Category: Archive – 2009

Since Minister Gatt's first presentation of the revised utility tariffs to MCESD back in October GRTU has consistently put pressure throughout to safeguard the interests of its members and placed a major claim against discrimination.

The major claim of GRTU in its submissions to MRA was that the tariffs structure discriminated against small and medium enterprises. The tariffs carried a different tariff structure, one for selected large enterprises and one for all enterprises with a gross discrimination against smaller businesses.

After several negotiations and a positive response to our claim GRTU was certain that Government would see sense and uphold our request, however, following the intervention of the Chamber of Commerce, Federation of Industry, MHRA and trade unions, GRTU was surprised when the discriminative mechanism against smaller businesses was reinforced.

The new tariffs in fact were introduced with a tougher dose on SMEs than that proposed in October. These unjustified and discriminative tariffs formed the basis of the Legal Notice and this discrimination is today reflected in the electricity bills smaller businesses are receiving.

When MRA requested new submissions for the review of the electricity tariffs GRTU was the only SME representative body that presented concrete and quantified proposals based primarily on the renewal of discrimination against SMEs.

GRTU now expects MRA to assess correctly the movements in the prices of petroleum products including fuel oil, gas fuel and the changes in the new tariff regime that will be effective as from April. GRTU now also expects MRA to propose advantageous terms incorporated in the new tariff structure to compensate for the additional burdens SMEs had to carry under the electricity tariffs effective from 1st October 2008.

The compensation must reflect the loss suffered by SMEs resulting from the imposition of the objectionable 4c3 suffered under the current tariffs, which charge was not directly related to the actual consumption made by SMEs but reflected instead a subsidy that smaller firms were forced to give to cover the consumption of the selected few larger enterprises that benefited from a reduced tariff rate in comparison to smaller businesses.

GRTU today is satisfied that in the new proposals, made by Hon Minister Austin Gatt on behalf of MITC and Enemalta, GRTU's claim to remove the discriminatory element between SMEs and few larger enterprises that benefited from favourable rates has been eliminated. The new proposed tariff structure reduces the tariffs applicable to SMEs by the full amount that was the basis of the complaint of GRTU.

This is only a great victory for GRTU but for all of us who believe that EU Directives beneficial to smaller enterprises should be adhered to. The EU electricity Directive clearly upholds the right of SMEs not to suffer any form of discrimination as a result of in-built cross-subsidisation in electricity tariffs.

GRTU's battle for a more acceptable electricity tariff regime continues. This success effectively means a reduction of around 29% to 21%.

Prime Minister Dr Lawrence Gonzi is correct to state that the top priority of all Government action is work. Jobs don't grow on trees. It is hard to establish an enterprise, whether large, medium or small, and during a period of economic recession it is extremely important that we do not allow any of our enterprises to go under. To be honest I am not convinced that this conviction is paramount in an equal manner in the minds of all Ministers, senior bureaucrats and Chairmen of all corporations and state authorities. I wish it were. My life as Director General of GRTU would be much easier. It would be much easier for me to convince all these decision makers to change certain plans and decisions. It is worthwhile therefore to explain what lies behind a "jobs first" strategy.

The economy is not an end in itself. The European project has always had a social dimension. The goals of great European achievements like the Single Market and the single currency had always the added value for the citizens by stimulating the economic development and creating more employment in an increasingly globalizing world.

The creation of new jobs is a core priority. Only if we manage to reach a high level of employment, will we be able to safeguard prosperity for everyone and assure the future of our social security systems in the context of demographic change. It is our duty to care for good working conditions and for reliable social security systems. Under current economic strains what has been achieved so far is under treat and what Malta is succeeding to do is remarkable.

We are on a case by case basis succeeding to support leading enterprises to maintain their level of employment and the current level of conditions even though at a heavy expense. It would be easier for us to be able to achieve greater success if all of us out our efforts together. It is not correct to instigate people to protest on issues of minor importance when all our efforts should be geared towards one important growth: job support and job creation.

No-one should be held back and no-one should be left behind. We need to invest in education, life-long learning and employment to create opportunities for all, including employees, youth, newcomers and partially disabled persons. Everybody is entitled to income, work and an old age pension. This becomes increasingly a challenge as rising prices for food and energy particularly affect people with lower incomes as well as the unemployed. The social security systems should on the one hand help those in need by applying the principle of solidarity and on the other hand have a stimulating element for unemployed to enter the labour market.

