Car importers’ plea for derogation from Brexit import duties dismissed by Government

A proposal to negotiate a derogation from the Brexit withdrawal agreement at EU level for Malta to be considered a disadvantaged state has been dismissed by Government, which said that the European Commission “will not be forthcoming on the matter”.

The newly set up Malta Car Importers Association (MCIA) put forward the proposal during a formal meeting with the Minister for Finance and Employment Clyde Caruana and the Minister for Transport and Infrastructure Ian Borg.

The meeting sought to tackle the current issues of added fees that are faced by MCIA Members when importing cars from the United Kingdom due to Brexit.

The industry lobby said that due to the norms in traffic rules inherited from the UK (namely driving on the left-hand side of the road and thus having driver’s positioning on the right-hand side) Malta should negotiate a derogation from the Brexit withdrawal agreement.

It expressed concerns that most of its members, 75 in total, are in dire financial state and require intervention from Government due to imbalance caused in the local market.

In January, industry insiders sounded a warning that operating in the sector could no longer be feasible as documentation fees, VAT and customs duties would raise the price of used cars by up to a third.

This was followed in April by reports that the Maltese car market remains in a state of uncertainty as new charges related to Brexit have made the importation of used cars from the UK impractical and uncompetitive, with consumers facing higher prices on both cars and parts.

However, the proposal for a derogation was dismissed. Even though the executive committee of the association insisted to initiate formal discussion, the position from Government remained unchanged, the association said.

“During the meeting, which was well attended by officials from both Ministries and Departments, alternatives were discussed in relation to Value Added Tax according to the International VAT treaty,” noted the statement.

“Government has agreed that efforts will be done to make sure that a double taxation situation does not occur. In this regard, it was agreed that formal communication will be done from the Government of Malta to the UK Government on the mentioned issue.”

The association added that in view of the recent free trade agreement in force between the EU and the UK as of April 2021, Government has agreed that it will request an opinion on whether rules of origin apply for goods originating from EU countries, sold to the UK and sold back to EU member states.

Should this be the case, the lobby said, according to the Free Trade Agreement with the UK, there would be zero tariffs and zero quotas on goods that comply with the appropriate rules of origin.

With regard to the grants provided by Government on e-vehicles, both Ministers agreed that although there will be no increase in the financial allocation for such measures, measures will be considered to address the current imbalance in the market.

The MCIA said it will be in constant communication with officials from the Ministry for Finance and Employment and the Ministry for Transport and Infrastructure on the above-mentioned matters.