Finance Minister Edward Scicluna has announced an increase in the maximum level of sales on which VAT is not charged.

The threshold will rise from €14,000 to €20,000 worth of sales, and persons paying below that level could opt not to pay VAT.

This measure is aimed at small-scale workers, he said, such as retirees who still work a few hours each week. He said that when forcing small earners into the VAT machine, it creates some panic.

The minister explained that when VAT was introduced in 1995, it was criticised for not taking small-time workers into consideration.

He said that this latest move does not mean that such people will not pay VAT, as, for example, they would still pay VAT on supplies they purchase etc.

He said that government had to request EU permission for such a move.

Currently, 15,600 people are eligible for the exemption earning below the €14,000 limit.

Photo Alenka Falzon