All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Malta: Release of the 2017 budget

intl-updates-small.jpg

The main theme of the Malta's 2017 budget, from a commercial perspective, is to incentivise the markets, boost business creation and attract foreign direct investment. At the core of the budget document are a number of tax measures and incentives.

salomone.jpg
cassar.jpg

Mark Galea Salomone

Kirsten Cassar

Malta's Minister of Finance Edward Scicluna presented the 2017 budget to parliament on October 17 2016.

As of next year, shareholders holding no more than 0.5% of the nominal share capital of companies listed on the Malta Stock Exchange may claim a refund for tax paid at source upon receipt of dividends from such qualifying holdings. This will be applicable to distributions made from profits derived after January 1 2017. In addition, fiscal incentives for the sale of shares on the Malta Stock Exchange will be extended.

To date, domestic tax legislation has exempted from income tax gains or profits arising from the transfer of shares listed on the Malta Stock Exchange, provided that they are not securities in a collective investment scheme. The exemption will also apply where the transfer is made by an individual who held the shares immediately prior to listing. This is a departure from the previous 15% tax on such gains or profits. This incentive will also be applicable to listings on alternative trading platforms.

Separately, the budget has proposed the introduction of the concept of fiscal consolidation into Maltese income tax legislation. This will allow companies forming part of a group to be treated as a single taxpayer, thus, computing their taxable income on a consolidated basis. Moreover, amendments to existing legislation are expected in order to strengthen insurance, collective investment schemes and securitisation products, as well as to grant the same tax benefits, currently provided to debt, to equity investments.

A host of tax credits have also been proposed in order to incentivise the markets, including:

  • Establishing the risk investment scheme, targeting investment in small and medium-sized enterprises (SMEs) and prospects (a scheme designed for SMEs to raise capital through the market) with the possibility of benefitting from a tax credit of up to €250,000 ($274,000);

  • Establishing a research scheme whereby researchers can claim a tax credit of between 25% and 45% on their research costs; and

  • Introducing a gaming scheme where developers of games may benefit from a tax credit of up to 30% on development costs.

Other notable tax measures include:

  • Tax credits for employers that invest in private pension plans for their employees;

  • Removing income tax on pensions for pensioners over 61 years of age, whether the pension is local or foreign, the exempt ceiling is being set at a maximum of €13,000;

  • Introducing a 12-month concession whereby stamp duty will be reduced from 5% to 1.5% when there is a transfer of business from a parent to his descendants;

  • Reducing the duty on the acquisition of residential immovable property in Gozo from 5% to 2%; and

  • Establishing the joint enforcement taskforce in the fight against unfair competition, income tax and VAT evasion.

Mark Galea Salomone (mark.galeasalomone@camilleripreziosi.com) and Kirsten Cassar (kirsten.cassar@camilleripreziosi.com)

Camilleri Preziosi

Tel: +356 2123 8989

Website: www.camilleripreziosi.com

more across site & bottom lb ros

More from across our site

The companies have criticised proposals for the gig economy, while the UK and EU VAT gaps have fallen in percentage terms, and ITR speaks to a European Commission adviser about its VAT reforms.
Corporations risk creating administrative obstacles if the pillar two rule is implemented too soon, sources say.
Important dates for the Women in Business Law Awards 2023
The Italian government published plans to levy capital gains tax on cryptocurrency transactions, while Brazil and the UK signed a new tax treaty.
Multinational companies fear the scrutiny of aggressive tax audits may be overstepping the mark on transfer pricing methodology.
Standardisation and outsourcing are two possible solutions amid increasing regulations and scrutiny on transfer pricing, say sources.
Inaugural awards announces winners
The UN’s decision to seek a leadership role in global tax policy could be a crucial turning point but won’t be the end of the OECD, say tax experts.
The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.