SME Chamber

Budget: Construction and development can give an immediate boost to the economy

 GRTU in its Budget proposals presented to Government has earmarked incentives for construction and property development as essential to give an immediate boost to the economy. It is essential Government gives priority to this economic sector as many other economic sectors and the economy in general depend on its revival.


Government must push infrastructural projects that modernise the country. The port projects, schemes to support first-time buyers, new roads projects, an extended factory buildings project, greater funding for Malta Enterprise, investment in alternative energies and in education, greater investment support to create more places of work and an extension of tourism in the locality.



GRTU supports all initiatives to increase the spread of tourism to all localities because it will not only make it possible for Malta to increase its carrying tourist capacity without the necessary damaging impact on the infrastructure and the further erosion of unbuilt areas but will provide better utilisation of unused resources found in localities.

Economic recovery must be supported by policies which aim to bring back confidence to all economic actors and to stabilise economic demand, without further endangering fiscal stability in the long run. The strengthening of the SME sector is key in the economic recovery. This budget must be a conscious budget however it must restore confidence for a new start.

GRTU proposes 21 fiscal initiatives to be included in budget 2010 for economic revival linked to better utilisation of our resources:

1. Stimulate private demand by setting the right incentives. Government must provide the necessary fiscal incentive to encourage developers not simply to issue an energy audit certificate on property placed on the market but to build and sell property that qualifies and saves energy. GRTU is recommending that the 12% withholding tax on properties that qualify to high energy saving criteria as set by Malta Resources Authority will benefit from a reduced 5% final withholding tax.

2. Stimulate public and private demand by investing in infrastructure also via Public-Private Partnerships.  Government must provide the necessary fiscal incentives so that developers will invest in the renewal of our old urban centres and in the creation of new comprehensive development projects that will cause first home buyers to return to the village and town cores or to reside in new energy saving modern comprehensive estates. It is a question of encouraging developers' funds and energies where the community needs most.

3. Reduced rates of withholding tax on property developed by private investors for parking complexes that service the community.

4. A grant of up to 50% of expenses to households for improvements that will enable the lodging of tourists where the size of the property makes this possible. This incentive will encourage the extension of tourist residence in the Localities thus providing the necessary impetus for the expansion of city core activities

5. Special allocation of funds coupled with adequate fiscal incentives to promote urban renewal and refurbishment in the traditional village and town core. Developers who participate in urban renewal schemes through the purchase of properties for development and refurbishment submitting to urban conservation plans and to energy saving will enjoy a reduced rate of taxation on sale of properties or a nominal 3% withholding tax on rents receivable if properties are placed on the rental market.

6. Tax relief of 70% investment allowance on expenditure affected by commercial property owners in the traditional urban centres used on the renovation and restoration of facades.

7. Reduction of 12% final withholding tax to property development investing in ready for use energy saving office space or facilities suitable for back office work in the Localities, including call centres but not only. Too much back office work is concentrated in special city centres. Much of this, including public back office work, can move to the localities.

8. Up to 50% tax credit for the renovation and extension of facilities in the city core such as bars, restaurants and cafeterias and other listed services in the community to encourage the growth leisure focal centre in the community. Local Councils will be provided with additional capital funds to provide the necessary facilities in the city centres for the outdoor extension of these enterprises.  

9. Special financial Awards to be given to Local Councils who prove successful in the introduction of projects that support enterprises and economic growth in their locality.  A Local Authority Business Growth Incentive (LABGI) package should be designed in consultation with GRTU and the Local Councils Association so that Local Councils will benefit on their initiatives in favour of economic sustainability of the locality.

10. Up to 50% tax credit on all initial expenses suffered by businesses that opt to transfer back office work to the Localities. This supportive scheme will also include special electricity and water rates for firms whose back office work functions from energy saving facilities established in the Localities.

11. A one year concession for first time buyers not to pay any stamp duty on property under € 120,000.

12. A lower withholding tax from the 12% option to 7% for developments that will support first time buyers, relieve developers and will also stabilise the property market for a period of 2 years.

13. A 12% final withholding tax instead of 35% on transfers to third parties still on convenium (CESSJONI).  This will encourage speculators to find more investors.

14. An extension of the 12% from 35% five year option period to an eight year option period.

15. Eliminate the 1% on property values paid on convenium as this is leading to discouragement. Introduce instead a range of administrative fees according to the values of properties which should not be higher than €1,000 or a percentage charge of 0.05% on property value.

16. Property owners are not regarding leasing of property as a feasible option due to the 35% tax which has to be paid annually from the return of their investment. GRTU also observes that the Government is earning very little from the rental market. GRTU therefore recommends that for a period of 10 years a 5% final withholding tax on residential property and 15% on commercial.

17. The current restriction on foreigners owning property in Malta should be released so as to be allowed to invest in more than one property, even if outside the designated areas. We remain confident that with the current over supply the country will not run out of property to sell.

18. A reform in property evaluation regarding CIR is badly needed.  The whole system should be changed immediately.

19. An incentive package that causes developers to invest in buildings for utilisation by entrepreneurs. Developers or property owners who build approved factories or garages for garage industries, approved premises for use as residential homes for the elderly and approved hotels and tourism projects, will benefit from a reduced final withholding tax of 6% if such property is soled or a withholding tax of 6% on annual rents if such property is rented. This special concession is given to developers who build such projects over a period of 5 years and building of premises for projects in the harbour areas.

20. In introducing the Energy Performance in Buildings Regulations as of 1st January 2009, the Government would ascertain that all properties with an area of over 1000sqm should form part of an assistance program to be set up by Government to align to these Directives.

21. All new buildings in excess of 1000sqm built for a commercial purpose are to include 50% of their energy needs in renewable energies. This would require a long term projection funding, either via tax credits or performance bonuses against set bench marks.

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