Emergency Measures

COVID-19: Emergency Measures in Malta | Update 11

This is the 11th update on COVID-19 related measures.   

International News

1.1   European Commission mobilises all its resources in response to the COVID-19 outbreak

On 2nd April 2020, the European Commission proposed the setting up of SURE, a €100 billion solidarity instrument to aid workers keep their incomes and businesses to stay afloat. Through SURE, countries that need it will be provided with up to €100 billion in loans based on guarantees provided by Member States.

It has also proposed to redirect all uncommitted money from the three Cohesion Policy funds – the European Regional Development Fund, the European Social Fund and the Cohesion Fund – to address the effects of the COVID-19 crisis. 

The Commission acknowledged that these measures are based on the current EU budget and will squeeze out every available euro, thus showing the need for a strong and flexible long-term EU budget.

Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_582

1.2   European Commission approves Maltese State Aid scheme

On 2nd April 2020, the European Commission approved the Maltese State Aid scheme to support the Maltese economy in the context of the COVID-19 outbreak. The scheme was approved under the State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak.

The approved Maltese scheme has an estimated budget of €350 million and comprises a guarantee scheme for working capital loans granted by commercial banks to support companies affected by the coronavirus outbreak. It has the following features:

  1. the underlying loan amount per company is linked to cover its liquidity needs for the foreseeable future;
  2. the guarantees will only be provided until the end of this year;
  3. the guarantees are limited to a maximum of six years; and
  4. guarantee fee premiums do not exceed the levels foreseen by the Temporary Framework.

Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_578

1.3 European Commission waives VAT and Duties on vital medical equipment

On 3rd April 2020, the European Commission has temporarily suspended customs duties and VAT on protective equipment, testing kits or medical devices such as ventilators. The suspension will be applicable from 30 January 2020 until 31 July 2020 and applies to state organisations and charitable or philanthropic organisations approved by the competent authorities of the Member States.

Sources : https://ec.europa.eu/taxation_customs/covid-19-taxud-response/covid-19-waiving-vat-and-duties-vital-medical-equipment_en;

https://ec.europa.eu/taxation_customs/sites/taxation/files/03-04-2020-import-duties-vat-exemptions-on-importation-covid-19.pdf

2. Administrative Notices

2.1 Malta Development Bank launches COVID-19 Guarantee Scheme

Further to the EC approval of Malta’s COVID-19 State Aid Scheme, MDB has launched the COVID-19 Guarantee Scheme (CGS). The CGS provides guarantees to commercial banks in order to enhance access to bank financing for the working capital requirements of businesses in Malta facing a sudden acute liquidity shortage as a result of the COVID-19 outbreak.

CGS will be intermediated via commercial banks in Malta which are accredited by MDB. Loans will be available from these banks and loan applications will be assessed by them in line with their credit policy criteria.

The CGS covers new working capital loans (and not the restructuring or rescheduling of existing facilities). The eligible costs under these loans mainly include, but are not limited to:

  • Salaries of employees, including social and health security payments
  • Lease of establishment, including rental costs, energy and water bills, fuel etc.
  • Unpaid invoices due to a decrease in business revenues in respect of working capital and other similar commitments and in respect of investment expenditures provided that investment expenditures only qualify under the Scheme if they were contracted for prior to the approval of this Scheme by the Commission
  • Acquisition of material and stock for continuation of business
  • Expenses directly related to contracts which were cancelled or postponed because of the COVID-19 outbreak excluding penalties and other liabilities incurred due to non-performance of contracts
  • Maintenance costs.

All business undertakings established and operating in Malta are eligible beneficiaries under CGS, subject to the following cappings:

  • SMEs (up to 250 employees): €2 million (may be increased to up to €4 million, subject to ad-hoc approval by MDB)
  • Large enterprises (employment exceeding 250): €5 million (may be increased to up to €8 million, subject to ad-hoc approval by MDB)
  • In all cases, the individual loan amount may not exceed double the annual wage bill of the beneficiary or 25% of the beneficiary’s total turnover in 2019, or a higher amount, subject to appropriate justification and self-certification, to cover the liquidity needs of SMEs for the coming 18 months and of large enterprises for the coming 12 months.

The interest rate due on these loans is to be determined by the commercial bank, but an interest rate reduction of 1% point on the average lending rate as compared to similar facilities prior to the introduction of the guarantee scheme must be provided. A moratorium period of 6 months (extendible to 1 year on a case-by-case basis) is available on both interest and capital repayments.

The loans in question must have a minimum term of 18 months, up to a maximum term of 48 months (extendible to 72 months, subject to terms and conditions). Loan terms longer than 72 months will not be covered by the CGS.

Source: https://mdb.org.mt/en/Schemes-and-Projects/Pages/MDB-Working-Capital-Guarantee-Scheme.aspx

3. Acts

3.1 Act No. XII of 2020 (Budget Measures Implementation Act, 2020 (Amendment) Act, 2020)

This amendment increases the ceiling on the amount of money which may be raised by the Government of Malta by way of loan to €2 billion (increased from €450 million). It also provides that the money borrowed may be appropriated and applied for the purpose of meeting excess expenditure over revenue incurred in the Consolidated Fund for year 2020.

3.2 Act No. XIII of 2020 (Legal and Other Time Periods) Suspension and Interruption) Act, 2020)

This Act provides that, where the Superintendent of Public Health issues an order for the closure of:

(a)    any court;

(b)    the registry of any court;

(c)    any government department;

(d)    any office of any public authority;

(e)    any other entity constituted by law; or

(f)     any other office that provides a service to the public

and it appears to the Minister responsible for justice (“Minister”) that the closure of such entities, departments or offices may have a prejudicial consequence as a result of the continued running of time periods prescribed by any law or in any contract during such closure, the Minister may make regulations in connection with the running of such times that may be deemed expedient in the circumstances.

4. Legal Notices

4.1 Legal Notice 120 of 2020 (Qualifying Employment in Aviation (Personal Tax) (Amendment) Rules, 2020)

S.L. 123.168 has been amended with effect from 1 January 2020 such that the Scheme may be applied for a consecutive period of five years by EEA and Swiss nationals and third-country nationals alike. A one-time extension of five years is also available for all EEA, Swiss and third-country nationals.

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