The budget for the 2018 legislature was presented to the
Maltese Parliament on October 9 2017. The main theme of the
budget, from a commercial perspective, was the creation of
business, the incentivisation of the markets and the attraction
of foreign direct investment. At the core of the budget
document were a number of interesting fiscal measures and
incentives for both businesses and households.
In the sphere of direct tax, the budget proposed a one-time
tax repayment to individuals earning no more than €60,000
($71,000) annually. Tax credits for postgraduate courses will
also be introduced, subject to certain conditions, and
individuals may benefit from a tax credit of up to the first
€60,000 of income earned. The value of assistance offered
in terms of the MicroInvest scheme will also be increased from
the current €30,000 to €50,000, for businesses based
in Malta, or €70,000 under other circumstances. In
addition, as part of the government's pledge to incentivise
employment in the private sector in Gozo, employers offering a
minimum three-year contract of work to Gozitan employees will
be given a refund of up to 30% of the average salary of its
employees, up to a maximum of €6,000.
With respect to indirect tax, the government will raise the
threshold for small undertakings that may opt not to charge
VAT, from €14,000 to €20,000. Furthermore, VAT
grouping will be introduced in the financial services and
gaming sectors, in terms of which separate legal persons having
a fixed place of business in Malta and a financial, economic
and organisational relationship between themselves will be able
to register as one taxable person for VAT purposes, and as a
result, intra-group supplies will be regarded as falling
outside the scope of VAT. Other measures introduced include the
extension of a scheme whereby persons who purchase bicycles or
pedelecs will receive a grant of 15.25%. The VAT rate on the
rental of bicycles has been reduced from 18% to 7%. Moreover,
the instances where taxpayers can submit social security forms
and VAT returns electronically will also be increased.
Pensioners will also be able to benefit from measures
proposed in the budget, such as an increase of the tax-free
bracket for pension income to €13,200. Homeowners will be
able to benefit from a second time buyers' scheme where
individuals who own one immovable property being their place of
residence, dispose of it to purchase another, will benefit from
reduced stamp duty, by way of a refund of up to a maximum of
€3,000. The government is also considering the possibility
of introducing equity release facilities in Malta, where owners
of immovable property will be able to secure regular income
from their immovable property after retirement age.
From a compliance perspective, the government has again
renewed its pledge to combat tax evasion and unjust
competition, and has announced that it shall be increasing
penalties for tax offences.
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Mark Galea Salomone |
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Donald Vella |
Mark Galea Salomone (mark.galeasalomone@camilleripreziosi.com)
and Donald Vella (donald.vella@camilleripreziosi.com)
Camilleri Preziosi
Tel: +356 21238989
Website: www.camilleripreziosi.com