In order to promote employment, we need also to focus on establishing direct and concrete measures which will encourage the creation of new business. This by easing the administrative burden on start-ups, simplifying the regulatory environment, reducing the general level of taxation, improving access for new enterprises to sources of finance, particularly risk capital, and promoting a more entrepreneurial culture.

 

Reconciliation of Family and Work Life

At present European citizens face major difficulties in reconciling their work and family life. For many parents, especially for women, finding the balance between high qualification, career success and their wish to raise a family, is very difficult to achieve. Family friendly policies that improve flexibility for working parents have to be introduced and our educational systems and work patterns have to be more flexible in order to support them.

The importance of supporting family life should be prioritized in policies such as education, employment, transport, health and inclusion of young people. Furthermore, better child care and housing policies have to be provided and parental leave for both working parents has to be encouraged.

Responsibilities need to be shared between the state and private industry. It should be our priority to establish more children-friendly societies by: improving the availability and access to childcare facilities, creating better financial conditions for young couples (through more effective family welfare allocations), family-friendly fiscal policies, and the reduction of social security contributions for parents with disabled children.

The private sector on the other hand can help by supporting young people's entrepreneurship and provide more flexibility with respect to working time, look for new ways in the career planning of its workers, especially of female workers, and guarantee sufficient child care facilities within the working place.

The Elderly

Elderly workers are also particularly affected by either unemployment or labour market inactivity. A greater participation of these categories in the labour market should be encouraged. The participation of people aged over 65 in the economic and social fabric must be promoted as an opportunity and not presented as a constraint. Flexible retirement must be encouraged and those who are still fit and willing to work should do so even after their official retirement age.

Education is a key response. Higher levels of education are associated with significantly higher employment rates and much lower unemployment rates. Life-long learning is especially important as early formal education may not suffice on its own to meet the challenges posed by technological change and globalization. We also need to facilitate training and learning of IT skills and computer knowledge for people of all ages.

Employment Support

It is all employment related. Once jobs a threatened the whole structure falls to pieces. That is why I find it extremely hard to understand why the labour party continues to fail to prioritise during such an economic situation job maintenance and creation in Malta. It is so easy to grumble, protest and fail to prevent alternative solutions. Ensuring that jobs are safeguarded should be the priority of all of us; employers associations, trade unions, civil society NGOs and Government. Investing up to 1.5% to 2% of GDP in sustaining those firms that may in the short term fail to live through the recession, is not only acceptable, but essential.

Firms will not go through the recession without support. Whether support through fiscal incentives, cash flow support or direct financial assistance, the whole structure must be supportive of enterprise. We cannot really afford to waste out time and energy arguing about minor issues. Malta is too small an economy to live through a period of heavy job losses. Our social fabric is too closely knitted not to have serious repercussions all around. A jobs sustaining action programme is a must and it is our duty to keep supporting all those who clearly see this as the nation's top most priority.

 

 

The major claim of GRTU in its submissions to MRA, that the previous tariffs structure discriminated against small and medium enterprises, has now been met according to the new tariffs proposed by Enemalta. The framework on which the proposed new tariff regime is based no longer carries a different tariff structure, one for selected large enterprises and one for all enterprises with a gross discrimination against smaller businesses. The new proposed tariff structure also reduces further the tariffs for heavy consumers in the commercial and catering sectors. The new proposed tariff structure reduces the tariffs applicable to SMEs by the full amount that was the basis of the complaint of GRTU. The new proposed tariffs represent for GRTU members a reduction of around 29% to 21%.

 

This reduction is expected to come into force from the effective date of the new tariff structure. GRTU now expects MRA to approve a tariff structure which will reflect the loss suffered by SMEs resulting from the imposition of the objectionable 4c3 suffered under the current tariffs, which charge was not directly related to the actual consumption made by SMEs but reflected instead a subsidy that smaller firms were forced to give to cover the consumption of the selected few larger enterprises that benefited from a reduced tariff rate in comparison to smaller businesses.

 

GRTU is not satisfied that the new tariffs proposed by Enemalta correspond faithfully to the prices of fuel and gas oil reigning in the market since September 2008. GRTU expects the Public Regulator, MRA, to publish its independent fuel market analysis to the satisfaction of residential and non-residential Enemalta consumers. GRTU also expects MRA to approve a tariff structure that reflects the economic impact on enterprises within the framework of the current adverse economic situation.

 

GRTU will be publishing a detailed analysis of the proposed tariffs in the coming days.

