Government launches €31 million car VAT refund scheme
Government launches seven-year scheme for the refund of VAT paid on the registration of vehicles between 2004 and 2008.
25 January 2014, 12:00am
Jurgen Balzan
Jurgen Balzan
3 min read
The refund is of a portion of VAT that was charged not only on the cost of the car, but also on the registration tax payable on the car.
All persons who purchased a vehicle for personal use between 1 May 2004 and 31 December 2008 will receive an ex gratia payment, the government announced today.
In a press conference held at the transport ministry, three ministers announced the refund scheme which applies to the first licensed owners of vehicles, including motorcycles, in the four-year period.
"This is a government that implements what it pledges and guarantees justice to consumers," justice junior minister Owen Bonnici said.
The refund is of a portion of VAT that was charged not only on the cost of the car, but also on the registration tax payable on the car.
Finance minister Edward Scicluna explained that the refund scheme will cost the government between €25 and €31 million. It was a commitment Labour promised well into the early days of Joseph Muscat's leadership.
"Contrary to the criticism prior to the election that parties were promising heaven on earth, this scheme confirms that the homework we did before the election was reasonable and we will not burn a hole in the national budget," Scicluna said.
He added that the refund, from which an estimated 40,000 owners will benefit, will be spread out over seven years and all vehicles purchased in the four-year period, new and second-hand, will be included in the scheme.
Scicluna added that 60% of beneficiaries will receive between €500 and €1,000, and on average applicants will benefit from a €771 refund. Each applicant will receive the net sum over the seven-year period, with the first instalment being between €10 and €90. Anyone due less than €65 will be paid in full during the first year.
Transport minister Joe Mizzi said the tax was ruled as illegal by the European Commission in 2009, and that the government was doing what the previous administration had failed to do.
Transport Malta will start paying the refunds in April, once the applications are submitted and processed, Mizzi said. The minister added that by February, TM will send a letter to all eligible owners on the address stated on the current ID card, informing them of the amount they are due.
He added that the authority will set up a customer service desk which will handle queries over the refunds.
The scheme applies to first licensed owners of vehicles, irrespective of whether the vehicle is still in their possession when the applicants apply for the grant, or whether the vehicle has been scrapped. Deceased persons are not eligible.
Government vehicles, taxis and other commercial vehicles exceeding 3.5 tonnes do not qualify for the refund. Licensed vehicle dealers or importers do not qualify unless the vehicles were registered and licensed in their personal capacity and intended for their exclusive personal use.
The reported expenditure shall not exceed the amount of value added tax paid by the applicant on the registration tax when the vehicle was initially registered.
In the 2014 Budget, the Labour administration allocated €3.5 million to commence the refund of car registration tax.
Under the previous PN administration, more than 18,000 car owners had started a class actions lawsuit on the initiative of the Labour Party. The party had sought a VAT refund on cars bought prior to registration tax rules being amended in 2009.
Bonnici said that the lawsuit will be dropped once the scheme comes into force.
Jurgen Balzan was a MaltaToday reported from 2011 to 2017.
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ryan abdilla Vat was paid on the registration tax so everyone paid it. It was a tax on tax where you were charge tax and taxed on the tax you paid. That is the N Peee for you.
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@thoni
allura kieku biss ? li hu zgur li se jrodd lil 40 elf ruh il flus li serqulhom il nazzjonalisti . se jqassam miljuni li seta zammhom ghal gvern tieghu li ried, imma iprefera jroddhom lura lil min jappartenu . Allura jhekk qed tinkett ghax se jivvutawlu hu pacenzja ghax il pN minbarra li fallut finanzjarjament huwwa immexxi min purcinell li mhux gol hajt se jdahhalkhom (ghax gonzi ga dahhalkhom gol hajt) imma midfun that l-art.
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The refund is of a portion of VAT that was charged not only on the cost of the car, but also on the registration tax payable on the car purchased between 1 May 2004 and 31 December 2008 - What about prior to joining EU ? For instance, hasn't there also been the same injustice when a new car was purchased during December 2003 ?
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just in time for the MEP's june election!
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Tghid busullotti (it traditur ta malta) jiprova jmur jugzana lil EU jerga halli ma jhallux lil gvern malti jrodd lura dawn il flus li serqilna il PN ? tiskantaw xejn !
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Bomba ohra komplu faqqaw tibzewx fejn huma il hypocriti illum is suq ghal lumi.
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Government that implement what he pledges ..... WELL DONE..... however I cannot understand how people who imported vehicles from Japan are granted to have the Vat refund. Japan is a non EU member thus Vat was never paid in any part of the EU . I learned that the vat is paid once from the ultimate EU individual. Also in the same scenario why people who have bought a new vehicle ,whether imported from an Eu member state or a non EU member are granted for this scheme ? The Vat must be paid in an Eu member state and this was done only in Malta since the ultimate user was in Malta. Can someone pls explain ? 10xs
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Simon "Buzullotti" still hasn't said a word. How come ?
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Dawk lu bidlu l'indrizz kif ser jinstabu? Jistu jergu japlikaw jew ser jircievu l-hlas skond ID card presenti?
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It is ironic that whatever was deemed impossible and fantasy under the previous administration is actually being done by the present government.
First came the utility bills and now the VAT refund on vehicles.
So much for 'Alice in Wonderland' !!!
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Gvern imexxi minn Joseph Muscat huwa gvern tal kelma.
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Prosit .Weghda ohra imwettqa tal PL ! flus li serqilna min halq uliedna il PN jigu irritornati.tiftakru kemm ghajruh giddieb u ma ghandux ragun li Dr.Muscat ? listess bhal tal kontijiet tad dawl u ilma din meta kienu jghidu impossibli jorhsu . Dr.Muscat jara kif se jitfalek flus fil but u Dr.Busuttil jiprova jgerrex l-investiment min xtutna u jasal anke biex jitradixxi lil MALTA.Inhallsuk fl elezzjonijiet ta mEP ibzax XMUN !
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Congratulaions to this goverment to see that they are keeping their promises which were given prior to their election. Well done.
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Owen Bonnici is a parliamentary secretary. So why does Malta Today continue to refer to him as minister?
