The COVID-19 Mini-Budget: Prime Minister Announces Special Stimulus Package | Update 29

The COVID-19 Mini-Budget: Prime Minister Announces Special Stimulus Package | Update 29

1. Tax Measures

  1. Reduced Rate of Property Transfers Tax
  2. Reduced Rate of Duty on Documents
  3. COVID-19 Fiscal Assistance – Postponement of Payment of Certain Taxes
  4. MicroInvest Tax Credit to be partially provided as Cash Grant

2. Supplements & Subsidies

  1. A continuation of the COVID-19 Wage Supplement Scheme until the end of September
  2. Rent and electricity subsidies for businesses
  3. Assistance to Enterprises promoting their business outside of Malta
  4. Construction industry incentivised to modernise machinery
  5. Support for Business Plans and Business Re-Engineering
  6. Small Entities to be supported with a Skills Development Scheme

3. Refunds

  1. Refunds and Support to Importers and Exporters
  2. Refunds for Commercial Licenses
  3. Refunds for Cancelled Weddings
  4. Refunds for Cancelled International Trade Fairs

4. Other

  1. Measures to increase domestic demand
  2. Malta Development Bank: Underwriting of Corporate Bonds
  3. In-Work Benefits
  4. Development of a legal framework for SMEs

On 8 June 2020, the Prime Minister announced a series of measures aimed at alleviating economic hardship caused by COVID-19. The measures are the third package of measures and are based on three main pillars:

  1. cost reductions and increased funding;
  2. domestic spending boost and
  3. direct assistance to the country’s industry whilst providing incentives to promote work.

The announced measures include:

1. Tax Measures

1.1   Reduced Rate of Property Transfers Tax

With respect to:

  1. immovable property which is currently being developed; and
  2. which shall be transferred by deed of transfer executed between 1 June 2020 and 31 March 2021;

Property Transfers Tax will be charged at the rate of 5% (normally the default rate is of 8%).

1.2 Reduced Rate of Duty on Documents

With respect to certain acquisitions of immovable property, a reduced rate of duty will apply up to €400,000. The reduced rate of duty will be of 1.5% (the standard rate of duty is 5%). The reduced rates will be applied to deeds of acquisition entered into between 9 June 2020 and 31 March 2021.  

The First Time Buyers Scheme will be amended such that individuals who already own portions of properties or garages will nonetheless be eligible for the Scheme.

1.3 COVID-19 Fiscal Assistance – Postponement of Payment of Certain Taxes

The COVID-19 Tax Deferral Scheme will be extended until the end of August 2020. The payments for deferred taxes will be spread over a 12-month period.

As of 1 July 2020, the tax deferral scheme will no longer apply with respect to Final Settlement System and Social Security Contribution payments.

1.4 MicroInvest Tax Credit to be partially provided as Cash Grant

Up to 30% of MicroInvest Tax Credits will be converted into Cash Grants, capped at €2,000 for Malta-based businesses and which increase to €2,500 for enterprises based in Gozo or those led by women.

2. Supplements & Subsidies

2.1 A continuation of the COVID-19 Wage Supplement Scheme until the end of September

Businesses and the self-employed falling under Annex A which are directly dependent on the tourism industry (tourist accommodation, travel agents, language schools, event organisers and air transport operators) will continue to receive the Wage Supplement at the current levels. Businesses and the self-employed falling under Annex A which do not operate in the tourism industry will receive a reduced Wage Supplement (€600 per month per full time employee, €375 per month per part time employee). A third category of Wage Supplement recipients (including those providing personal services) will continue receiving this support too but will be transferred to Annex B. Annex B businesses will continue to receive the Wage Supplement at the current levels.

Pensioners and students who derive income from a part-time employment which is not, however, their main source of income, will also be eligible to the Wage Supplement.

All Wage Supplements will run until the end of September.

2.2 Rent and electricity subsidies for businesses

Enterprises listed in Annex A and B of the COVID-19 Wage Supplement will receive a cash grant of €2,500 to be used to pay rental expenses. The Government will subsidise 50% of the electricity bills of these enterprises for the months of July, August and September, subject to a capping of €1,500.

2.3 Assistance to Enterprises promoting their business outside of Malta

Assistance will be provided for enterprises carrying out digital promotion in new markets. This assistance will be capped at €10,000 per enterprise.

Support will also be provided to companies looking to export to new markets through an Export Credit Guarantee Scheme.

2.4 Construction industry incentivised to modernise machinery

Assistance will be provided to enterprises operating in the construction industry to upgrade/replace their machinery with more efficient, sustainable and eco-friendly machinery. This assistance will be capped at €200,000 per enterprise.

2.5 Support for Business Plans and Business Re-Engineering

A scheme to aid businesses in developing business plans and business re-engineering will become available. Each enterprise will be eligible for support of up to €5,000.

2.6 Small Entities to be supported with a Skills Development Scheme

Companies which employ less than 50 employees will be eligible for support in terms of a Skills Development Scheme aimed at improving the employee’s skills.

3. Refunds

3.1 Refunds and Support to Importers and Exporters

A refund of 33% on port charges will be available for vessels providing shipments to Malta. A 10% refund will also be provided on container discharge fees for importation and exportation. These refunds will not be available with respect to transshipment.

3.2 Refunds for Commercial Licenses

Enterprises that have already paid their commercial licenses for 2020 will be refunded.

3.3 Refunds for Cancelled Weddings

Couples who had to postpone their wedding due to the COVID-19 pandemic will be eligible to a cash grant of up to €2,000.

3.4 Refunds for Cancelled International Trade Fairs

A refund up to 80% of expenses incurred by enterprises that were going to participate in international fair that were cancelled as a result of the COVID-19 pandemic.         

4. Other

4.1 Measures to increase domestic demand

Maltese resident individuals over 16 years of age will receive €100 in vouchers which are redeemable by end of September 2020. 80% of this voucher will be available for spending on MTA licensed hotels, restaurants and bars, whilst the remaining 20% of this voucher will be available for spending in outlets which were required to close by the Superintendent of Public Health.

With effect from next Monday 15 June 2020, petrol and diesel prices will decrease by 7c per litre to Eur 1.34 per litre and Eur 1.21 litre respectively. 

The tax refund payable to employees whose income is less than €60,000 and those whose income falls within the tax-free bracket will be paid out during the week starting Monday 15 June 2020.  

4.2 Malta Development Bank: Underwriting of Corporate Bonds

The Malta Development Bank is working on a new facility to be able to underwrite corporate bonds maturing in 2020.

4.3 In-Work Benefits

In-Work Benefits will continue to improve. These grants will be available for couples where both parties work, single parents as well as couples with children with one working parent. A one-time additional benefit of €250 will be provided to each family that benefits from the In-Work Benefits.

4.4 Development of a legal framework for SMEs

A legal framework will be developed for SMEs to publish non-financial information relating to environmental, social and governance considerations.