COM (2009) 21 Proposal for a Directive on the common system of value added tax as regards the rules on invoicing. The following measures are being proposed:

simplifying the rules on the chargeability to tax for intra-Community supplies by creating a single date on which the tax becomes chargeable;

changing the rules on the right of deduction (either by applying equal treatment between the requirements of the supplier to issue and invoice and the customer to hold an invoice in order to exercise the right to deduction or extending an existing optional cash accounting simplification measure to all Member States);

clarify as to which Member State's rules apply on invoicing by proposing a set of harmonised rules for b 2 b invoices;

provide for a two-tier system for either a full or a simplified version of a VAT invoice depending on the situation;

treat both paper and electronic invoices equally;

Set out a common EU time period of 6 years for the storage of invoices, wherein paper invoices may also be converted to electronic ones for storage purposes.

Source: MEUSAC General Affairs Committee

GRTU has this morning outlined its final recommendations on the Rent Reform Bill that were presented to the Minister for Social Policy, the Leader of the Opposition and the Members of Parliament during a press conference.

GRTU President Paul Abela explained that GRTU has on the 2^nd of March 2009 sent its formal position on the Rent Reform Bill to be discussed at Committee Stage in Parliament. GRTU's formal position was drawn up following several meetings for different groups of tenants and owners to discuss the Rent Reform Bill and meetings on a one-to-one basis of in-depth contract analysis.

Vince Farrugia Director General of GRTU explained that we consider the property ownership of enterprise owners as one important store of wealth that accumulates from the earnings of an economic activity in the form of enterprise. An enterprise is very important for both the Maltese and European economy – "the backbone of our economy"- and Government must promote and defend enterprise in line with the Small Business Act. On these lines GRTU has felt the need to once again raise the proposals it deems are essential especially in times when closing of enterprises and job losses are something we do not need.

GRTU's legal adviser Dr Jan Karl Farrugia outlined GRTU's proposals as follows:

One of GRTU's major objections on the Bill is on the validity of contracts. GRTU sustains that where pre-June 1995 contracts are clear and contain all the essential elements to make a contract binding, independently of whether a contract is definite or not, it must be still regarded as a valid contract, unbreakable especially by a third party.

It is unacceptable that the legislator, in this case a third party, interferes and intervenes between the contractual obligations reached between the two parties based on existing contractual obligations reached within the framework of existing laws. The contracts were signed by both parties knowingly, the majority in the presence of Notaries or Lawyers in their professional capacity. In the same way a purchase contract is not broken when the purchased item increases in value, a lease contact is not broken because the value of the property increases.

In the same way employees and wage earners are provided with legal protection against unfair dismissal, business owners whose livelihood, that of their families and of their employees depend on the enterprise operating from rented properties should continue to enjoy the safeguards that exist under current legislation ensuring that their livelihood will not depend on the whims of the property owner renting the enterprise property.

The Rent Bill also establishes a 15% annual increase of rent up till 2012 after which the rent must be renegotiated with the landlord. To GRTU It is not acceptable that a blanket approach is adopted for the increase in rent. Rent cannot increase in the same manner for all tenants. No justification for the choice of 15% was given and no impact assessment was carried out. Cases are common were a significant sum of money was paid to the landlord for him to agree not to increase the rent or to ascertain length of lease term.

In addition 2013 is too early to expect businesses to have adjusted to what might be a drastic change in the rent they pay. A longer transition period is required both for the rent to start to increase and for the tenant to be thrown to the mercy of the landlord.

Should the clause on the revision on rent be accepted due consideration should be given to the added economic value the property has achieved through the efforts of the tenant's entrepreneurship over the same property. Taken into consideration should also be the original cost of construction or purchase value of the building and the returns enjoyed by the property owner as rents and other remuneration and premiums paid over the years by the tenant for privileges granted under the same lease arrangement, as well as the structural improvements carried out.

As to inheritance of lease GRTU feels Malta has little if any supportive schemes for the succession of family owned private businesses by members of the same family or by others. The principle of succession of businesses in rented properties should be recognised and members of the family of the tenants or others nominated by the tenants as successors should be given the necessary safeguards so that the enterprise will continue to survive.

Change of Use is another aspect GRTU feels the Bill should be more versed to the current economic situation. Economic changes are necessitating the change of genre for old established enterprises. The tenant should be given the opportunity of change of use from that stipulated in the contact if this does not jeopardise the landlord. Should the Rent Board find, after hearing both parties, that there is no reason to stop the tenant from applying for change of use this will be granted to the tenant.

