Government’s drive to further restrict its deficit will receive a blow from a Lm4 million refund it will pay telecommunications company Go (formerly Maltacom) after the company won an appeal on VAT payments on Friday.
Maltacom had contested a VAT fee it was charged some years ago over international termination charges. The VAT department had charged a fee over the company’s incoming international phone calls, described by analysts as a ‘pre-accession folly’, when the company had an international exchange and enjoyed a monopoly on this service.
The charge continued to be levied until Malta joined the EU in May 2004, levying the statutory penalties and interest against Maltacom for not paying.
Maltacom had wisely decided to pay the exchequer an advance payment, whilst retaining its right to contest the bill before the VAT Appeals Board and the domestic courts.
The finance ministry was paid Lm2.8 million, registering it as government revenue, but Maltacom filed an appeal before the VAT appeals board which it later won.
When the government completed the privatisation of Maltacom, selling it to Dubai firm Tecom, the company filed a court case over the refund it was owed by the State. The ruling, ordering the government to pay some Lm4m in VAT refunds to the company, was confirmed last week in an appeals court.
Go later issued a muted company announcement on its court victory. The windfall will boost its results and add up to its cash hoard, since the company had previously reflected the cost of the alleged VAT bill in its financial statements. The proceeds are therefore pure income for Go.
mvella@mediatoday.com.mt
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