OVERVIEW

 

During the Budget introductory speech, the Hon. Minister Prof. Edward Scicluna emphasized on the aspect of changing the economic direction of the country to a more efficient and effective one based on sustainable development, which would benefit all. For this goal to be achieved, the Minister gave a brief overview of what the year 2014 brought with it.

 

  • Economy grew at the rate of 3.2%
  • Employment stood at 5.8%
  • Deficit 2.7%
  • Inflation rate at 0.6%

 

The projection for the year 2015 is set for an economic growth of 3.55% and a targeted deficit of 2.1%. Meanwhile, unemployment is to stabilize at below 6%.

 

EMPLOYMENT AND ECONOMY

 

A breakdown of the economy in 2014:

 

  • The deficit in 2014 reduced to 2.1%. In 2015 this is expected to be reduced to 1.6%.
  • GDP in 2014 made an increase of 4.9% in monetary terms.
  • People registering for work decreased by 13.7%.
  • Female labor marked a great increase compared to that of male by 1,821.
  • Expenditure by tourists increased by 6.5%.
  • Inflation rate in Malta 0.6% compared to that of EU at 0.3%.
  • Industry turnover declined by 9.3%.
  • In 2015 weekly costs of living increase of €0.58 per week.

 

TAX MEASURES

 

Those individuals earning less than €60,000 annually will as from 2015 benefit from a tax rate of 25%. This has been reduced as in 2014 such were taxed at a rate of 29%. Below is how this bracket will eventually look like:

 

Tax rate

Separate computation

Joint computation

Parents Rates

0%

0 – 8,500

0 – 11,900

0 – 9,800

15%

8,501 – 14,500

11,901 – 21,200

9,801 – 15,800

25%

14,501 – 60,000

21,201 – 60,000

15,801 – 60,000

35%

Over 60,000

Over 60,000

Over 60,000

 

Tax exemptionwill be applicable for pensioners and person, whose income does not exceed the minimum wage, will be increased to also include the cost of living adjustment.

 

Introductionof a new tax programme will be introduced to promote investment in Malta having its main target the United Nations pensioners.

 

Parents of children who attend private schools and use school transport may now claim a tax deduction of € 150.

 

Tax creditwill be set up to promote investment in start-up companies with a maximum capital investment of € 250,000.

 

Property

 

The final tax on transfers of immovable property acquired after 1st January 2004 will be reduced from 12% to 8% of the transfer value while the rate of those acquired before 2004, will be 10%. This shall start to take effect as from 1st January 2015.

 

Individuals who do not trade their property and transfer such property within 5 years of acquisition will be taxed at 5% (compared to the 8% taxed before) on the transfer value.

 

Swimming pools licences will increase by 15%.

 

Duty on documents

 

One-time exemptionfrom the payment of duty on the first € 150,000 of the value of immovable property granted to first time buyers acquiring immovable property in 2014 will now be extended for those contracts up to June 2015.

 

No stamp duty will apply on the transmission causa mortis of assets held in a trust where the beneficiary is a disabled person.

 

Stamp duty exemption on partitions will be extended to deeds of partitions of immovable property, where the values of the latter are equal to that of the partitions.

 

Vehicles

 

Vehicle licence rateswill be increased; however those cars registered in 2009 onwards and have an emission of not more than 100g/km will not be affected.

 

Registration tax on small vehicles will be reduced to encourage the use thereof.

 

Tower cranesused in construction shall be charged € 10/15 depending on the size thereof.

 

Indirect Tax

 

The excise duty will start to be effective as from this year 2014 pertaining tobacco products and cigarettes, being increased from 6% to 12%.

 

From January 2015, the following duties shall be put into practice:

 

Increase of €0.20 per litre on all wines;

Mobile telephone service will increase from 3% to 4%;

Excise duty on fish farm food;

Cement duty increased from € 8 to € 35.

 

VAT

 

Persons whose turnover does not exceed € 7,000 in a year, will now be obliged to register for VAT and no longer be exempt.

 

There will be a mandatory systems audit for those persons seeking to obtain an exemption from issuing fiscal receipts.

 

VAT on material in electronic format shall be reduced from 18% to 5%.

