2017 BUDGET – A summary of principal policies


Business

  • The tax exemption on capital gains, realised upon the sale of shares to the public through a listing on the Malta Stock Exchange, will be re-introduced, at the rate of 15%. A similar exemption will also be introduced in respect to the sale of shares to the public through a listing on an alternative trading platform. The benefit afforded in this case may be dependent on the percentage shareholding offered to the public.
  • An annual tax credit of up to €250,000, in terms of a Risk Investment Scheme, will be afforded to people who invest in Small or Medium Enterprises (‘SMEs’) that are registered on an alternative trading platform, such as ‘Prospects’, or in funds that invest in a number of SMEs  that are so registered.
  • Malta Enterprise will launch a tax credit in relation to costs incurred on renovation works undertaken on hotels and restaurants, capped at €200,000 and €50,000 respectively.
  • Disadvantaged individuals who set up a business will be entitled to receive a financial assistance of up to €25,000.

Transport

  • The Kappara project is expected to be completed by the end of 2017, after which works will commence on the Marsa Junction project. Work will also commence on the widening of the Hamrun bypass between the Santa Venera tunnels and the slip road leading towards Qormi, two new junctions at High Ridge and Mosta, and other road works in Zurrieq, Hal-Safi, Isla and Valletta.
  • A public tender will be issued for a fast ferry service between Valletta and Mgarr (Gozo). Moreover, call for proposals for the design, building and operation of the tunnel between Malta and Gozo will be issued next year.
  • The works to tackle parking problems in Mosta, Wied il-Ghajn, Birkirkara, St Andrews, Birgu and Victoria (Gozo) will be started. Moreover, in 2017, the Planning Authority shall propose fiscal incentives for the development of new public car parks including open spaces.
  • Incentives for private companies which organise free transportfor their employees will be made available. Such companies will be given a tax rebate of 150% of their expenditure, capped at €35,000 per year for a company providing this service on its own, while the capping will be increased to €50,000 per year if this service is provided jointly with another company.
  • Any person that reaches the age of eighteen during 2017 will be offered free use of public transport for one year, capped at €312 per youth.

Infrastructure

  • Pinto Wharf in Grand Harbour will be widened by 15 metres to cater for bigger cruise liners in Grand Harbour. Moreover, negotiations will be undertaken to expand the Deep Water Quay. What is more, there are plans to build a new breakwater in Marsamxett. The project has been identified as being eligible to funding through the European Fund for Strategic Investments.
  • The second fibre-optic link will be installed between Malta and Gozo, at a cost of around €3.2 million, over the next two years, in order to attract further niche investment in the IT sector and the digital economy to the island. Moreover, a new fibre-optic link will be laid between Malta and Marseille, France, to reduce dependence on a hub in Italy. It will be financed by EU funds.
  • An indoor pool will be built at the Cottonera Sports Complex, a public call be issued for a shooting range, and a football ground and a pool will be built in Marsaskala. A final decision will be taken on whether, and if so where, a motorsports track will be built. A yacht marina will be built in Gzira, and possibly another one will be built in Marsaskala.
  • An investment of over €56 million will be undertaken on the new ITS campus in Smart City in the first months in 2017. A 40,000 square metre site in Hal-Far will be transformed into international free trade and logistics centre, with an investment of €80 million. The Crafts Village in Ta’ Qali will be developed starting from 2017, with a total expenditure of €14 million. Plans will start for the regeneration of Birzebbugia, and a plot of land will be identified to serve as an administrative centre outside Valletta.
  • Restoration work on the Valletta Triton Fountain and surrounding area will also be undertaken. Partial refund will be given on the expenses incurred on the restoration of façades of historical buildings. Opportunities will be made available to help increase the number of companies operating at the Life Sciences Park.

Energy and Environment

  • Ablecare Oilfield Services Holding Ltd will invest €55 million over 10 years to help the development of ex-Marsa shipbuilding into a maritime hub. The works will start in 2017. A new national oil exploration company will be launched.
  • During 2016 work was carried out to identify the best underwater route and location to link the gas pipeline between Gela (Sicily) and Malta. In 2017, geological tests will also be undertaken to search for the best route to pass the pipeline underground to Delimara.
  • Enemalta will start work on Malta’s first solar farm. Moreover, following the European Union funds obtained for renewable energy, Melita plc in partnership with Malta Government Investments Limited will issue Solar Bonds to the public in order to finance the rental of photovoltaic systems fitted by commercial establishments as well as to raise funds for the installation of photovoltaic in public places.
  • Malta Enterprise will start be administering new schemes aimed at providing assistance to businesses with high energy consumption, which aid the investment in new systems and machinery which will improve the efficient use of energy. The energy plants operating on heavy fuel oil will be closed and will commence operating by means of gas. The Marsa Power Station will be completely decommissioned and the oldest boilers, turbines and chimneys at the Delimara Power Station will be dismantled.
  • Enemed will be modernising the storage facilities at Has-Saptan with the development of a new filling station, involving an investment of over €50 million. Moreover, over €15 million will be invested to modernize the facilities of jet oil storage at the airport.
  • New schemes to promote the use of heat pump water heaters, double glazing, roof insulation, and solar water heaters and to encourage restoration of wells will be introduced. An eco-cheques scheme will be launched which will allow the most vulnerable people to replace their old appliances.
  • The funds collected from the “bed-tax” of €0.50 per day, introduced in 2016, shall be re-invested into specific projects aimed at embellishing and improving the Maltese islands. The projects will be implemented by a new agency responsible for the overall appearance of the Maltese islands.
  • A new scheme will be put into place between the Energy and Water Agency and the MHRA. Thanks to that, hotels will benefit from gains on savings registered in their energy consumption.
  • The eco-contribution reform should be finalised by the end of 2017. Batteries, mattresses, detergents, toiletries, vehicle filters, kitchen utensils and containers made of plastic will no longer be subject to eco-contribution. Excise duty on cigarettes and cigars will be increased by 3.76%, while that of other tobacco products will be increased by 5.5%. Excise duty on non-alcoholic drinks, excluding water, will be increased by two to four cents per litre, and the one on non-bio-degradable utensils and bags will also increase. Moreover, excise duty on concrete and certain construction products will be introduced and excise duty on cement products acquired from outside Malta will be extended. The money obtained in such a way will be diverted to a fund for environmental projects.
  • New green areas will be identified in Swatar, Bormla, Wied Blandun, Bahar ic-Caghaq and Mater Dei. Moreover, work will start on the Inwadar National Park that will stretch from Zonqor Point to the Ta’ Bakrat plant, while the Argotti and St Philip’s gardens at Floriana will be converted into botanical gardens in a €3 million project. The Ta’ Qali picnic area will be extended and the Argotti new camping area will be identified. What is more, companies who work with local councils to develop gardens and other open spaces will be given a tax rebate of 120% of their expenditure.
  • Comino will be turned into a national park. Tourism activities on the island will become organised in light of the government’s national plan to safeguard the Maltese environment.

