Malta sees red over tax exemption loss

Malta?s yacht and “private pleasure craft” owners, as well as the lucrative bunkering and ship repair industries, will see the price of fuel shoot up by at least 25% on 1 January after the European Commission threw out a request to prolong Malta?s derogation from levying tax on ?red diesel? until 2013.

Red diesel is a grade of gas oil used to power sea craft and is dyed red to distinguish it from the more heavily taxed road diesel. Malta had negotiated an exemption from the Energy Tax Directive in its EU accession talks. The derogation, also enjoyed by Belgium and the UK, expires at the end of the year and the countries? separate requests to prolong the favourable tax-free regime were all rejected by the EC this week.