 

Refund scheme on registration of cars, for those that had been registered between May 2004 and December 2004.

 

VAT refund(new) for third country tourists on their consumption in Malta.

 

 SOCIAL MEASOCIAL MEASURES

 

Employees & Students

 

The cost of living adjustment will be € 0.58c per week. This shall be given to pensioners in full.

 

Stipends will be increased by the cost of living adjustments, on a pro-rata basis. Tax exemption on students’ stipends.

 

2015 will bring with it a one-time non-taxable additional bonus of € 35 which will be granted to employees who will not benefit from the income tax reductions.

 

Parents

 

Both parents employed, earning a low income, having children below the age of 23 will benefit from € 1,000 per child. A single working parent shall be entitled to € 1,200 per child.

 

A supplement pay of € 400 per child and € 200 from the 4th child to low income earning families, provided that each child attends 95% of scholastic days.

 

Pensions

 

A grant of € 300 for elderly over the age of 75.

 

Persons aged between 62 & 74 years who had not paid social security contributions shall receive a bonus of € 200 as long as they have paid 5 years contributions.

 

Full pension those individuals with special needs who are engaged in employment.

 

After 25 years of service those employed with the Civil Protection Unit will be entitled to the retirement pension.

 

Maternity

 

Maternity leave payable will be increased by € 6 per week. Those who are self-employed shall be entitled to € 73 per week for 14 weeks.

 

Extension of leave entitlement in case of adoption of children to be in line with that of maternity.

 

New fund to be set up in order to cover the cost to pay the maternity leave benefit payable by the employer.

 

Disability

 

Employers who employ disabled person will be exempt from paying social security contributions, and also granted a tax credit equivalent to the wage of such person, up to maximum of € 4,500.

 

In order to encourage employment to disabled persons, measures including the following will be put forward: 50% reimbursement of the employee’s wage if such person is single.

 

If a company employs more than 20 employees, 2% of the persons must be those with disability.

 

 HEALTH & ENERGY

 

Health Services

 

White Paperwill be introduced in relation to organ donation as it will mark the first legislation in this respect.

 

A Screening scheme will be introduced as part of the National Cancer Plan.

 

Setting up of Medical Plus which aims increasing the number of operations that are performed on a daily basis as well as increase those performed on a weekend.

 

Energy

 

A 25% reduction on electricity bills and 5% reduction on water bills.

 

Those interested in increasing the solar photovoltaic panels by April 2015, may benefit from the Feed-In-Tariff of 22c.

 

An extension to Feed-In-Tariff Scheme for allocation of capacity from 4 to 10 Megawatts.

 

EMPLOYMENT

 

Work programme introduced to assist persons having been unemployed for a long period.

 

The creation of Virtual Labour Market by ETC will provide a platform for matching potential employees with employers.

 

Training programme for employees in the tourism industry in off-peak months to improve quality service.

 

 

A grant of € 100 per month to employers upon employment of every employee from ITS.

 

INDUSTRIES

 

Cruise linersstaying overnight in Malta will be allowed to operate their casinos for their passengers against a licence fee. This exemption will subsist in case such cruises are visiting Malta or Gozo.

 

Efforts will continue to be performed to reduce Air Malta losses by creating new routes and fleet renewals.

 

Specialized courses will be introduced in the film industry for those interested in film making and such investment.

 

The LGA will be replaced by the Malta Gaming Authority.

 

Search for potential partners to commercialize the space allocated to Malta for satellite communication.

 

Increase WI-FI hotspots to another 300 by 2016.

 

New schemes for Valletta retailers – opportunity to apply for a title of ground rent. This will give owners security and invest further.

 

Entertainment capital projects– the Government will enter into a private public partnership for the Marsa race track to be more professional.

 

Projects Malta – set up a company with the objective to identify public private incentives.

 

TRANSPORT

 

Gas prices will remain stable at € 18 until April 2015.

 

Excise duty on leaded petrol will increase by 2c/litre; unleaded petrol will increase by 1c/litre; and that on gas oil, diesel, biodiesel and heavy fuel oil by 2c/litre.

 

Scrappage scheme to be re-introduced whereby a rebate of between € 700 – 900 will be given to persons who scrap their old cars for new ones.