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COVID-19: Emergency Measures in Malta | Update 22

1. International News

  1. European Commission proposes deferral for certain filing deadlines under the Mandatory Disclosure Rules
  2. European Commission proposes deferral for certain filings under the Common Reporting Standard
  3. European Commission proposes deferral for entry into application of the VAT e-commerce package
  4. State Aid: European Commission expands Temporary Framework to recapitalisation and subordinated debt measures to further support the economy

2. Legal Notices

  1. Legal Notice 186 of 2020 (Value Added Tax Act (Eighth Schedule) (Amendment) Regulations, 2020)
  2. Legal Notice 187 of 2020 (Rent Subsidy Regulations, 2020)

3. Administrative Notices

  1. FIAU Guidance Note on COVID-19
  2. Launch of COVID-19 Masks Subsidy Scheme
  3. Malta Development Bank: Further accredited commercial banks offering facilities under the COVID-19 Guarantee Scheme

1. International News

1.1 European Commission proposes deferral for certain filing deadlines under the Mandatory Disclosure Rules

On 8 May 2020, the European Commission published a Proposal for a Council Directive amending Directive 2011/16/EU to address the urgent need for deferring certain time limits for the filing and exchange of information in the field of taxation due to the COVID-19 pandemic. This proposal for a Directive contemplates a three-month extension to the deadlines for filing and exchange of information pursuant to DAC 6 (the Mandatory Disclosure Rules), such that:

  • the deadline for the reporting of ‘historical’ cross-border arrangements (i.e. arrangements that became reportable from 25 June 2018 to 30 June 2020) is extended from 31 August 2020 to 30 November 2020;
  • where a reportable cross-border arrangement is made available for implementation or is ready for implementation, or where the first step in its implementation is made between 1 July 2020 and 30 September 2020, the period of 30 days for filing information shall begin on 1 October 2020;
  • the date for the first exchange of information on reportable cross-border arrangements will move from 31 October 2020 to 31 January 2021.

The proposal also provides for the possibility of one further extension for a maximum additional three months.

Source

1.2 European Commission proposes deferral for certain filings under the Common Reporting Standard

The proposal referred to above also seeks to extend certain time limits applicable with respect to DAC 2, such that the deadline for exchanges of information by Competent Authorities on Reportable Financial Accounts will be extended by three months, i.e. until 31 December 2020.

Source

1.3 European Commission proposes deferral for entry into application of the VAT e-commerce package

On 8th May 2020 the EU Commission proposed to postpone the entry into application of the VAT e-commerce package by 6 months. If accepted it will mean that the new e-commerce VAT rules rules will apply as of 1 July 2021 instead of 1 January 2021, giving Member States and businesses more time to prepare for the new VAT e-commerce rules. More details on the impacted legislation can be found here, here and here.

1.4 State Aid: European Commission expands Temporary Framework to recapitalisation and subordinated debt measures to further support the economy

The European Commission have further expanded the scope of the Temporary Framework with respect to recapitalisation aid to non-financial companies. In line with the expanded framework:

  1. Recapitalisation aid should only be granted if no other appropriate solution is available. The aid must be limited to enabling the viability of the company and should not go beyond restoring the beneficiary’s capital structure to before the coronavirus outbreak.
  2. The State must be sufficiently remunerated for the risks it assumes through the recapitalisation aid. The remuneration mechanism must incentivise beneficiaries to buy out the shares acquired by the State such that the scheme only has a temporary impact.
  3. Beneficiaries and Member States are required to develop an exit strategy.
  4. Until the State has exited in full, beneficiaries are subject to bans on dividends and share buybacks. Moreover, until at least 75% of the recapitalisation is redeemed a strict limitation of the remuneration of their management, including a ban on bonus payments, is applied.
  5. Additional measures have been put in place to prohibit cross-subsidisation and take-overs.

Moreover, the amended Temporary Framework now also allows Member States with the possibility to support undertaking facing financial difficulties due to the COVID-19 pandemic through the provision of sub-ordinated debt at favourable terms. Certain restrictions and limitations are envisaged.   

Finally, it was also noted that the Temporary Framework will be in place until 31 December 2020. That said, where the recapitalization measures are concerned, the Commission has extended this period until 30 June 2020. The Commission also noted the need to ensure legal certainly and therefore it will be assessing before these dates if they need to be extended.

Source

2. Legal Notices

2.1 Legal Notice 186 of 2020 (Value Added Tax Act (Eighth Schedule) (Amendment) Regulations, 2020)

By virtue of this Legal Notice, with effect from 4 May 2020, VAT will apply at a reduced rate of 5% on the supply of protective face masks and visors, excluding diving equipment.

2.2  Legal Notice 187 of 2020 (Rent Subsidy Regulations, 2020)

This Legal Notice establishes, with effect from 1 February 2020, a Rent Subsidy scheme to be administered by Malta Enterprise. This Scheme applies with respect to eligible undertakings requiring support to rent industrial space for developing a business activity. Malta Enterprise may provide assistance not exceeding €25,000 per annum and covering up to 50% of the cost of the rental. Both the term ‘eligible undertakings’ and the terms and conditions of the Scheme will be laid out in Guidelines to be issued by Malta Enterprise.

The deadline for applications is 31 December 2022.

3. Administrative Notices

3.1 FIAU Guidance Note on COVID-19

The FIAU have published a guidance note titled COVID-19: Remaining vigilant against a changing criminal landscape which aims to advise on current and anticipated threats, address arising concerns and remind subject persons to remain vigilant in the fact of ML/FT risks.

The Guidance may be accessed here.

3.2 Launch of COVID-19 Masks Subsidy Scheme

The Minister for the Economy, Investment and Small Businesses has announced the launching of the COVID-19 Masks Subsidy Scheme, aimed at aiding pharmacies in alleviating wholesale cost-induced losses borne by the introduction of the price capping on protective face masks and visors, while also safeguarding the wider public’s interests. This Scheme will be administered by MIMCOL and may be accessed here.

Source

3.3 Malta Development Bank: Further accredited commercial banks offering facilities under the COVID-19 Guarantee Scheme

The Malta Development Bank has updated its list of accredited commercial banks offering facilities under the COVID-19 Guarantee Scheme.

Source

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