SME Chamber

Budget 2014: Business Highlights

Tax Related Measures – Tax Deduction for Entrepreneurs who Offer Apprenticeship: Placements Entrepreneurs who are
willing to be part of the system will be given a tax deduction of €600 for
every apprenticeship placement (capped at 800 placements).

Tax deduction for Entrepreneurs who offer Work Placements: Government is offering an incentive
to entrepreneurs in the form of a tax deduction of €600 for every work
placement they accept (capped at 400 placements).

Providing Training and/or Employment to Employees who are between 45
and 65 Years of Age: Government will
offer a tax deduction of €5,800 as an incentive to employers to hire persons
within this age group who have been unemployed for the previous three years,
translating into a saving of €2,030 for each hired individual in this category.
The deduction applies for the first two years of employment. On the other hand,
companies will benefit from a tax deduction on their income or corporate tax of
50% of the training (up to a maximum of €400) for training undertaken by a
training provider officially accredited by the Malta Qualifications Council
upon the provision of a VAT receipt.

Reduction in Income Tax: The Government will be reducing the income tax rate for those income
earners who earn between €19,501 and €60,000 from the current 32% to 29%.

Tax Refund on Vehicle Registration: The Government has allocated the sum
of €2.5 million so that, as from next year, all persons who paid this tax will
receive a refund. The process will be carried out over a period of seven years,
and the ex gratia payment will be provided to those persons who registered a
vehicle for personal use between 1st May 2004, and 1st May 2008.

Abolishing the Tax on Auctions: The tax on auctions is going to be abolished.

Tax on Part Time Income: The preferential rate of 15% will increase from a present threshold of €7,000
to €10,000 for those working part-time, and from €7,000 to €12,000 for those
who work part-time as self-employed. For those businesses that employ two
part-time workers, the 15% will still be applicable.                           Reduction
in Income Tax for Unemployed Women who are over 40 years of age: From 2014,
principal breadwinners whose wives are over forty years of age and have been
inactive for more than 5 years but are going to start employment, earning a
tax-exempt wage, will benefit from reductions in income tax. The income
attributable to the wives will not be considered when using the joint tax
computation. Therefore A married couple may apply for the married tax rates
without taxing the wife's income, if:

  • the wife has not worked for 5 years:
  • the wife is over 40 years of age; and
  • the wife's income does not exceed the
    minimum wage.



This benefit is
applicable for a maximum period of 5 years.

Reduction in Registration tax on motor cycles and non-EU imported cars:
The registration tax on motors having
an engine equal to or greater than 250cc will be reduced. The registration tax
on non-EU imported cars is going to be reduced. The vehicles eligible must not
exceed the 150g/km CO2 emission level and must not be older than eight years.

Excise duty: Excise duty has
increased on a number of goods and commodities including they duty on bunkering
fuel (will increase by €0.35 per metric tonne), excise duty on cigarettes and
tobacco products (being increased by 6% and 9.3% respectively) and excise duty
on alcoholic beverages (being increased at rates of between 2.5% and 15%,
depending on the type of product). Excise duty on cement is also being
increased by €10 to €27 per 1000kg. Excise duty on heavy fuel oil, LPG and
methane is being increased by €2 per 1000 kg whereas that on leaded and
unleaded petrol, biodiesel, gasoil and kerosene is being increased by €20 per
1000 litres.

Value Added Tax: The budget announces a reform in the administration of VAT penalties and
interest as well as administrative proceedings with respect to tax in dispute
both for VAT and Income Tax, giving the necessary discretion to our Courts of
Law when applying imprisonment conditions to faulty taxpayers. Changes are
expected where individuals fail to pay VAT or Income Tax balances on time.

Energy Policy

Reduction on energy bills: As from March 2014, household energy bills will decline by 25% while
water bills will decline by 5%.

Solar Water Heaters, Double Glazing and Roof Insulation Schemes: An incentive scheme will be adopted
to help people upgrade their residence to one which is more energy efficient.
This measure emanates from the National Energy Efficiency Action Plan and is in
line with Directive 2012/27/EU. This measure will lead to a reduction in the
domestic energy use which subsequently reduces the amount of CO2 emissions.

Malta Oil and Gas Corporation: The Government will be establishing a Malta Oil and Gas Corporation.
This will be done so as to provide an infrastructural framework for the
development of an Oil and Gas industrial services industry in Malta. This
corporation will be the Government's leading agency in this regard, and will be
responsible for the implementation of the Government's needs and plans for the
purposes of oil and gas exploration.

Output Potential

Employment Aid Programme: This
tranche of Employment Aid Programme (EAP) will provide employment aid that
covers up to half of the wage s to Gozitan employers. The scope of the
initiative is to promote the recruitment of disadvantaged and/or disabled

Target Sectors

Gaming: It is
Government's intention to endeavour to enhance Malta's role as a hub for
digital gaming activities.

Managed Seed Capital Fund: An application for the European Social Funds (ESF) programming period
2014-2020 will be prepared to set up and co-manage a Managed Seed Capital Fund
to finance Knowledge-Intensive start-ups. The ESF funds requested will amount
to €11 million over a five year period. It is expected that €10 million will be
directly available as start-up grants and will help finance between fifty and
one hundred Knowledge-Intensive start-ups. The rest of the funds will be used
to finance the setting up of the Fund itself. This measure is expected to
encourage the creation of more Knowledge-Intensive start-ups in Malta.

MicroInvest and Jeremie Scheme: Micro enterprises and self-employed will be supported through a 45% tax
credit on eligible expenditure and 65% tax credit if based in Gozo. In
addition, the Jeremie scheme is going to be continued. These measures will
encourage micro enterprises and the self-employed to invest in their business,
increase their workforce, innovate, expand and implement compliance directives
and aiding in its continued growth by reducing their tax amount payable to the
Government. In turn, this would help increase economic activity.

International Individual Investor Programme: The Government is committed to attract foreign
direct investment for Malta to remain competitive in a global economy. The
Citizenship programme will put us on the same level with Canada, Portugal, Belgium
and Singapore in attracting high-quality investors.

Family Business Act: Family Businesses are the backbone of the Maltese economy. Around 70% of
local businesses are family businesses. Furthermore, in total, there are around
31,000 small family businesses that employ more than 38,400 people. However,
only 30% of businesses which complete the successful transition from the first
to the second generation survive for the long-term. Less than 10% of such
family-run businesses make it through to the third generation. To address this
challenge, the Government will enact the Family Business Act which aims to
ensure the continued existence of family businesses by facilitating the
transition from one generation to another.


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