In the circular to its members, GRTU

director general Vince Farrugia said that thanks to the pressure exerted by the GRTU, government has now accepted that:

• Eco-Tax will not be levied on existing stocks held by traders/producers, as originally insisted upon by government.

• Eco-tax will not be levied on all listed products once they leave customs, as originally proposed by government.

• Eco-tax will not be levied on all listed items at customs on non-EU originating products and no Eco-tax will be levied once non-EU-originating products leave customs, as originally planned under the Act.

• Eco-tax will not be levied on goods held by retailers.

Moreover, Mr Farrugia said, retailers will not be burdened by any additional paperwork or tax collection.

In a summary of what will happen, Mr Farrugia said that the eco-tax will be levied as follows:

• On listed products once the first VAT transaction is effected ie (a) either when a trader or producer sells to wholesalers or retailers, or (b) when traders or producers sell directly to customers.

• Eco-tax is payable by importers/producers (not retailers or wholesalers) on the next VAT return due on all sales transactions of listed items as from 1 September.

• Sales transactions made by wholesalers and retailers to consumers of items invoiced to them prior to 1 September are not subject to eco-tax. Items sold to retailers prior to 1 September therefore remain eco-tax free.

The GRTU members were also told that all items contracted for delivery after 1 September will be subject to eco-tax, irrespective of the price on the sales contract, unless a sales tax invoice has been issued prior to 1 September. Any items not covered by a tax invoice will be subject to eco-tax.

Eco-tax is levied on products that are transacted out of warehouse from traders or producers. Listed products already on sale at retailers are not affected. Sales on the products to retailers prior to the effective date proceed as before.

Initially, the GRTU had asked for a postponement of implementation until January 2005 in order that current stocks could be depleted. But government has agreed that importers and producers will not have to submit a stock-take as at end of August 2004 and pay eco-tax on all listed items on their inventory.

Also, since government has accepted that the eco-tax will not be levied on all listed products immediately they leave Customs, irrespective of sales, GRTU has reconsidered its position.

Therefore, GRTU now considers that the date of implementation is no longer a major stumbling block. However, the chamber still believes that government is rushing unnecessarily to introduce the tax as from 1 September.

Payment of the eco-tax will be made at the end of the VAT tax period due after 1 September 2004 and payment is effected on every VAT payment date.

The VAT department is the authority that will administer the Eco-Contribution Act.

The exact mechanism regarding the operation of the tax is still under discussion. A Technical Commission is being established to discuss the technical aspects of implementation. GRTU has successfully insisted that the Eco-Contribution is considered as a cost which is incorporated into the total price of the product and not invoiced separately. This means that, like excise duty, the trader will add his mark-up after all costs are added and VAT is charged as the last item.

The eco-tax will be refundable only if approved schemes of collection of waste generated by the listed items are in operation. Discussions on these will proceed under the auspices of the proposed Commission. At this stage, eco-tax is to be considered as another non-refundable cost and is charged to consumers.

The terms of reference of the proposed Commission will be published shortly in the Government Gazette.

The Legal Notice will qualify the Articles of the Eco-Contribution Act as they apply to administration, collection of the contribution and other technical aspects and official forms will be issued later by the VAT department. In the meantime, the Act has been published and is available on the GRTU’s website.

The listed items are as per the attached Schedule. The Legal Notice, will, however introduce important changes on certain items:

The published list referred only to electrical appliances and not to gas appliances. The Legal Notice will also indicate gas appliances as being subject to eco-tax. These fall under HS Codes 7321 and 8419.

Those items that fall under HS Codes 851660, 7321 and 8419, and have a weight of less than two kilos, will be exempted from eco-tax.

Batteries will be subject to eco-tax but the tax will not also be levied on separators.

The tax is payable by importers/producers and not retailers when the VAT return is due on all first invoiced transactions on the listed items effected after 1 September and payable with VAT.

All importers/producers have to register, and obligations are similar as under the VAT Act.

GRTU members are advised to make the necessary preparations and to pass on questions, advice or proposals to GRTU by e-mail on [email protected].