Accountants, auditors, advisors in Malta
ECOVIS Malta
55B, Birbal Road
Balzan BZN9017
Malta
Phone: +356 21341680
Fax: +356 21341681
Email: malta@ecovis.com

Malta Budget 2017- A Concise Summary Prepared by ECOVIS Malta

18.10.2016

The Maltese Economy – General Overview

  • GDP growth of 6.4% in 2015 and 4.1% in the first six months of 2016
  • Deficit expected to be reduced to 0.7% in 2016 and 0.5% in 2017
  • Inflation Rate is expected to reach 1.5% in 2017
  • Unemployment rates reduced to 4.9%
  • The weekly cost of living adjustment (COLA) for 2017 set at €1.75
  • Government debt reduced to 63.3% of GDP by end of 2016

Fiscal Incentives

  • Qualified startups with a turnover not exceeding €80,000 per annum may exempt their company from statutory audits in the first two years or subject the company to a statutory audit but claim a tax deduction amounting to 120% of the audit fee up to a maximum of €700 per year
  • Detailed tax consolidation rules will be introduced allowing groups of companies to calculate their profits and losses collectively
  • Tax deduction of 120% shall be available to businesses that fund projects which embellish the locality (the additional 20% deduction shall be capped at €15,000)
  • Immovable property inherited after November 1992, and being transferred by judicial sale, will be subject to a 7% final withholding tax
  • A limited pilot project for lessors, entering into a long term rental contract of residential property with low income earners, to benefit from a reduced rate of income tax of 5%
  • Pensioners in receipt of pension income not exceeding €13,000 will be exempt from income tax
  • Tax credits will be granted to companies who invest in private pension schemes for their employees

Stamp Duty

  • Reduction of stamp duty from 5% to 1.5% on transfers of businesses by parents to their children
  • The stamp duty exemption for first time buyers on the first €150,000 extended for contracts of sale concluded by the 31st December 2017
  • Reduction of stamp duty on acquisitions of property in Gozo from 5% to 2% for promises of sale registered during 2017 and concluded by 31st December 2018

Malta Enterprise

  • Tax credits ranging from 25% to 45% on research and development expenditure incurred by businesses set up by disadvantaged persons
  • A tax credit of 30% on the development of cultural digital games
  • A tax credit on the renovation of hotels and restaurants, capped at a maximum of €50,000 for restaurants and €200,000 for hotels
  • Assistance to high energy consumption companies in order to encourage them to invest in more energy efficient equipment

Malta Stock Exchange

  • Dividends from companies listed on the MSE to shareholders holding not more than 0.5% of the capital of a company may claim a refund of the tax suffered at source depending on the income tax rates applicable to such shareholder
  • Removal of 15% tax applicable on the gain arising on the disposal of shares listed on the MSE by persons who held the shares prior to listing.
  • Reduction on the tax on capital gains on a transfer of shares upon the listing of shares on an alternative trading platform such as Prospects, which reduction increases as the percentage of shares offered by the shareholders to the public increases
  • Introduction of a Risk Investment Scheme through which a maximum credit of €250,000 per year will be granted to persons investing in SMEs or funds that invest in SMEs registered on an alternative trading platform such as Prospects

Property

  • Refund scheme will be given to first time buyers for the restoration of properties within Urban Conservation Areas, capped to €100,000 on the costs incurred
  • Partial refund to be given on the expenses incurred on the restoration of façades of historical buildings
  • Founding of ‘Property Malta’, an agency aimed at encouraging foreigners to live and invest in Malta
  • Rental agreements covering a period of three months or more will need to be registered with the Inland Revenue Department

Green Economy and the Environment

  • A tax deduction of 150%, up to a maximum of €35,000 yearly, where a company offers free transport to its employees and up to a maximum of € 50,000 yearly when two or more companies operate in a partnership to offer free transport to their employees
  • Persons reaching the age of 18 in 2017 will be granted one year of free public transport (up to a maximum €312 per person)
  • Extension of incentives for the investment of bicycle racks by employers and any related expenditure, such as the installation of showers
  • Extension of grant schemes for installation of PVs, heat pumps, water heaters, double glazing, roof insulation, solar water heater and the renovation of wells

ECO Contribution and Excise Tax

  • Removal of ECO contribution on batteries, mattresses, detergents, toiletries, vehicle filters, kitchen utensils and containers made of plastic. Some of these products will instead be subject to excise duty
  • Increase in excise tax on cigarettes and non-alcoholic drinks, excluding water
  • Imposition of excise duty on non-bio-degradable plastic bags and on certain material used in the construction industry

This summary reflects high level announcements made in the Budget Speech which are still to be implemented through detailed legislative amendments. Clients are advised to contact us on malta@ecovis.com.mt for more information.