During the presentation of the first budget of this government’s legislature, the Minister of Finance Hon. Edward Scicluna highlighted the continued economic growth that the Maltese economy is experiencing. During 2016, the Maltese economy registered an impressive 5.5% growth in real terms and in the first six months of 2017 growth increased to 6.3%. The Minister announced that in the first half of this year Malta registered the highest economic growth in the EU. For next year economic growth is expected to reach 5.6%.
Malta Budget 2018 for Investors - Download your Free Copy
Malta’s economic growth has been acknowledged by International Rating Agencies. Fitch upgraded the rating for the Maltese economy from A+ to A+ stable, DBRS upgraded the economic outlook from A stable to positive, whilst S&P upgraded the rating for Malta from A- stable to positive. Malta also registered an improvement of 3 places in the Global Competitiveness Index (2017- 2018) and now ranks 37th out of 138 countries.
Based on this positive economic performance the budget for 2018 does not include any new taxes or tax increases but seeks to redistribute wealth and ensure continued investment in infrastructure that sustains economic growth in the future. The government aims to continue to incentivise the creation of employment opportunities with a view to increase the participation rate and decrease further the level of unemployment, which is already at a record low of 4.1%.
Microinvestment Scheme
The MicroInvest Scheme which is designed to encourage undertakings to invest in their business, to innovate, expand and implement compliance directives will be extended to enterprises which do not employ more than 50 (increased from 30) full-time employees. The value of assistance provided under this
Scheme will also be increased from €30,000 to €50,000 for Maltese enterprises and shall increase to €70,000 in the case of enterprises based in Gozo or enterprises having a majority of female shareholder or undertakings by selfemployed women.
Malta budget 2018 - Tax Exemption and Fiscal Evation
Exempt pension income
Increase in the exempt tax bracket for pension income up to €13,200.
Combating fiscal evasion
The Government will continue its fight against fiscal evasion and unfair competition through an increase in penalties for crimes dealt with through the courts as well as out-of-court settlement agreements. The Joint Enforcement Task Force will increase its efforts to identify those entities and businesses which are evading taxes.
Malta Budget 2018 for Investors - Download your Free Copy
This year's Malta Budget on VAT
VAT Grouping
As a means of encouraging growth in the financial services and gaming industries, government is proposing the introduction of VAT grouping for these sectors. By virtue of this proposal two or more separate legal persons having a fixed establishment in Malta and which are closely bound to one another by financial, economic and organisational links may opt to be registered as one taxable person. As a result, supplies between members of the same VAT group will be regarded as falling outside the scope of VAT.
Online submission
Entities having 10 or more employees shall be able to submit VAT returns and Social Security forms electronically.
Increase in thresholds for small undertakings not to charge VAT
The turnover threshold under which small undertakings may opt not to charge VAT will be increased from €14,000 to €20,000.
Refund of VAT on purchases of bicycles extended and available to companies
The scheme which allows for the refund of VAT paid on the purchase of bicycles and pedelec bicycles shall be extended for a further year and the refund shall also be extended to companies which acquire such bicycles for the purpose of hiring out.
Stamp Duty
Extension of Stamp Duty exemption scheme for First Time Buyers
Individuals buying residential property for the first time currently benefit from an exemption from Stamp Duty €150,000 of the value of the property. This is being extended for a further year.
Stamp Duty refunds for Second Time Buyers
Individuals who sell first residential property in order to buy another shall benefit from a reduction in Stamp Duty by virtue of refund of up to €3,000 increasing to a maximum of €5,000 where such person has a disability.
Reduction of stamp duty on properties within UCA
Reduced rate of Stamp Duty at 2.5% instead of 5% for acquisition of properties in an Urban Conservation Area extended for one year.
Reduced Stamp Duty on acquisition of property in Gozo
Individuals acquiring residential property in Gozo will continue to benefit from a Stamp duty reduction from 5% to 2% for a further year.
Malta Budget 2018 for Investors - Download your Free Copy
Property Measures
Acquisition and Restoration of property within UCAs
Individuals buying and restoring property within Urban Conservation Areas or any other first or second grade scheduled property will continue to benefit from a refund of certain expenses incurred in restoring the property.
Introduction of Equity Release Facilities
A Working Group will be set up to discuss the regulatory framework for the introduction of Equity Release Facilities which will allow property owners to use the value of owned property secure regular income after retirement age through financial institutions which offer Equity Release Facilities.
Malta Citizenship By Investment
The Malta Individual Investor Programme has been extended.
BLOCKCHAIN STRATEGY
Government has set up a Task Force to evaluate proposals in relation to the implementation of a national Blockchain strategy and in the coming months
government is going to invest in a Blockchain lab at MITA with various training programmes being launched for civil servants to familiarise themselves with uses for this technology. Government will also be setting up a web portal to facilitate communication between all those interested in Blockchain and cryptocurrencies. A Blockchain Hub will also be set up in order to assist and provide support to start-ups working on this technology.
Other
The Government will be introducing a system for Maltese companies, allowing them to offset certain payments due to and from the Maltese government.
Malta Budget 2018 for Investors - Download your Free Copy