GRTU on the other hand particularly agrees with the Bill's Non Uso clause were a tenant who chooses to pay the rent regularly but does not operate his enterprise is hindering other enterprises form establishing their enterprise in those premises, sometimes prime locations. This of course does not include closure for a period due to works that need to be carried out in the establishment.

GRTU also feels that certain important aspects were not considered or at least not sufficiently in the Bill. The use of Government property for instance should still be used as a tool of assistance to enterprise, including preferential rental treatment, within the framework of an agreed small business promotion strategy.

The Reform should include incentives and options that give the possibility of a safe landing to the enterprises that will be very negatively hit by the Reform by giving the tenants an option to buy the property on favourable terms and get credit for the number of years the property has been occupied together with the credits for the value of the investments done in the property. These should together obtain a maximum discount on the market value of the property of up to 50%. This option should apply irrespectively of whether the rented property is privately owned or Government owned.

COM (2009) 60     Proposal for a Regulation imposing a definitive anti-dumping duty on imports of certain plastic sacks and bags originating in the People's Republic of China or Thailand, and terminating the proceeding on imports of certain plastic sacks and bags originating in Malaysia

This proposal concerns the application of Council Regulation on protection against dumped imports from countries not members of the European Community in the proceeding concerning imports of certain plastic sacks and bags originating in the People's Republic of China (PRC) and Thailand.

The Commission's proposal is made in the context of the implementation of the basic Regulation and is the result of an investigation which was carried out in line with the substantive and procedural requirements laid out in the basic Regulation.

During the investigation that led to the imposition of the anti-dumping duty, given the large number of exporters/producers of the product concerned in the PRC and Thailand, a sample of exporting producers was chosen. Individual duty rates ranging from 4.8% to 14.3% were imposed on the companies selected in the sample in the PRC and Thailand. The cooperating companies not included in the sample were attributed a duty rate of 8.4% for the PRC and 7.9% for Thailand. Residual duty rates of 28.8% for the PRC and 14.3% for Thailand were imposed on all other companies.

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. This Regulation shall be binding in its entirety and directly applicable in all Member States.

Source: MEUSAC General Affairs Committee

On the occasion of the convening in Malta of the 7^th session of the Maltese-Tunisian Mixed Commission led by Tunisian Foreign Minister Abdelwahed Abdallah, the Ministry of Foreign Affairs is organising a seminar on: Doing Business with Tunisia on Tuesday, March 24, 2009 at 14.00 hrs. This seminar provides an overview of Tunisia, the Tunisia/EU Free Trade Agreement, business practices in Tunisia and market/business opportunities for Maltese entrepreneurs. 

After presentations by various speakers from Tunisia, participants will have the opportunity to meet Tunisian companies from the following sectors and to have one-to-one meetings. Textiles; Sugar; Manufacturers of boats; Manufacturers of porcelain and ceramic; Representatives of agricultural products; Producers of various processed foodstuffs; Producers and exporters of flowers; Producers and exporters of plastic containers; Producers and exporters of herbs and spices.

The Ministry of Foreign Affairs has company profiles of all participating companies which can be forwarded to interested parties upon request. Maltese Businessmen interested in the possibilities of doing business with Tunisia are encouraged to attend and network and learn more about the business opportunities in this market. For more information please contact Abigail Mamo on 21232881/3 (e-mail ).

I have for a long time been advocating that the Maltese Government should abolish completely financial reporting obligations for all micro enterprises, those firms with less than 10 employees. I have persistently strived, both at European level through our representations at UEAPME (the European organisation representing SME's and Craft Enterprises) and at EuroCommerce (the European federation of national organisations representing retailers and traders) and in various interventions in workshops and consultation sessions organized by the European Commission, and with the Ministry of Finance and all authorities striving to reduce bureaucratic burdens on small businesses, that the European Commission should adopt a harmonized policy to cause member states` governments to get rid of unnecessary accounting requirements for micro-enterprises. This action will be a major contribution to the efforts needed to ensure that small businesses have more of their time devoted to actually running their business and not to the production of lengthy accounting procedures.

The response of the Maltese authorities so far is the publication of MARSSE, the Malta Accounting and Reporting Standards for Smaller Entities. This is a less voluminous burden then what originally existed but I believe, and I stated this publicly often enough, that though most welcome, it is still not good enough.

The reason given by the Maltese Authorities for opting, following years of deliberations, for a reduction in accounting and reporting standards and not for a complete abolition is that it would not generate a net cost reduction for small businesses since most enterprises will have to keep filing accounts anyway for national administration purposes, banking reasons, suppliers demands and competition rules.

