In terms of Article 75(2) of the VAT Act the Commissioner for Tax and Customs has published guidelines on 8 February 2024 with respect to the application of a 12% reduced rate on such supplies. In applying this reduced rate ‘credit and credit guarantees’ shall mean any credit and credit guarantees the supply of which would be exempt in terms of item 3 of Part Two of the Fifth Schedule to the V AT Act. In addition, the introduction of this reduced rate shall not affect in any way the application of any of the exemptions contained under item 3 of Part Two of the Fifth Schedule to the VAT Act.
Accordingly, the management of credit and credit guarantees by the person granting the credit remains exempt without credit in terms of item 3 of Part Two of the Fifth Schedule to the VAT Act whilst the provision of the same credit and credit guarantees by a person other than the one granting the credit is taxable in Malta at a reduced VAT rate of 12%.
These guidelines shall only apply when assessing the VAT treatment of such supplies from a Maltese VAT perspective taking place in Malta.
It is clarified that the reduced rate of 12% applies where in terms of the Fourth Schedule to the VAT Act the date the tax becomes chargeable on such services falls on or after 1 January 2024.
