The Malta Hotels and Restaurants Association (MHRA) has called on the government to introduce a framework which would make genuine tips and qualifying service-related payments distributed to hospitality workers tax-free, the association said in a statement.

The MHRA said it believes that whether a restaurant applies a service charge, a cover charge, or neither, should remain a commercial decision for the entrepreneur.

Different establishments operate different business models, and that flexibility should be respected, it said.

"What must be guaranteed is full transparency, with customers clearly informed of any applicable charge before placing an order and in line with consumer protection requirements," the statement said.

The MHRA also stressed that service charges and cover charges are not the same thing and should not be confused.

The association is calling on the government to introduce a clear framework whereby genuine tips and qualifying service-related payments distributed to hospitality employees are tax-free.

"Where a charge is specifically represented as being for employees, it should be distributed fairly and transparently to those employees and remain separate from the employer's responsibility to provide proper wages and employment conditions," it said.

The MHRA is urging the government to use the forthcoming Budget process to introduce a simple framework based on three principles: freedom for businesses to determine their commercial model, full transparency for consumers, and tax-free rewards for employees who deliver excellent service.