ECONOMIC PERFORMANCE
In the first six months of the year, the Maltese economy grew more than three times the European Union (EU) average rate of 1.4%. The unemployment rate as at June 2019 remained at 3.4%, whist the unemployment rate for 2020 is anticipated to be 3.5%,
continuing to be below the EU average rate. The Incoming tourists up to July 2019 amounted to 1.5m, which grew by 4.2% from 2018.
Income distributions in Malta is comparatively better when compared to the European Union (EU) average with the wealthiest 20% of the total population having an income that is on average 4.3 times greater than that of the poorest 20% of the whole population. A new record figure of 25 new financial instruments were listed on the Malta Stock Exchange (MSE) in 2019
National debt as at the end of 2019 estimated to be around 43.1% of GDP (i.e. €5.7bn) and is projected to decrease to 40.4% of GDP by 2020. The surplus for 2019 estimated to be around €48.5m (1.4% of GDP) up from €33.3m as anticipated in 2018. For 2020, this is expected to increase to approximately €114m.
INCOME TAX
REDUCED TAX ON OVERTIME
Beginning from 2020, the first 100 hours of overtime for employees with the basic salary of not more than €20,000 (and not in a managerial post) will be taxed with the rate of 15%.
TAX REFUND TO EMPLOYEES
Tax refunds paid in the past two years will be given again to employees who earn less than €60,000. The refund will range between €40 and €68 depending on the level of income and tax status of the employee.
EXEMPTION ON PENSION INCOME
The maximum amount of exempt pension revenue will be increased to €13,798 with individuals claiming married rates being eligible to receive a further €2,000 tax free in respect of income from alternative sources.
NEW SERVICE OFFERINGS BY THE OFFICE OF THE COMMISSIONER FOR REVENUE
New online services for VAT and Private Employer (PE) registrations. Pensioners may choose not to pay provisional tax but to have an amount deducted from their pension. Couples who are married can decide to file separate income tax returns. Taxpayers to receive tax statements (on a provisional basis) in order to reduce the filing of tax returns. Tax refunds must be paid within six months.
TAX ON ASSIGNMENT OR CESSATION OF RIGHTS OVER PROPERTY
Effect from 1 January 2020, the first €100,000 of any profits or gains arising on the assignment or cessation of any rights acquired under a promise of transfer of immovable property or any rights thereon would be subject to a tax at the rate of 15%. Any profits or gains that exceed €100,000 will remain subject to tax at 35%.
TAX MEASURES RELATING TO GOZO
Enhancement to the iStartup tax credit to further incentivise new companies setting up in Gozo. Tax incentives to be provided in respect of relocation costs incurred by those companies that relocate their businesses to Gozo and also to those businesses creating new jobs opportunities in teleworking and back office sectors.
OTHER TAXES
STAMP DUTY
An extension of the reduced duty rate on certain intra-family transfers of business property and securities. First-time buyers of real estate properties will now be excluded from the stamp duty on the first €175,000 of the existing value of the property (earlier €150,000).
Repeated reduction or refund of stamp duty on the purchase of a new residential home for “Second-Time Buyers”, in Gozo (reduction from 5% to 2%) and in Urban Conservation Areas (reduction from 5% to 2.5%). The reduced rate of 3.5% on inherited real estate property being the residential property of the heirs shall now be in force on the first €175,000 of the value of the real estate property.
CUSTOMS
Government would continue to invest in new security equipment at the Malta International Airport (MIA) and at the Grand Harbour to help prevent tax evasion, illegal activities, entry of illicit goods and encourage fair competition.
VAT
The VAT exemption on the provision of education and educational research will be extended to approved vocational training and retraining. The grant equivalent to the VAT amount on the acquisition of bicycles and pedelec bicycles is being extended for another year.
The VAT exemption on special apparatus purchased for people with disabilities will be increased by €400 up to a maximum of €1,000.
OTHER MEASURES
Payments in cash for the purchase of property, cars, yachts, and diamonds cannot, as from next year, exceed €10,000. This measure seeks to combat tax evasion and stimulate fair trade.
SOCIAL MEASURES
COST OF LIVING INCREASE
The cost of living increase for 2020 amounts to €3.49 per week. Such increase will be given to all workers, to pensioners and to those who receive welfare benefits. Students will also be given such cost of living increase on a pro-rata basis.
PENSIONS
All social security pensions will be increased by €3.51 per week, together with the cost of living adjustment of €3.49, the weekly increase for pensioners should be of €7 (€364 per year). Same to prior years, the portion of any service pension which is not to be reduced from the retirement pension is being increased by a further €200
Recalculation of certain service pensions once recipient reaches pension age. Invalidity pension revised upwards to match the minimum national wage.
MEASURES RELATED TO EMPLOYMENT
An extra day of leave to all workers’ annual leave balance.
OTHER MEASURES
An added bonus of €35 to families with more than one person; reduced to €15 for single person in each household. Persons not eligible for minimum pension shall continue benefiting from a bonus of between €200 and €300, even after 75 years of age. Introduction of a €300 bonus for every new-born or adopted child.
Increase in allowance given to widowed pensioners having children aged under 18 years of age. Such allowance shall be increased to €10 a week regardless of whether the widowed pensioner is currently working or not. Crediting of up to eight years of contributions given to parents of children suffering from rare diseases.
ECONOMIC MEASURES
The Malta Stock Exchange (MSE) is to continue implementing initiatives to promote the issuance of Green Bonds that are intended to fund environmentally friendly projects. Initiatives aimed to support the growth of video games development and esports industries by strengthening of courses in order to equip people with the skills that are needed to operate in these industries.
Grants will be given to enterprises employing people with special needs. Extension of the current Malta Enterprise Schemes for the agriculture and fishing sectors, together with new incentives for such industries to be more creative under the ‘Innovation Aid for SMEs’ Scheme. New strategies for tourism to attract higher-end visitors to Malta and to ensure a sustainable growth of this industry in Malta.
Several initiatives for Gozo including allocation of funds for Gozo to be used as meetings and conferences destination, extension of support scheme for students and employees studying and working in Malta, acquisition of a fourth vessel by Gozo Channel and installation of a second fibre optic cable. Furthermore, work continues on the planning process for the Gozo Tunnel.
OTHER MEASURES
The government would be financing the 10% down payment (up to €17,500) interest free and repayable over a 15-year period to certain people under 40 years of age who need assistance to acquire a permanent residence. The establishment of a new authority to regulate and oversee the construction industry.
Measures to eliminate single-use plastics by 1 January 2021 by banning importation and production of such plastics. Exemption from registration tax on eco-friendly vehicles (including electric and hybrid cars) will be extended for another year. More charging pillars will be installed.
Following the One Tablet per Child Scheme, a pilot project will be launched in order to expand the use of technology to middle schools. A grant of a maximum of €850 per person to study a foreign language overseas. Continuing to invest in technology in educational institutions, including the University of Malta (UOM).
