Issue link: https://maltatoday.uberflip.com/i/1544097
8 maltatoday | SUNDAY • 29 MARCH 2026 NEWS CONTINUES FROM PAGE 1 Either way, he said, the meas- ure would be to an extent, self-fi- nancing. While the government would lose out on VAT revenue by lowering the rate, he said this reduction could be offset by in- creased income tax receipts from those same establishments that would hopefully see higher profits because of the VAT re- duction. But De Marco pointed out that VAT rates are inconsistent across different types of catering establishments. While food served in stan- dalone restaurants is charged with the standard VAT rate of 18%, the same meal served in a hotel is subject to a 7% rate. Meanwhile, ready-to-eat food sold in supermarkets is charged at zero per cent. De Marco said this creates an unlevel playing field in the sector. De Marco also said this meas- ure would make Malta more competitive when compared to other Mediterranean tourist destinations, where restaurants tend to charge VAT at below the standard rate. De Marco also recalled the words of Finance Minister Clyde Caruana, who had once claimed that the average restaurant pays only around €4,500 in annual tax. He said this means either most food operations are barely viable or the tax authority's grip on declared income is still weak. Therefore, increased efforts to strengthen tax collection in this sector could also help finance the VAT proposal, De Marco said. The PN has long been propos- ing a VAT cut for restaurants and kiosks, but it was when Op- position Leader Alex Borg men- tioned it a couple of weeks ago that people took a renewed in- terest in the measure. The Association of Catering Establishments welcomed the proposal and said that any re- form in the sector will need co- ordination with fiscal authorities and a broader review of licens- ing, compliance and operational structures. However, the finance minister was less welcoming of the pro- posal. He said it would cost the government around €140 mil- lion, which was the exact same price of the government's tax cut in the 2024 budget. Nonetheless, last year, when asked about re- ducing the VAT for restaurants, Caruana had suggested such a measure would result in a de- crease of €80 million. VAT rates are inconsistent across different types of catering establishments CONTINUES FROM PAGE 1 The foundation issued four separate tenders last year seek- ing offers from private compa- nies interested in designing and building the respective sites. At the time, the MDA had warned the scheme would give poten- tial tender winners an advantage since they would pay no premi- um for the land. Similar concerns were raised by Nationalist Party MP Albert Buttigieg and ADPD Deputy Chairperson Carmel Ca- copardo. According to the foundation's website, three of the four ten- ders—Kirkop, St Julian's and Fgura—are currently at evalu- ation stage. The tender for the Marsaskala site had a submission deadline for 6 March 2026. In its letter to the European Commission, the MDA said its concerns related to "regulatory, administrative, and potentially financial measures that appear to grant preferential treatment to certain operators or devel- opments, thereby placing other market participants at a competi- tive disadvantage". The lobby group said that these measures "may constitute State aid that has not been notified to or approved by the European Commission". Brussels was asked to assess the compatibility of the affordable housing measures with EU state aid rules, determine whether these measures constitute un- lawful and incompatible state aid, open a preliminary investigation and take measures deemed nec- essary to restore fair competition. The letter signed by Mamo TCV Advocates was copied to Deputy Prime Minister Ian Borg, Housing Parliamentary Secretary Andy Ellul and Finance Minister Clyde Caruana. But the MDA's unprecedented action caused political and indus- try shockwaves. On Friday, developers Anton Camilleri, known as Tal-Franċiż, Pio Vassallo and association sec- retary-general Paul Attard, re- signed from the MDA. Industry sources privy to the situation told MaltaToday that Camilleri and Vassallo were among the tenderers for the af- fordable housing projects and were miffed by the MDA's re- quest for a Brussels investigation. Camilleri is a major developer with big plans for the Villa Ro- sa site in St George's Bay, Pace- ville. However, Camilleri was also bidding to buy out MIDI plc on the Manoel Island project before government decided to step in and have the island returned to public ownership. The resignations have fractured the development lobby's tran- quillity, which in turn is cause for political concern. "We have a situation where the government through its founda- tion is going to skew the market in favour of a select group of de- velopers at the expense of others, who have invested millions," an industry source, who preferred to remain anonymous, said. For Prime Minister Robert Ab- ela, the MDA's action is a spoke in the wheel ahead of an impend- ing general election. The Brussels probe could derail what could have been a flagship housing project but more significantly it creates a sense of unease within the construction sector, which the Labour Party wants to keep on its side. "Whichever way you look at it, this is bad news for the administration and it even sends the political message that developers will not necessarily kow-tow in a situa- tion where they feel a few are put at an advantage over others," a source close to government said. Request for Brussels investigation led to resignations from MDA, sent shockwaves in government (From left to right) Developers Anton Camilleri, former MDA Secretary- general Paul Attard and Pio Vassallo tendered their resignations from the MDA in what is believed to be a reaction to the association's request for Brussels to probe government's affordable housing scheme