The 2017 Malta Budget was presented on Monday 17th October 2016. The Finance Minister noted the economic improvements which the country made over the past year, highlighting specifically the overall economic growth in certain critical sectors.
This document provides for the salient points of the budget 2017.
INCOME TAX MEASURES
Refund on tax paid on dividends
– Shareholders who receive dividend profit after the 1st of January 2017 from a company listed on the Malta Stock Exchange, shall be entitled to claim a refund on the tax paid on such dividend. This applies to shareholders that do not own more than 0.5% of the nominal share capital and dividend rights of the company.
Malta Stock Exchange
– A maximum credit up to €250,000 per year, in the form of a Risk Investment Scheme, will be granted to individuals or funds that invest in SMEs that are registered as an alternative trading platform, as ‘Prospects’ on the Malta Stock Exchange.
– An exemption from tax will be introduced upon gains obtained from the sale of shares through a company listed on the Malta Stock Exchange.
– As of 2017, the stamp duty due on transfer of businesses by parents to their children will be reduced from 5% to 1.5%.
Eco-contribution and excise duty
– Following last year’s removal of eco contribution, further removal of eco contribution has been announced on products such as batteries, mattresses, detergents, toiletries, vehicle filters, kitchen utensils and containers made of plastic. Instead, some of these products will be subject to excise duty.
– An excise duty is being introduced on the following:
– On non-alcoholic drinks, excluding water, equivalent to 2c per litre;
– On materials used in the construction industry such as steel structures, glass and tiles will be introduced;
– On non-bio-degradable plastic bags in order to incentivize waste separation;
– On cigarettes and cigars at an average rate of 3.76% and at a rate of 5.5% with regards to other tobacco products.
INCENTIVE FOR START-UPS
A start-up company with a turnover of less than €80,000 per year may opt for:
– Exempting the company from preparing a financial audit report for its first two years; or
– The company prepares a financial audit report and instead shall be given a tax deduction on the audit fee incurred which will amount up to 120%, on a maximum fee of €700 per year.
First Time Buyers Scheme
– First time buyers will be exempted from duty on part of the transfer of immovable property on acquisitions made in 2017.
Refund Scheme for first time buyers regarding restoration of UCA property
– New schemes intended for first time buyers of immovable property within a UCA or any other property scheduled within one or two grade, will benefit from a refund capped at €100,000 on expenses incurred on restorations.
Stamp duty reduction on Gozo properties
– Persons who enter into and register a promise of sale agreement by the end of 2017 and purchase a property in Gozo by 2018 will benefit from a reduction of stamp duty from 5% to 2%.
Tax on transfer of inherited property
– Until today, immovable property that is transferred by means of a judicial sale by is charged as follows:
– 7% final tax charged if the immovable property being transferred was inherited before November 1992
– Property inherited after November 1992 and sold by a judicial sale by auction is subject to 7% provisional tax.
In order to simply the tax collection process and to create more equity between heirs, all inherited property that is to be sold by means of a judicial sale by auction will now be subject to a final tax at rate of 7%.
Registration of rent contracts
– All property rent agreements for a term of three months or longer, including renewal agreements, need to be registered with the Inland Revenue Department by either the lessor or the lessee. In the absence of such registration the lessor will be subject to penalties, as contemplated by law.
– In collaboration with Malta Developers Association an entity, Property Malta, will be set up in order to encourage foreigners to live and invest in Malta.
– Rent subsidies, depending upon the size of the family and the household income, will be doubled from the maximum of €83.33 to a maximum of €166.66 per month.
– A pilot project will be launched for people leasing their property to families with a low income of a minimum of seven years. The landlords will benefit form a tax rate of 5%. This does not apply to Special Designated Areas.
– As of January 2017, the minimum retirement pension will be increased by €4 per week which will amount to €208 per year.
– Individuals above the age of 61, with a retirement pension income up to €13,000 will be exempt from income tax. Furthermore, they will be exempt from tax on any income up to a maximum of €1,000.
– Individuals above the age of 75 and that still live in their home, will receive a grant of €300 per year.
– Disability pensions shall be increased.
Private Pensions Scheme by employers
– A tax credit will be granted to employers that contribute and invest in a private pension scheme, on behalf of their employees.
– Any person that attains the age of 18 in 2017 will be given one year of free access to public transport which amounts to a maximum of €312 for each.
– From 2017, companies that provide organized transport for its employees will benefit from a deduction of 150% on the expenses incurred, up to a maximum of €35,000, if it offers the service on its own or €50,000 if it combines the service with another company.
– Any government entity employing more than 50 employees will offer a plan of sustainable transport.
– The scheme, introduced in the previous budget, relating to the installation of bicycle racks by companies to be used by employees will be extended to next year.
– Solar bonds will be issued to the public, which will fund the installation of photovoltaic panels in commercial establishments and public spaces.
– Schemes by the Malta Enterprise and MHRA will be put in place for the industries to benefit from efficient use of energy
– From 1st January 2017, it will no longer be permissible to smoke in car in the presence of children.