Malta’s big cab players owe millions in unpaid VAT

A number of Malta’s big players in the cab industry collectively owe millions to the taxman in unpaid VAT dating back years, MaltaToday has learnt. 

Sources told MaltaToday that a tax investigation into the controversial sector revealed over €3 million in taxes had been evaded by just two companies – WT Global and TXGO, both of which are major players. 

This newspaper understands that authorities have evaluated the size of operators’ fleets, as well as information obtained from ride-hailing platforms, which provide a clear picture of operators’ earnings. 

WT Global – Malta’s largest cab company – has been in the limelight since MaltaToday revealed the company’s suspicious accounts, showing how its revenue increased by almost 500% in just one year. 

MaltaToday had reported last year that WT Global’s director, Walid Ouhida was summoned by tax authorities in February 2024. 

This would typically be the case for persons from whom the tax administration requests documents for the carrying out of tax audits or to notify with a tax assessment. 

The company boasts a rapidly growing 309-cab fleet, raising eyebrows among many in the cab sector who, for years, questioned how a company could grow its fleet to such an extent while simultaneously acquiring garaging facilities necessary to comply with the law. 

In fact, WT Global was not in accordance with the law, as last January, Transport Malta revoked its operating licence due to false declarations regarding garaging facilities made to the authority. 

Similarly, TXGO also had its operating licence revoked in January. As of last November, TXGO operated 27 vehicles. 

The two companies have both appealed the revocation of their licences and have been allowed by the court to continue operating pending the conclusion of their appeal. 

Neither of the companies responded to MaltaToday when asked to explain their undeclared taxes. 

Tax rules for the cab sector will change in the coming years 

The platform economy, which encompasses the local ride-hailing sector, among others, is part of an EU initiative to reform and modernise VAT collection. 

In a 2022 proposal by the European Commission, the current VAT system was flagged for being outdated and unable to keep up with modern realities such as the gig economy, which has flourished in the digital age. 

This has resulted in flawed VAT collection and control, excessive burdens and compliance costs for businesses, and significant revenue losses due to the VAT gap. In 2020, the VAT gap, which is the difference between the expected VAT revenue and the amount actually collected, was estimated at €93 billion. 

The Commission’s proposal aims to update VAT rules for the platform economy. It seeks to clarify the rules regarding the place of supply for transactions involving platforms and strengthen the role of platforms in VAT collection.  

The proposal introduces a "deemed supplier" model, making platforms responsible for accounting for VAT on the underlying supply when the supplier fails to charge VAT. 

Last November, EU member states unanimously agreed on the proposal, paving the way for its implementation. The timeline for the implementation process is set to start in 2025 and end in 2030.