BCMS Limited
243/1 Constitution Street
Mosta, MST 9052

T: +356 2142-1111
M: +356 9947-5566
F: +356 2141-7118
E: rkg@bcmsltd.com

2016 Budget preview

Minister for Finance Edward Scicluna Budget 2014 briefcase

  • Cost of living
    An increase in the cost of living of €1.75 per week (€91 per annum)
  • Income Tax (General)
    Widening of tax bands so that no tax is payable where one’s wage or pension does not exceed minimum wage (plus government bonus).
  • Income Tax (Sports)
    A reduced 7.5% tax previously applicable to football and waterpolo players now extended to other sports and shall include coaches
  • Income Tax (Police)
    Payments for additional duties falling under the definition of “extra duty” by police shall be taxable at 15%
  • Income Tax (Rental income)
    The 15% tax previously applicable to residential letting has now been extended to the letting of commercial properties. (Properties requiring an MTA licence are also eligible since 2014). This reduced rate remains optional (it might not always be advantageous) and now applies to both companies and individuals but not intra group rentals.
  • Income Tax (Sale of immovable property)
    The final withholding tax of 8% on the sale of immovable property has now been reduced to 5% for properties in urban conservation areas which are renovated. A similar reduction in stamp duty from 5% to 2.5% also applies.
  • Income Tax deduction (Trade and business)
    The capital allowances for industrial buildings, hotels and car parks, deductible against trade and business income will start to include office buildings.
  • Businesses that purchase hybrid or electric vehicles can claim a wear and tear allowance of 50% of the purchase price in the year of acquisition
  • Stamp duty (First time buyers)
    The stamp duty exemption for first time buyers has been extended to Dec 2016. Contracts made since it expired (1 July 2015 ) will be entitled for a refund.
  • VAT Reduction (Selected activities)
    The VAT rate has been reduced from 18% to 7% for gym memberships, football nurseries, fitness centers and similar activities.
  • Other fiscal measures

– An “in work” benefit of €150 per child under 23 years of age, applicable for families where only one parent is gainfully employed and earns between €6,600 and €12,700. The incentive increases to a maximum of €1,000 where both parents work but earn between 10,000-20,000;

– An increased pension for those receiving the minimum pension;

– A full tax deduction (previously 50%) for donations exceeding €1,999 by corporate entities to the Community Chest Fund;

– Tourists will be subject to a tax of €0.50 per night capped at a maximum of €5 per visit as from 1 April 2016. Although the budget mentions “tourists” this tax is likely also to apply to non tourists staying at a hotel though this is still to be determined.

– Increased duty on tobacco, cement and fuel

– Companies registered electronically with an authorised capital of not more than €1,500 shall have their initial registration fees reduced from €250 to €100.

– A tax credit of 150% (of donation value) for people donating money to arts.

– A proposal for a single tax return and computation for companies owned by the same shareholders

– Increased financial assistance for business start-ups

– The current ceiling for Micro Invest tax credits is being extended from €30,000 to €50,000 for self employed women and organisations where woman hold a majority of shares

– Financial compensation of €10,000 (maximum) for SMEs renting out space from private sector for manufacturing purporses

– A number of non fiscal measures on long term projects to promote Malta, the national film studies or facilitate transport.