VAT implications of Brexit on Malta : a qualitative study

Abstract

Purpose: This study intends to examine how Brexit impacted Malta from a VAT perspective. It analyses the changes in the VAT treatment that result when the UK is involved and investigates how those impacted had to adapt to such changes. This study aims to identify what local scenarios have emerged or might emerge later on so that those impacted can continue to enjoy the advantages the EU VAT system offers. Design: Primary data was collected from fourteen semi-structured interviews. The majority of the interviewees work in VAT advisory, either in the private or public sector while a few were involved in the running of a business. This provided different perspectives and a more detailed insight on the true effects of the VAT implications of Brexit. Findings: The study shows that the changes in the VAT treatment with respect to trade with the UK resulted into significant cash outflows upon importations, change in the compliance obligations and additional costs. The study also shows that certain businesses had to wait for their suppliers to take action and that not every decision was driven to obtain a beneficial VAT treatment. Conclusion: Malta has significant trading relations with the UK. However, this study perceives that the additional expenses and bureaucracy involved when dealing with the UK will diminish the relationship between Malta and the UK while it may open doors for certain opportunities. Value: A local study targeting this subject matter has never been done. Therefore, this study has addressed this gap in the literature. Moreover, given that VAT is harmonised, this study aims to at least encourage a discussion to improve the bureaucracy on UK imports and encourage a discussion on VAT simplification procedures to facilitate EU exports.