A Budget that extends the safety-net for Businesses, more tax incentives should follow to enable new investments
19 October 2020
Budget 2021 The Malta Chamber of SMEs is pleased to see a number of its...
The Legal Obligations on retailers and traders
The laws affecting the sale/dispensing of carrier plastic bags are two:
The VAT Act imposing an 18% VAT rate on the sale of plastic bags. The VAT EU Directive does not allow for VAT exemption of plastic bags so retailers have no option but to charge consumers 18% VAT on top of the cost of the bag, eco-taxation, any customs duty and any margin covering retailers cost of storage and retail service.
The Eco-Contribution Act. As from February the eco-tax on all carrier plastic bags (bags with handle used for the carriage of retail purchases) will be €0.15c. All eco-tax according to the eco-contribution act are the responsibility of traders and producers and not of retailers. There is no exception to this rule and in practice this means that importers and producer impose the eco-contribution on all eco-taxable items, including plastic bags, and the law specifically identifies importers and producers as responsible for the submission of Returns and the payment for all eco-contributions to the Eco-Contribution Authority (VAT Department).
It is inconceivable and illogical for the Eco-Contribution Act to be changed and a separate tax authority system introduced solely for carrier plastic bags. It is even more irrational when the aim of the 15c eco-tax on plastic bags is to effectively wipe out the demand for plastic carrier bags.
2. The VAT act imposes on retailers to itemise on the fiscal receipt separate items included in a sale. Sale of carrier plastic bags will now appear as a separate item on the cash receipt so that customers will know that they have been charge the full price of plastic bags including VAT
3. The Legal Notice setting the regulation for the dispensing of plastic bags will make it illegal for retailers or traders to dispense carrier plastic bags without charge even if retailers are willing to absorb the eco-tax themselves.
4. Traders and producers who commercialise plastic bags will have to register with the Eco-Tax Authority and will be liable to account for all sales of plastic bags
5. Retailers will, when demanded by the authority, submit details including invoices to prove that plastic bags have been purchased by bona-fede traders registered with the tax authority. When retailers cannot provide such information they are liable for breach of registration as suppliers (since they cannot quote supplier reference than they are deemed to be importers themselves) and for non-payment of eco-tax on all plastic bags under their charge. Retailers will therefore also be subject to the resultant penalties if found in breach.
These are obligations at Law established after consultations between Government and all registered stakeholders when eco-contribution and Vat were introduced.
Once the new €0.15c is legally enforced, retailers will sell carrier plastic bags at a price covering cost of bag, eco-tax and any customs duty (if imported from outside EU), retail service charge and VAT. Only the retail service charge will remain with the retailer, all the rest are costs most of which representing taxation. This is a situation not unlike the sale of cigarettes, alcohol and other high taxation items.
Retailers will sell plastic carrier bags the same way they sell black garbage bags and grey bags for separated waste.
From the effective date retailers will no longer distribute plastic bags for free. The only plastic bags that can be distributed feely are light weight, transparent, bags without handles used for wrapping of items such as cheeses, breads, hams, etc. These bags will not be subject to the 15c eco-tax.
The €0.15c eco tax will apply to all other plastic bags irrespective of the quality of the plastic. This is a Government decision and not a GRTU decision. GRTU however agrees with this decision as retailers cannot be expected to distinguish between different types of plastics.
Retailers and suppliers to customers are not obliged to make any changes to their cash registers or to their point of sale software. Retailers are also not obliged to register specifically to be able to sell plastic bags or to submit any specific additional returns to what they do today.
GRTU supports Government's initiative to heavily curtail the use of plastic carrier bags. Retailers recognise that their dispensing of plastic bags ay no charge was creating unnecessary damage to the environment and at a cost which retailers can no longer sustain. GRTU therefore requests retailers to support the new system and avoid at all costs to support and private initiative that will distort the objective of the new 15c eco-tax on plastic bags.
GRTU strongly objects to the irresponsible comments made by the spokesman/ writer for plastic bag manufacturers who has made serious allegations against the retailing community and for the completely erroneous misleading and unfair comments made against GRTU. Today GRTU has written to the commissioner of police requesting him to ask Mr Robet Abela to submit, as it is his duty, any information he has of tax evasion and contraband importation of plastic bags. These are serious allegation which Mr Abela has stated publicly through the media.
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