Malta Economic Regeneration Package

UPDATE - 8 June 2020

On 8th June 2020, the Maltese Government announced a package of measures aimed to regenerate the economy following a number of restrictive measures taken to combat the COVID 19 pandemic.

The package is built on three pillars targeted to:

Reduce business costs;
Enhance domestic demand; and
Assist industries whilst safeguarding employment

The main incentives were the following:

Wage Supplement Scheme

The COVID 19 wage supplement that have been made available at the beginning of the pandemic will be further extended to September 2020. From 1st July 2020, the wage supplement will be granted as follows:

Businesses operating in the tourism industry will be receiving the wage supplement in full - €800 per month in the case of full timers and €500 per month in the case of part timers;
Business previously included in Annex A that are not directly dependent on tourism will be considered as Annex B businesses. Therefore, the wage supplement will be reduced to €600 per month in the case of full timers and €375 in the case of part timers;
Business previously included in Annex B will continue to receive the same amount;
Pensioners and students, who have other sources of income other than their pension or stipend and who were previously excluded from the wage supplement, will now be entitled for the wage supplement scheme.

Incentives for Businesses

Businesses included in Annex A and Annex B are given the following subsidies:

One time rent subsidy of €2,500 to cover rental costs.
One time utilities support equivalent to 50% of the electricity consumption costs (capped at €1,500) for the months of July, August and September.

As from Monday 15th June, petrol and diesel prices will be reduced by 7c per litre.
A full refund of trade licenses and permits paid during 2020 by business that had to close during the pandemic.
Refund of 33% of port charges and 10% in container discharge fees incurred on the import and export of goods for the period from June to December 2020.
Refund of 80% (capped at €10,000) of costs incurred in participating in fairs abroad that were cancelled due to COVID 19.
An increase of €5 million in the budget of the Skills Development Scheme for businesses employing less than 50 employees.
Grants of up to €5,000 to cover business consultancy fees incurred to re-engineer their business models.
Grants of up to €200,000 to businesses in the construction industry to acquire more modern and eco-friendly equipment.
Granting of export credit guarantees to assist companies export their products to new markets.
The final withholding tax on the sale of property will be reduced from 8% to 5% and the stamp duty on the acquisition of property will be reduced from 5% to 1.5%. Such reductions apply on the first €400,000 transfer value. These reductions apply for property transfers published by the end of March 2021. Exemptions from stamp duty applicable to first time buyers will also be relaxed, whereby owners of small property portions and garages will now be eligible as first-time buyers.
The tax deferral scheme announced in March will be retained until September. The deferred payments are then required to be settled within 12 months. However, as from 1st July no deferral is allowed for the Final Settlement System tax and Social Security Contributions.
Tax credits received under the Malta Enterprise Micro-Invest Scheme may be converted into cash grants – the maximum that can be transferred is 30% capped at €2,000 for businesses in Malta and €2,500 for business in Gozo and those run by female entrepreneurs.
Support of €3 million to voluntary organisations who have seen a decrease in income because of the pandemic and support of €2 million to elderly homes.
Malta development bank will be stepping in to underwrite bonds that are not subscribed upon their roll-over to ensure that the bondholders obligations are upheld.

Incentives to increase domestic demand

€100 vouchers to be given to all residents in Malta over the age of 16, out of which €80 to be used at MTA licensed accommodations, restaurants and bars and €20 to be redeemed in retail outlets that were forced to close due to COVID such as hairdressers, clothes and beauty parlours. All vouchers are valid until the end of September 2020.
Grant of up to €2,000 per couple to cover forfeited deposits on wedding expenses.
In work benefits given to encourage parents to go to work will increase to €1,400 per child in cases where both parents work or €630 per child where only one parent work. Each family is to receive an additional one-time benefit of €250.

How Can Debono & Associates Assist?

The details of the above measures are still being communicated. We continue to follow developments and provide updates as they become available.

Jean Paul Debono – Managing Partner (jeanpaul@debonoassociates.com)

Disclaimer: The information contained in this publication is a general commentary and should not be used, relied upon or treated as substitute for professional advice. Readers should take specific advice from a qualified professional when dealing with specific situations. Debono & Associates and associated companies reserve the right to change, modify or correct the information contained in this publication at any time without notice.