A pre-Covid agreement with the authorities to install scanners at the port in Valletta to check vehicles arriving from Sicily never materialised, the Malta Chamber of SMEs CEO Abigail Agius Mamo told The Malta Independent on Sunday.
“We had formulated this agreement after we (the SME Chamber) received reports from a number of Maltese businesses in a particular sector about tax evasion on certain materials coming from Sicily,” she said.
Customs carried out an investigation on the importation of such materials and found “a lot” of tax evasion, under-declaration and non-declaration, she said.
Following this exercise “we pushed Customs to take action and an agreement was reached for a scanner to be placed where goods arrive by sea from Sicily”.
Upon repeated follow-ups with the relevant authorities, the Chamber of SMEs had been informed that there was an issue with the functionality of the scanners available and therefore there were not enough functioning scanners available to place at the Valletta port.
The SME Chamber CEO said that “foreign operators manage to evade taxes completely when they sell directly to Maltese consumers. They do not pay VAT and excise duty where this is due. That is the main way they undercut Maltese businesses, by competing unfairly. Goods sent to Malta are listed as exports when in reality they are being sold directly to consumers and the tax is not paid in either country”.
The way the scanner would work, and should have worked, is that merchandise vehicles would drive through the scanner, without any disruption, thus enabling a verification process to take place.
“Businesses have a stipulated timeframe by when they should declare any dues and unfortunately, there is no real verification that can take place to ensure that what is entering the Maltese market is following the appropriate procedure,” she said.
Early February 2015, Agius Mamo had expressed concern about the mechanism of items being brought from Sicily and sold in Malta. She had also confirmed that the hardest hit sectors in this trade were building industry suppliers, the furniture industry, pool servicing, IT equipment and beverage importation. "It's quite a wide range and I can't say there is a sector that is not affected," she had explained.
Agius Mamo said that the fact that people are going to Sicily to buy things is not something new, as it is something which has been happening for quite a number of years now.
“Obviously it affects Maltese businesses, but there is nothing much to do about it when this is done fairly… apart from trying to compete,” she said.
The Chamber of SMEs believes there should be more enforcement on the matter.
When speaking with the authorities about acting on tax evasion in such situations, the Chamber was told that importing goods from Sicily to Malta is like bringing stuff from Gozo, even given that Malta does not form part of Italy.
Although Sicily is in the EU, according to EU law, when there is suspicion and evidence that there is tax evasion, the authorities must carry out correcting actions,” she said.
The Chamber had also proposed that the authorities carry out random checks, so they wouldn’t need to inspect every single trailer that comes from Sicily.
Agius Mamo said that such random checks would ascertain a better understanding of what is coming in from Sicily.
“I dont think the local authorities even know all that is coming over from Sicily.”
She added that since VAT is part of the EU fiscal system, one must ensure that it is always paid when it is a business to consumer transaction. Apart from that, there are also national taxes such as the excise duty (SISA). “Government must ensure that taxes are paid.”