My advice has been that we should design a really simplified form that is easy enough for small business owners to fill without the necessary costs and burden of having to appoint accountancies and auditors to satisfy the legal requirements imposed by Government. I believe that the authorities are still in time to produce such a document without the need of any pressure from the European Commission, but the best the local authorities could do is MARSSE. Meeting MARSSE requirements is still a laborious task and it's design was more an effort not to disturb unduly the banks and the taxation chiefs rather then really to liberate small business owners. In my view the MARSSE still poses a huge burden and rather then really relieving micro-enterprises, it satisfies the accountant's fear of loss of revenue and the bank's insistence on more detailed accounting by firms.

At UEAPME many delegates from other countries argue that abolition or simplified accounting requirements, simple enough to be complied with without the need for expensive accounting services may cause a competition threat as cross-border consistency will no longer be guaranteed. Member States will be tempted to use such measures to protect their own micro-enterprises to the detriment of foreign competitors.

Now the European Commission faced with pressure from representatives of small and medium enterprises at a time when economic recessionis causing many business owners to desperatley strive to reduce current expenditure, has put forward a bold new proposal which would allow Member States to completely abolish financial reporting obligations for the EU's smallest companies.

In a deteriorating economic climate, the new rules are designed to alleviate the regulatory burden on micro entities. The aggregate administrative burden reduction potential is estimated at around € 6.3 billion. The proposal, which was flagged in the European Economic Recovery Plan in November 2008, now pass to the European Parliament and the Council of Ministers for consideration.

Internal Market and Services Commissioner Charlie McCreevy said: "In a time of economic uncertainty, this micro entities proposal can relieve the burden on the smallest companies in the European Union on a large scale. The Commission has delivered this proposal in a short time period; it is now up to the Member States and the European Parliament to give full and rapid backing to it. This is a real opportunity to make life easier for the EU's smallest companies. We intend to do whatever we can to encourage maximum take-up of this exemption by our Member States. As I said last year, when I announced my intention to bring forward this proposal, in the current climate, that is no mean saving. We will follow this up with more simplification efforts in the field of financial reporting by the end of 2009. This represents the Commission's continued commitment to simplification and burden reduction. "

The purpose of the proposed amendment to the Fourth Council Directive (78/660/EEC on the annual accounts of certain types of companies) is to allow Member States to relieve the EU's smallest companies (commonly referred to as "micro-entities") from the requirements of this Directive. Rough estimates show that if Member States implement this exemption, the savings potential for micro entities could amount to as much as €1200 per year on average.

Micro entities would be defined as those companies that on their balance sheet dates do not exceed the limits of two of the three following criteria: balance sheet total of €500.000, net turnover of €1.000.000 and an average number of employees during the financial year of 10.

Micro-entities are mostly engaged in business at local or regional level with no or limited cross-border activity. At the same time, micro entities are often subject to the same reporting rules as larger companies. This creates a disproportionate burden on the companies that have a key role in creating new jobs and economic activities but also have limited resources to comply with demanding regulatory requirements.

Now that this proposal has been adopted, the Commission will also launch a stakeholder consultation on what is left of the accounting rules in a drive to identify further areas which are ripe for simplification. Contributors will be asked to provide input for the review of the Fourth and Seventh Council Directives (83/349/EEC on consolidated accounts).

In my view Malta should know move forward and accept the new European Commission proposal and remove the requirement on Maltese small businesses  to produce annual audited accounts reporting requirements.

In consultation with GRTU we can then agree on a much reduced version of MARSSE. MARSSE is an acountants` proposal. Government should now introduce a micro-enterprises` proposal in line with what the European Commission is advocating.

This is one occassion where small business owners must feel that the European Union has been brought home to them.

 

 

 

COM (2009) 28 – Proposal concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures.

The proposal seeks to extend the mutual recovery assistance to other taxes and duties than those already covered and extend to compulsory social security contributions.

It also seeks to adopt uniform instruments permitting enforcement or precautionary measures so as to avoid problems of recognition and translation of instruments emanating from another Member State. For the same reason, it is calls for the adoption of a standard form for the notification of documents, relating to these claims, on the territory of another Member State.

The Commission proposes that national officials should have the competence to act on the territory of other Member States, and that a system of spontaneous information exchange should be developed.

It also calls for conditions for requesting assistance to become less strict, at least in certain circumstances, in order to improve recovery chances. The proposal tackles common request forms to facilitate the assistance and considers other revisions aimed at facilitating practical assistance and making the application of legislation easier.