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21 November 2023
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GRTU met Hon Minister Edward Scicluna to discuss its concerns in relation to the new excise duty imposed on tyres as per Budget 2015.
Prior to the meeting GRTU analysed how the addition of the excise would impact different types of operators and the impact was indeed significant:
1. Large tyre importers
GRTU estimated that a company importing large commercial tyres on a regular basis (6 times a year) would have normally paid around €7K in taxes (Eco Tax and VAT) a year, while with the new Excise tax they would pay around €70K a year in taxes (excise and VAT on excise).
2. Freight forwarders
A large enterprise in this sector would change around 300 tyres a year. Up to the end of 2014 the enterprise would have paid an estimate of €1.6K in taxes (Eco Tax and VAT) while with the new system the tax element would increase to €17K (Excise + VAT).
GRTU argued that the increases on users of large tyres were too hefty and would significantly impact their competitiveness because it will increase their running costs. In addition the excise will also decrease the competitiveness of importers because it will be cheaper to change tyres outside Malta. As such GRTU suggested that the Ministry would cap the maximum amount of Excise that could be due on large tyres.
Another aspect raised by the GRTU was that whereas with the previous system eco tax was paid only once the product is sold, meaning first it is recuperated and then it is paid after, with excise, the payment is due on import. As a mitigating proposal GRTU suggested that importers would be given a longer credit term.
The Ministry accepted GRTU’s arguments and its proposals, agreeing to introduce a capping of tyres over 35kg and it also agreed to a credit term of 3 months. GRTU estimates that these changes will reduce the excise duty burden on large tyre importers by a minimum of 50%.
In addition GRTU emphasised with the Ministry that the excise duty will be even more harmful if enforcement is not effective and GRTU therefore asked for this to be beefed up. As such it suggested that the scanner would be moved on a regular basis to other areas through which importation of goods occur. This was also a proposal the Ministry found acceptable.
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