Malta Budget 2017, the Highlights

MEDIA ROOM

In the Budget for 2017, the Government chose the ease of access to financing and the instilment of confidence and optimism in the economy as two of the key priorities. The relevance of these priorities can be seen in the below highlighted incentives and commitments that the government is undertaking.

The Finance Minister, during his Budget Speech, announced that throughout 2016 the Maltese economy grew by 4.1%, more than double the Eurozone average, and is projected to sustain a 3.5% growth throughout 2017. All this is in line with the recent announcement by Standard & Poor’s, predicting that the economy will continue to grow by an annual average of 3 per cent until 2019.

The working of the Maltese Taxation System

  • The Finance Minister brought up the possibility of having group tax consolidations;
  • Malta is renewing its commitment towards transparency and exchange of information by taking a commitment to introduce international measures to enhance transparency;
  • A joint enforcement task force shall be established and shall be operated in conjunction with the VAT Department, Customs Department and the Tax Compliance Unit. This joint enforcement task force is being set up to combat tax evasion. Its first priority will be to enforce controls on irregular employment, undeclared rental income and unfair competition of certain imports and acquisitions.

Property-related Fiscal Measures

  • First time-buyers exempt from duty on the first €150,000. This is an exemption that will be extended to acquisitions made in 2017;
  • New schemes will be launched whereby first time buyers of immovable property situated within an Urban Conservation Area or certain scheduled properties will benefit from a grant of up to €100,000 on expenses incurred on the restoration of the said property;
  • Following the introduction of the favourable 15% tax regime on the rental of residential and commercial property, an anti-abuse measure is being introduced. All property rental contracts for duration of at least three months are required to be registered with the Inland Revenue Department. In the absence of registration, the lessor will be subjected to the penalties contemplated by law.

Other industry-specific Fiscal Measures

  • A reduction in capital transfer duty from 5% to 1.5% is being allowed when a business is being transferred from a parent to a child. This is applicable as of the 1st of January 2017, and remains applicable for a 12 month period;
  • A fiscal incentive will be given to entrepreneurs who sell their shares in a company to the public through a listing on the Malta Stock Exchange;
  • There shall be developments in the legislation on collective investment funds and securitisation so that the financial sector in Malta continues to grow in a dynamic manner;
  • The Malta Individual Investment Programme has been renewed for another year, that is it shall continue to be offered throughout 2017.

Enterprise

  • Malta Enterprise is launching new business schemes granting financial assistance in the form of tax credits for the establishment of sustainable business in the research industry;
  • The promotion of equal pay for equal work will be implemented in Malta through Amendments to the Industrial Relations Act, and further enforced through sport check inspections.

Malta Gaming Industry

  • Along the course of 2017, the Malta Gaming Authority will be implementing legal reforms which are set to target the needs of the gaming industry thereby introducing a demarcation between games of skill and games of change, whilst not oppressing innovation in the sector and strengthening the players’ protection;
  • A European Gaming Institute of Malta is to be set up to ensure that training being given is recognised by the industry.

Energy and Infrastructure

  • The modernisation of Has-Saptan storage plants and the development of new filling stations;
  • Schemes to support investments in large scale photovoltaic installations.

Employment

  • Tax deductions on expenses incurred by companies offering free transport to their employees;
  • Discussions are to be hold with social partners for the introductions of special leave payment over and above the statutory sick leave for employees receiving cancer treatment;
  • A consultation process will be initiated to consider the use of parental sick leave.

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