Malta Budget 2014: Main Measures

TAX DEDUCTION FOR ENTREPRENEURS WHO OFFER APPRENTICESHIP PLACEMENTS AND WORK PLACEMENT TO INEXPERIENCED NEW WORKERS

• A tax deduction of €600 for every apprenticeship placement (capped at 800 placements) shall be given to Entrepreneurs who are willing to be part of a new apprenticeship placements scheme.
• Government is offering an incentive to entrepreneurs in the form of a tax deduction of €600 for every work placement they provide (capped at 400 placements) to inexperienced workers.

MICROINVEST AND JEREMIE SCHEME
Micro enterprises and self-employed will be supported through a tax credit of:

• 45 per cent on eligible expenditure  for Malta based enterprises, and
• 65 per cent on eligible expenditure if based in Gozo.

The ‘Jeremie Scheme’ is being continued.

TAX DEDUCTION ON TRAINING AND/OR EMPLOYMENT TO EMPLOYEES WHO ARE BETWEEN 45 AND 65 YEARS

• A deduction of €5,800, resulting in a tax savings of €2,030 applies to employers who hire persons within this age group (provided that they have been unemployed for the previous three years). The deduction applies for the first two years of employment.
• In addition companies will benefit from a tax deduction on their income or corporate tax of 50 per cent of the approved training (up to a maximum of €400).

FAMILY BUSINESS ACT
The Government will enact the Family Business Act which aims to ensure the continued existence of family businesses by facilitating the transition from one generation to another.

REVENUE MEASURES

• Excise tax on cigarettes and tobacco, fuel, alcoholic drinks and beer, cement, and bunkering fuel shall increase.
• Diesel will remain stable for six months up to March 2014.
• Petrol will increase by just one cent as from January 2014.
• Car licences rates will earn €21.4 million more than this year.

TAX ON AUCTIONS
The tax on auctions is going to be abolished.

CHANGES IN INDIVIDUAL’S INCOME TAX

• Maximum income tax rate down from 32% to 29% (applicable for single, parent and married computations).
• Untaxed parent rate bracket is being widened from €9,300 to €9,800. This applies to parents with dependent children up to the age of 23 years.
• 15 % final withholding tax on part-time work is extended to €10,000 from €7,000 and that for part-time self-employed to €12,000.
• Pensioners who work part-time will benefit from a 15% tax rate on their employment.
• There will be no tax on the minimum wage.
• Income tax payable by footballers will go down to 7.5%.
• Taxpayers who earn income from leases on residential property can apply for a 15% final withholding tax on the gross rental income.

HELPING THE LONG-TERM UNEMPLOYED TO JOIN THE LABOUR MARKET

• Long-term unemployed who join the labour market will retain their unemployment benefits which shall be scaled down over three years.
• The 15% self-employed contribution shall be extended to pensioners.
• Pensioners who retain a part-time self-employed business will be given the option to pay a 15% tax rate on their income, given their earnings do not exceed the minimum threshold pertaining to the lowest contribution due.

PART TIME EMPLOYMENT
Part Time Self Employed may employ two part-time employees, retaining their part time status.

INCOME TAX FOR UNEMPLOYED WOMEN WHO ARE OVER 40 YEARS OF AGE

• Married men, whose spouses (over 40 years) returning to work after being inactive for more than 5 years and earning up to minimum wage, will continue to apply joint tax computation solely on their income.
• Spouses’ income will be tax free and not included in the husband’s tax computation.

COLA FOR 2014

• The COLA payment will be €3.49 weekly.
• Minimum wage earners receiving the COLA will be exempt from paying tax on the increase.
• Also applicable to pensioners who are currently not liable to tax.

TAX CREDIT FOR PARENTS SENDING THEIR CHILDREN TO PRIVATE CHILDCARE CENTRES
Tax credit being extended from €1,300 to €2,000.

DUTY ON PROPERTY FOR FIRST TIME BUYERS

• Exemption of 3.5% duty on the first €150,000;
• Applicable to first time buyers not owning immoveable property before 1st January 2014;
• Contract to be concluded in 2014.

TRANSFER CAUSA MORTIS FOR DISABLED PERSONS
Tax on transfer causa mortis for every property inherited by disabled persons will be tax exempt.

REDUCTION IN REGISTRATION TAX ON MOTOR CYCLES AND NON-EU IMPORTED CARS

• Registration tax on motors having an engine equal to or greater than 250cc to be reduced.
• Registration tax on non-EU imported cars (not older than eight years) with emissions not exceeding the 150g/km Co2 level will be reduced.

TAX EVASION & AVOIDANCE
Strong measures have been announced to combat tax evasion which shall be supported through educational programs. These shall include:

• In real estate business, valuation of works carried out which should reduce VAT evasion.
• Launch of an Investment Registration Scheme, whereby individuals will be given the opportunity to regularise undeclared investments.
• Online system to report evasion from tax payment by foreign workers.

For assistance contact ECOVIS Malta by sending an email to malta@ecovis.com
www.ecovis.com/malta