risk of distorting competition in the EU.

Malta has always maintained that it would stick to its accession commitments as long as Ireland and the UK retained the same system.

The EU Treaty does not allow any harmonisation of VAT rates across the EU because this is the sole competence of individual member states.

Both the UK and Ireland have already stated that they have no intention of giving up their zero rates on food and medicine.

The lowest standard VAT rate allowed in the EU is 15 per cent.

Source: www.timesofmalta.com