The 2016 Malta Budget was presented on Monday 12th October 2015. The Finance Minister noted the economic improvements which the country made over the past year, highlighting specifically the attainment of a 1.6% budget deficit for 2015, growth in employment, and an overall economic growth in certain critical

sectors. The GDP for 2015 is expected to be €8.5bn a 4.2% increase over 2014.

This document provides for the salient points of the Budget 2016.

 

Income Tax Measures

 

·         Reduction in personal income tax rates

 

–          There shall be a reduction in personal income tax by widening the tax free brackets as per below :

€8,500 to €9,100 (single computation)

€11,900 to €12,700 (married computation)

€9,800 to €10,500 (parental computation)

Furthermore, through a change in computation on how individual’s tax is charged, the below will start to apply:

–          Individuals with an annual income of up to €19,500 will save €90 tax each year (single)

–          Individuals with an annual income of up to €28,700 will save €120 tax each year (jointly)

–          Individuals with an annual income of up to  €21,200 will save €105 tax each year (parents)

 

·         Income tax on sports activity

 

–          A reduced optional flat income tax rate of 7.5%  available to footballers and waterpolo players will as from 2016 be extended to cover all other sports players and also the income derived by sports coaches.

 

·         Incentive for research and innovation

 

–          A tax credit of up to a maximum of €10,000 is entitled to enterprises that employ individuals holding a doctorate or are in pursuit of studies for a doctorate in science, technology and/or engineering – so long that such individual retains employment for a minimum of 12 months.

 

 

·         Donations

 

–          Community Chest Fund donations made during 2015 that amount to not less than €2,000 made by companies shall be entitled to a tax deduction equivalent to the amount donated.

–          A new introduced tax deduction shall take place in relation to donations made to arts equivalent to 150% of the amount donated.

 

·         Tax deduction on electric/hybrid vehicles

 

·         A 50% tax deduction shall be availed off by businesses that opt to purchase hybrid and/or electric vehicles in the same year of purchase.

 

 

·         Police Officers earnings

 

–          Any ‘extra duties’ performed by police officers as of January 2016 shall be held as a separate chargeable tax from income and thus subject to 15% tax (reduced rate).

 

·         Fiscal Consolidation

 

–          Companies that are owned by the same persons have the option to undergo a fiscal consolidation regime in order to facilitate the computation of taxable income and therefore be eligible to submit one consolidated income tax return.

 

 

 

Value Added Tax

 

·         Reduction in VAT on sports activities

 

–          A reduced rate of 7% shall be introduced on gym memberships and fees charged by fitness centers and other similar sports activities.

 

 

Property Measures

 

·         Tax on rental immovable property

 

–          At the option of the taxpayer, the income derived from the rental of residential property may be chargeable at 15% final tax also on rental of commercial property, but will exclude rents between related parties.

 

Eco Contribution

 

·         Removal of Eco Contribution on more products

 

–          Following last years removal of eco contribution on electronic equipment, further removal of eco contribution from other products shall be effective, however simultaneously increasing in excise duty.

 

Company registration fees

 

–          The initial registration fee for companies registered in electronic format and whose authorised share capital does not exceed €1,500 shall be reduced to €100.

 

Family businesses and social entrepreneurship

 

–          White Paper on legal measures, corporate governance measures and fiscal incentives intended to facilitate transfers of businesses between family members to be launched for public consultation.