News | Sunday, 26 April 2009

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VAT charged on vaccines, despite EU exemption

James Debono
The government is charging a reduced 5% VAT rate on medical vaccines like those against meningitis and cervical cancer, despite an exemption on VAT on medicines granted to Malta before EU accession.
Both vaccines are not provided for free by the national health service.
A spokesperson for the finance ministry claims vaccines fall under a different classification to medicines. “Unlike other medicines, vaccines are not VAT free because they fall under another a different classification.”
The spokesperson said medicines falling under classification HS 30.02 – such as vaccines – are subject to 5% VAT.
But MaltaToday has confirmed that Cyprus, which joined the EU at the same time as Malta, applies 0% VAT rate on “pharmaceutical products, medicines and vaccines,” including those falling under the classification referred to by the ministry.
On the other hand Malta’s exemption applies to supplies of prescribed pharmaceuticals and medicines.
The ministry however said Malta had requested the Commission to exempt vaccines from VAT in the pre-accession negotiations, while those selling them would be refunded the VAT incurred in their importation. But the request was not accepted.
“The imposition of VAT on vaccines results from pre-accession negotiations when Malta was requested to align itself with similar exemptions granted to other member states,” the spokesperson said.
A spokesperson for the European Commission insisted that no VAT should be charged on vaccines sold in Malta.
When asked whether VAT should be charged on vaccines sold by private pharmacies in Malta, the Commission spokesperson said: “Malta has a derogation to apply zero rates on pharmaceuticals. The EU VAT Directive fixes a zero rate on the supply of pharmaceutical goods without making a distinction between the suppliers of those goods. Vaccines against cervical cancer and meningitis bought from private pharmacies would therefore be subject to a zero rate in Malta.”
The issue of VAT on vaccines was raised in parliament by Opposition leader Joseph Muscat last week, who asked finance minister Tonio Fenech whether it was the government’s decision to impose VAT on medicines and whether Malta had requested to exempt vaccines from VAT.
Asked the same question by Muscat, social policy minster John Dalli replied that Maltese law made no distinction between vaccines and other medical products.

jdebono@mediatoday.com.mt

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