Social measures – Education

  • Students who reside in social institutions such as church homes and the students with any disability will be entitled to maintenance and supplementary grants. Students from Gozo will be granted a subsidy in case of attending private tertiary education institutions.
  • The Government will provide an amount of €400,000 for the teachers who apply for free year in order to amplify their studies. €1 million fund will be administrated in order to purchase school supplies for children from deprived backgrounds.
  • Tablets will be provided to all 4th year primary students. The Government will change the computers which were bought eight years ago or more.

Social measures – Pensions

  • Pension income up to €13,000 will be tax free. In order to eliminate the pension disparities referring to gender, the Government has decided to establish an increase of a maximum of €20 per week.
  • Contributions to private pensions by employers will be considered as a tax deductible expense. The employer will be entitled to a further tax credit amounting to €150 for each €1,000 contributed.
  • Wages will increase by €1.75 per week to reflect the cost of living adjustment. The minimum retirement pension payable to married pensioners will be increased by an additional €4 per week. An annual amount of €300 will be granted to senior citizens over the age of 75.
  • Those who need carer’s assistance will be entitled to receive an increase of €1,820 in total per year. Elderly people who are residing in their homes while waiting for being accepted in a residential house will be entitled to a subsidy of maximum €5,200 per annum, so that they could have cares at home.

Social measures – Poverty

  • The allowances for unmarried individuals who quit their jobs to take care of their parents will be increased by €35 per week, reaching €140 per week. Likewise, for married people the amount will be €90 per week.
  • The number of vulnerable families has doubled from 1,400 to 2,800 and the rent subsidy given to them will be reconsidered.
  • Other measures
  • The rate of stamp duty applicable to transfers of businesses by parents to their children will be reduced from 5% to 1.5%. The stamp duty rate for persons who acquire a residential property in Gozo by the end of 2018 will be reduced from 5% to 2%, provided that the promise of sale agreement is registered with the Inland Revenue Department by the end of 2017. The stamp duty exemption on the first €150,000 of the value of the property for individuals buying their first residential property is being extended until the end of 2017.
  • All transfers of inherited property by means of a judicial sale by auction will be subject to a final tax at the rate of 7% on the transfer value. €5,000 tax concession for first-time property buyers will remain at the same level.
  • Research projects and projects connected with the development of digital games with a cultural theme will be entitled to a tax credit of 25% up to 45% of the expenses incurred and up to 30% of the expenses incurred, respectively.
  • A European Gaming Institute of Malta will be set up to ensure that persons working in the gaming industry possess the required specialised expertise.
  • Legislative measures will be introduced in the areas of insurance, collective investment schemes and securitisation in order to ensure that Malta’s financial services sector continues to develop. The Joint Enforcement Task Force is being established to ensure that the Inland Revenue Department, the VAT Department and the Customs Department can address the issues of unfair competition and tax evasion in a more effective manner. Among other functions, the Task Force will seek to identify instances of unregistered employees, undeclared rental income and unfair competition with respect to certain importations.

Andrea Beccarini Crescenzi
Economist
Justyna Ferenc
Statistician
Economic Department, PKF MALTA

DISCLAIMER

All matters raised in this report are only those which came to our attention and are not necessarily a comprehensive statement of all weaknesses and strengths, and potential risks and opportunities that exist. Though no complete guarantee can be given with regard to the advice and information contained therein, care has been taken to ensure that all the information provided in this report is accurate as possible, enabling us to provide a reasonable representation of the sector. The report is prepared solely for the exclusive use of its recipient/s as indicated in the covering letter accompanying the report, and otherwise the report should not be quoted or referred to in whole or in part without our prior consent.  No responsibility to any third party is accepted as the report has not been prepared, and is not intended for any other purpose.  PKF Malta is a member firm of PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.