Various measures were introduced through Malta Enterprise to assist businesses (both companies and self-employed) impacted by COVID-19.
These initiatives consist mainly of the following COVID-19 Wage Supplement
- Deferral of Payment of Taxes
- Quarantine Leave
- Facilitating Teleworking Activities
- Other liquidity measures
CSB Group through their Payroll & Tax teams together with CSB Legal can assist you in applying for all the above schemes.
The measure that mostly impacts employers and employees and consequently gives rise to payroll implications is the COVID Wage Supplement.
The COVID Wage Supplement has been introduced by the government to be applied retroactively from 9th March 2020. The first application for COVID Wage Supplement covered the period between 9th March 2020 to 24th April 2020. Businesses that have already applied for this do not need to re-apply to benefit from the supplement in May and June 2020. Those businesses that have not yet applied for the COVID Wage Supplement cannot benefit for the supplement for the month of March and April as the application for this closed on 30th April 2020 but can benefit for supplements for the months of May and June as the scheme is being extended to cover these two months too. At CSB Group we can help you understand whether your business is eligible and assist in the completion of the application form.
Eligibility to COVID Wage Supplement
To be eligible one would need to fulfil one of the activities listed in Annex A or Annex B which are included on the Malta Enterprise website. The most important criteria determining the eligibility to the COVID wage supplement is that one would have suffered a complete suspension of his business or a loss of business resulting in at least 25% reduction in revenue compared to the same period in 2019. In either of these cases, the business is able to apply for such COVID Wage supplement and then it will be at the Malta Enterprise discretion as to whether the wage supplement is approved or otherwise. Malta Enterprise processes the application forms received in a very efficient and timely manner such that a business would expeditiously know whether it is approved or otherwise as well as receiving an acknowledgement including the exact amount the employer would be receiving for each and every employee and how this has been calculated. The amounts are received by the employers who would then be obliged to pass these on to their respective employees by not later than the next salary run andpayment.
Full-time employees who work in businesses falling within one of the sectors listed in Annex A are entitled to up to 5 days’ salary per week calculated on a monthly salary of Euro 800. This includes persons who are self-employed. For Part-time employees the monthly salary is calculated on Euro 500.
Full time employees who work in businesses falling within one of the sectors listed in Annex B are entitled to 1 days’ salary per week equivalent to Euro 160 per month. Part-timers will also be eligible to 1 days’ salary per week equivalent to Euro 100 per month. For self-employed and Gozo based businesses the benefits are higher.
Payroll Implications
Commissioner for Revenue (CFR) issued a notice on the payroll and tax implications of the COVID Wage Supplement (CWS). The main factors one would need to take into consideration are the following;
- Government will pass on the monthly wage supplement for each employee and deduct 10% for the national insurance contributions.
- For payroll purposes, the employer needs to record the CWS separately on payslips. Therefore, for example, a deduction for Euro 800 is effected as pre-tax adjustment and then a separate line as an addition for the CWS of Euro 800 needs to also be included as pre-tax adjustment.
- The CWS is not tax exempt and that is why it is included as a pre-tax adjustment on payslips.
- Employers will deduct the national insurance contributions as per normal procedure, however, the CWS received by employers from the government includes the employees’ National Insurance Contributions (NI) and thus the employer will not need to remit the employees’ share of NI to the government as part of the monthly FS5 submission. Employers still would need to remit the employers’ share of NI and the income tax.
- The FS7 needs to be modified to show the amounts paid to employers and the NI withheld from the wage supplement.
- It was highlighted that for income tax purposes, the wage supplement will not be treated as income or grant to the employer and therefore will not be taxable nor tax-deductible.
CSB Group’s dedicated payroll team assists clients with all their payroll requirements where the outsourcing of payroll is required. Payroll Outsourcing has various advantages amongst which continuity and confidentiality. CSB Group’s payroll team also ensures that you are abreast of the changes in regulations and that taxes and national insurance contributions are being calculated accurately. We also ensure that you take advantage of the above Malta Enterprise initiatives if you are eligible and that these are accurately recorded on your employee’s payslips and other FSS documentation.
CSB Group currently provides payroll services to well over 75 companies which operate within the online gaming, financial services, retail, shipping, marketing, consultancy services amongst others. Currently the largest payroll being administered consists of 200 employees. CSB Group’s Payroll Services are further complemented by Tax, HR Solutions and Employment Advisory services.
About the Author
This article has been authored by Christabelle Agius, Senior Manager Client Accounting Services. For more information or any assistance required you are invited to contact u on [email protected].
