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Malta Budget 2018

10.10.2017

Yesterday evening, the Minister for Finance Professor Edward Scicluna addressed the nation from Parliament to announce the changes to be taking place within the next year. For those who missed the speech, these are the highlights from the 2018 Budget:

General:

  • No new taxes, as well as no increase in any tax, whether direct or indirect, was announced
  • Fines for tax evasion will increase
  • Cost of Living Adjustment will be €1.75 weekly

Employment:

  • An extra day of vacation leave is to be added to the yearly leave balance of every employee
  • The government is working on implementing the earlier promise that public holidays falling on the weekend will be added to the leave balance of employees
  • Employees on minimum wage are entitled to an increase in salary of €3 per week after the first year of employment until the third year of employment.
  • Those with a salary of less than €60,000 will be paying less tax. The beneficiaries will be receiving cheques with tax refunds of between €40 to €68, to be calculated according to their gross pay in 2017
  • The VAT Exempt threshold to qualify as a small undertaking will be increased from €14,000 to €20,000

Pensions:

  • Pensioners will be receiving an increase in their pension payments of €2 a week. The maximum non-taxable pension will also be increased to €13,200
  • The fund that was set up in order to cater for anomalies due to changes in the pension will continue to address these variances
  • People over the age of 75 who live at home will continue to receive €300 a year
  • Introduction of a working group to start discussing Equity Release Facility so that pensioners who are homeowners can use the value of their property to finance their retirement expenses on a monthly basis. The property would be later released to the paying company upon the death of the owner

Schemes, benefits and allowances:

  • The Government Savings Bond will continue to be issued next year
  • Highest rate of in-work benefits to increase to €450 for every child
  • Those receiving benefits who find employment will continue to profit from the ‘tapering of benefits’. The period of waiting to benefit from the tapering will be reduced from 2 years to 1 year
  • Those in community worker schemes will receive a €200 increase in monthly payment
  • Parents who travel abroad in order to adopt a child will be receiving a reimbursement of up to €10,000 to cover their expenses
  • Orphans will continue to receive an allowance until they reach 21 years of age, irrespective of whether or not they are in employment
  • Widows and widowers who are employed and receive widowers’ pension will now also receive sickness benefits
  • Foster-care allowance will increase to €100 a week
  • Maintenance payments will no longer be considered as an income for the ‘means test’ to obtain a pink card which is used to receive free medicine
  • Drug-addicts allowance is also increased to €40 a week for those undergoing a drug rehabilitation program
  • The Government shall enter into arrangements with BOV for social loans for persons renting property from the Government who wish to purchase the property

Projects:

  • Three new homes for persons with intellectual disabilities, including autism, are to be founded
  • New wards will be added to San Vincenz de Paule, and facilities will also be improved

Property:

  • The government promises to address the problem of high prices in the property market
  • There will be additional subsidies for persons who rent, provided that the lease is legal and regular
  • The ‘Nikru biex Nassistu’ scheme which was founded in September 2017 will continue to receive applications
  • The Housing Authority will financially assist in the repair and upgrade of abandoned empty houses if the owner agrees to subsequently rent out the property for at least 10 years
  • Elderly persons whose house is rented from the Government and who move to old people’s homes will be incentivized to return their house keys in order to benefit from 20% less reduction on their pensions
  • The government will be investing in an upgrade of government blocks, including installation of lifts
  • An ‘affordable housing’ white paper will be published with proposals for social housing. Its aim will not be to introduce rent control, but to regulate injustices. Some of the proposals in the white paper will be:
    • Obligatory registration of every rent agreement
    • The rent agreement is to regulate by how much the rent can increase and when it can increase
    • There will be a minimum term for rent agreements
    • A deposit retention scheme will be launched, in order to prohibit abuse of lessors who retain deposits even though there was no breach of the rent agreement
  • The first-time buyers scheme will be extended for another year
  • A new scheme for second-time buyers looking to replace their current residential home will be introduced with a reduction in duty payments of up to €3,000
  • Reduction in stamp duty from 5% to 2.5% on property in an Urban Conservation Area
  • Reduction in stamp duty from 5% to 2% on property bought in Gozo will also continue for another year
  • A scheme for the redemption of ground rend in emphyteutical grants shall be introduced

Transport:

  • Plans to repair and improve roads will be implemented
  • Bus shelters will also be improved or rebuilt
  • Youths aged between 16 and 20 will be receiving a free bus card
  • A VAT exemption shall apply to those purchasing electric bicycles or bikes, together with a grant of up to €400
  • VAT rate for hiring of bicycles reduced from 18% to 7%
  • Those who buy electric or hybrid cars will benefit from removal of tax registration payments and road license payments for up to 5 years
  • Grant capped at €10,000 when purchasing wheelchair accessible taxis

Environment: 

  • The Government will invest in an infrastructural project of over €150 million to obtain energy from waste
  • A new organisation called ‘Ambjent Malta’ will be founded
  • Fines for littering and not separating waste will be increased
  • A tree will be planted for every child born
  • A gas pipe-line between Malta and Sicily will replace the temporary floating storage unit in Delimara
  • A new water desalination plant will be built in Hondoq ir-Rummien, Gozo

Investment: 

  • The Government intends to make use of opportunities created by Brexit in order to attract more investments into the island
  • A Blockchain lab is to be set up at the Malta Information Technology Agency
  • A web-portal shall be set up to aid those interested in block-chain and crypto-currencies
  • A new law for VAT grouping of regulated sector such as financial services and iGaming Companies: entities which are independent but have financial ties may register as one taxable person
  • The Micro-Invest scheme for enterprises with up to 50 employees will increase assistance from €30,000 to €50,000 to Maltese persons, and to €70,000 for Gozitans –the scheme will be extended to companies whose shares are held by women and those that employ more than 50 full-time employees.
  • The Individual Investor Programme scheme will be extended for another year
  • Introduction of two new solar farms
  • More incentives for employment in Gozo – for every employee that is offered a contract of 3 years or more, there will be a refund of up to €6,000 of his salary,
  • Investigations with regards to the tunnel between Malta and Gozo will remain underway

Education:

  • There will be new services offered for children who suffer from autism
  • SEC and MATSEC fees shall be decreased in 2018 and eventually removed
  • The ‘One tablet per child’ project will be extended to include children in the fourth and fifth years of primary schools
  • More schemes in apprenticeship will come into place
  • Persons under 40 years of age who pursue a Masters or PHD in 2017/2018 will not pay income tax for a maximum of 2 years after finishing their course

Health: 

  • A National Cancer Research Foundation will be set up with the aim of providing research in the area
  • The Glucose Monitoring Sticks programme will be extended
  • The law surrounding IVF is to be improved to reflect the technological advancement, with the aim of continuing to aid couples
  • A new hospital will be built in Gozo
  • There will be a new private-public partnership to increase parking spaces at Mater Dei

Leisure:

  • A new shooting range will be built for the international championship which will be held in Malta next year
  • A new football ground and a pool will be built in Marsascala
  • A new racing track will be built

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.