In the current COVID-19 reality, Parliament recommences following the summer recess, bringing about the annual Budget, setting the scene for the year 2021. Together with explaining the current economic position, the Budget is anticipated to lay down a number of incentives and encouragements for the upcoming year. From when Malta’s Finance Minister was reading this year’s budget last October, no one had fathomed of the idea that the COVID-19 would result in a global pandemic bringing the world to a halt. In such a time, a forecast of the current economic situation is well needed, as the Government promises that this Budget will help Malta’s Economy move forward, during and post the COVID-19 era.
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Malta: a candidate to the UN Security Council
Profs Scicluna has further stated that Malta has put forward its candidacy towards becoming a non permanent member of the UN Security Council. Malta shall require two thirds of the votes of the members in order to win this seat in such a prestigious institution of worldwide influence. The vote will be taken in June 2022 and Malta shall continue to work hard to convince its counterparts of Malta's deserving place.
Illegal Immigration
With the aim of reducing the weight Malta carries in illegal immigration, the Maltese government shall continue strengthening diplomatic ties. Malta shall also focus on repatriation and burden sharing.
Community Policing
It has been announced that the Community Police will continue becoming a part of the local society, after a successful roll-out of this initiative in a few localities.
Rule of Law
Following approved changes brought about by the Venice Commission, the Government is committed to continue to improve the institutions of the State, thus serving the country up to the highest standards. In view of the Moneyval report issued in July 2019, a lot of work has been invested into improving anti money laundering measures. All the recommendations were tackled.
Voluntary Organisations
Registered Voluntary Organisations shall be exempted from tax on annual profits not exceeding EUR50,000.
COVID 19 Reserve
The Government is allocating funds for the renting of additional infrastructure for health reasons in order to ensure continuity of healthcare services. Additionally, medicines shall continue to be provided including new freely offered medicines for chronic illnesses.
Education
Finance Minister has promised to build two new schools, and continue to refurbish current schools with the latest technologies.
Infrastructure
The Government shall continue to invest millions in Malta's roads including that of creating safe cycle paths. Several large infrastructure projects, such as the Msida Creek Infrastructure Project shall also commence. Important maritime areas shall also be improved including the refurbishment of present breakwaters and pathways. The Government is also committed to creating new business hubs around the island.
Halt to Single Use Plastic
As from 1st January 2021 importation of single use plastics into Malta shall not be allowed while by 1st January 2022 the sale of single use plastics shall be stopped.
Climate Change
Malta is aiming towards improving Malta's air and consequently people's quality of life. Reducing emissions is a key element. The strategy towards low carbon emissions shall be concluded by the end of the current year.
Green Bonds
The Minister announces a strategy towards issuance of green bonds by the Central Bank towards renewable energy and other green projects.
Water Consumption and Preservation
The government acknowledges that this resource is of utmost important for our island. Therefore, it has been announced that conservation of this resource will be given priority. An overhaul of the grey water system is also in the pipeline.
E-Commerce
Being vital for Maltese businesses to strive, schemes like Micro-Invest, R&D 2020 and Business-Start will continue operating. The government aims to help Maltese businesses switch to online. To this end, there will also be an investment in customer dispute resolution.
Aviation
A new aviation policy shall be pronounced in the next year following changes in the framework of law undertaken in recent times.
Reduced Tax for VAT-exempt Businesses
VAT-exempt businesses currently enjoy a tax-free threshold on the first EUR20,000. This is being raised to EUR30,000.
Schemes for Foreign Investment
The schemes to assist businesses and attract foreign investments shall continue and be helped to flourish. Schemes such as micro-invest and business continuity scheme shall continue to be given prominence.
Start ups Investment
The Minister has announced frameworks attractive to start ups to invest in Malta.
Focus on a Green Economy
It has been announced that Malta plans to be carbon neutral by 2050 through the use of new innovations in the realm of renewable resources. The aim of the Government is to build a work-force based on greener jobs, fueled by innovation in this area.
Extension of Wage Supplements
The Minister announces that the current wage supplement measures announced in the COVID-19 mini budget earlier this year, shall be extended to March 2021. The measure will be modified so as to provide assistance to those businesses most affected by the pandemic.
Incentives Relative to the Transfer of Immovable Property
The current exemption from the payment of stamp duty applicable to first time buyers is being extended from EUR175,000 to EUR200,000.
The reduced stamp duty and property transfer tax rates announced earlier this year are being extended: they remain applicable in relation to preliminary agreements for the transfer of immovable property entered into until March 2021 and final deeds entered into by the end of December 2021.
In relation to the donation of immovable property, the exemption on the first EUR200,000 is being increased to an exemption on the first EUR250,000.
Boosting Local Businesses
Another round of EUR100 vouchers shall be distributed to all Maltese residents, which vouchers are to be used locally. These vouchers will cost the government over EUR50 million.
Expected Growth
After setting the scene, Finance Minister Profs Scicluna shifts the focus to the current economic environment. As expected, the economic shut down had a toll on the Maltese Economy, anticipating a reduction of 7.4% in GDP this year. However, it is being expected that Malta will experience a come back next year, with a growth of 5% and 6.4% in nominal terms.
Introductory Words
Finance Minister Prof Scicluna opens his Budget Speech 2021 by reflecting on the deep impact the COVID-19 pandemic has had on Malta and the entire world. The Minister specifies the incentives which were already put into motion as announced in the so called 'Mini Budget' which debuted in June 2020 and included a EUR 100 voucher scheme to all Malta residents, as well as wage supplements for employees' wages and electricity and water bill refunds for businesses heavily impacted by the pandemic.
