In Malta as in other modern economies, the service sector has an increasing role to play in creating wealth.
Many people operate in the services sector.
They provide services to other businesses, to local residents and to visitors. It is therefore necessary and was widely stressed in the consultations which the Government has carried out, that indirect taxation should not be limited only to taxes on goods, but should also be charged on services. This is particularly so as services cannot be made subject to customs duties and can therefore only be taxed by inland or internal taxes. The conclusion is that while VAT on services should be removed, selected services should be made subject to an appropriate tax. A new excise tax on selected services 5.2 Historically, taxes were levied indirectly on the person providing the services, or on the goods used to do so, for example licence fees and stamp duties.