Introduction to the Malta Budget 2023
As a consequence of current worldwide events, it is expected that 2023 shall even more challenging than 2022. Supply chains disruptions resulting primarily from COVID-19 as well as energy and fuel price increases resulting from the ongoing conflict in Ukraine have all contributed towards an uncertain economy for 2023. On the 24th day of October 2022, the Minister for Finance and Employment, Hon. Clyde Caruana presented the Budget for Malta for 2023.
Economy
Is it anticipated that the GDP will increase by 6.0% in 2022 and by 3.5% in 2023, resulting in a debt-to-GDP ratio of 59.1% 2023. The annual inflation rate is expected to level at 3.7% in 2023, with energy price inflation remaining contained. Unemployment is projected to remain low at 3.1%.
Malta Budget 2023 - Businesses
Income Tax & Stamp Duty
The current measure in force which allows entities with excess capital allowances resulting from losses suffered during the COVID-19 pandemic to be surrendered to other group entities has been extended and will be allowed to be utilised for the basis year 2022.
The reduced rate of 1.5% stamp duty for intra-family inter-vivos donations of company shares and commercial tenements shall be extended beyond 2022.
Grants & Subsidies
Cash grants have been announced under the Business Enhance Scheme to be provided to small and medium sized enterprises, consisting in an investment of approximately €40million. Businesses requiring support to rent industrial space for developing their business activity shall continue to benefit from the Rent Subsidy Regulations, with the support increasing from €25,000 to €50,000 per annum over a maximum period of six years. The Microinvest Scheme is being extended to Social Enterprises resulting in a tax credit of up to €70,000 over a period of 3 years. Income tax on royalty income arising from literary works for authors ad co-authors shall be decreased from 15% to 7.5%. An investment of €5million shall be made in a Technology Extension Support involving private investors. Malta shall also increase its involvement in the Horizon Europe scheme as well as strengthen the National STEM Community Fund.
Start-Ups
A Start scheme will be introduced to assist start-ups in establishing their business in Malta, which assistance shall include aid with the completion of applications to benefit from existing incentives.
The Malta Enterprise is also working on the development of a new Business Incubation Centre through EU funding for innovative start-ups to continue diversifying Malta’s Economy.
Property Sector in the Malta Budget 2023
First Time Buyers
A new cash grant has been announced for first time buyers, resulting in a benefit of €10,000 over a span of 10 years – this applies to property not exceeding the value of €500,000. First time buyers shall continue being exempt from duty on the first €200,000 of the purchase price of the property.
Extension of current reduced stamp duty and income tax rates
Apart from the extension of the reduced rate of stamp duty for first time buyers, the current refund of duty paid on the first €86,000 of the value of the replacement property shall continue to apply too second time buyers. The reduced stamp duty of €2 for every €100 applicable to property situated in Gozo shall also be extended to the end of 2023.
Transfers of property situated in an urban conservation area (UCA) or which had their construction completed at least 20 years before the date of the transfer and are vacant on the date of the transfer and have been vacant for a period of 7 continuous years during the period immediately preceding the transfer shall continue to benefit from an exemption from income tax and duty on the first €750,000 provided that the transfer is made by the end of 2024. The VAT scheme applicable to the restoration of qualifying properties has also been extended.
Environmental, social, and governance (ESG) guidelines
Malta Enterprise will continue to assist companies in meeting their ESG obligations particularly through cash grants to companies investing in digital and sustainable projects to cover 50% investment, capped at €100,000. Malta Enterprise will also continue to issue guidance for local companies to achieve their ESG goals. Enterprises that invest in projects reducing their energy and water consumption and wastages will benefit from a tax credit of a maximum of €40,000. Interest-free loans shall also be granted to companies to invest in electric vehicles and charging stations.
Malta Budget 2023 - other measures
All employees, pensioners and those receiving social benefits shall receive a cost-of-living adjustment for amounting to €9.90 per week for 2023. Student stipends shall increase pro rata. An additional cost of living adjustment shall also be introduced for vulnerable persons. An additional weekly increase of €2.60 shall be granted to pensioners in their cost-of-living adjustment.
Introduction to the Malta Budget 2023
As a consequence of current worldwide events, it is expected that 2023 shall even more challenging than 2022. Supply chains disruptions resulting primarily from COVID-19 as well as energy and fuel price increases resulting from the ongoing conflict in Ukraine have all contributed towards an uncertain economy for 2023. On the 24th day of October 2022, the Minister for Finance and Employment, Hon. Clyde Caruana presented the Budget for Malta for 2023.
Economy
Is it anticipated that the GDP will increase by 6.0% in 2022 and by 3.5% in 2023, resulting in a debt-to-GDP ratio of 59.1% 2023. The annual inflation rate is expected to level at 3.7% in 2023, with energy price inflation remaining contained. Unemployment is projected to remain low at 3.1%.
Malta Budget 2023 - Businesses
Income Tax & Stamp Duty
The current measure in force which allows entities with excess capital allowances resulting from losses suffered during the COVID-19 pandemic to be surrendered to other group entities has been extended and will be allowed to be utilised for the basis year 2022.
The reduced rate of 1.5% stamp duty for intra-family inter-vivos donations of company shares and commercial tenements shall be extended beyond 2022.
Grants & Subsidies
Cash grants have been announced under the Business Enhance Scheme to be provided to small and medium sized enterprises, consisting in an investment of approximately €40million. Businesses requiring support to rent industrial space for developing their business activity shall continue to benefit from the Rent Subsidy Regulations, with the support increasing from €25,000 to €50,000 per annum over a maximum period of six years. The Microinvest Scheme is being extended to Social Enterprises resulting in a tax credit of up to €70,000 over a period of 3 years. Income tax on royalty income arising from literary works for authors ad co-authors shall be decreased from 15% to 7.5%. An investment of €5million shall be made in a Technology Extension Support involving private investors. Malta shall also increase its involvement in the Horizon Europe scheme as well as strengthen the National STEM Community Fund.
Start-Ups
A Start scheme will be introduced to assist start-ups in establishing their business in Malta, which assistance shall include aid with the completion of applications to benefit from existing incentives.
The Malta Enterprise is also working on the development of a new Business Incubation Centre through EU funding for innovative start-ups to continue diversifying Malta’s Economy.
Property Sector in the Malta Budget 2023
First Time Buyers
A new cash grant has been announced for first time buyers, resulting in a benefit of €10,000 over a span of 10 years – this applies to property not exceeding the value of €500,000. First time buyers shall continue being exempt from duty on the first €200,000 of the purchase price of the property.
Extension of current reduced stamp duty and income tax rates
Apart from the extension of the reduced rate of stamp duty for first time buyers, the current refund of duty paid on the first €86,000 of the value of the replacement property shall continue to apply too second time buyers. The reduced stamp duty of €2 for every €100 applicable to property situated in Gozo shall also be extended to the end of 2023.
Transfers of property situated in an urban conservation area (UCA) or which had their construction completed at least 20 years before the date of the transfer and are vacant on the date of the transfer and have been vacant for a period of 7 continuous years during the period immediately preceding the transfer shall continue to benefit from an exemption from income tax and duty on the first €750,000 provided that the transfer is made by the end of 2024. The VAT scheme applicable to the restoration of qualifying properties has also been extended.
Environmental, social, and governance (ESG) guidelines
Malta Enterprise will continue to assist companies in meeting their ESG obligations particularly through cash grants to companies investing in digital and sustainable projects to cover 50% investment, capped at €100,000. Malta Enterprise will also continue to issue guidance for local companies to achieve their ESG goals. Enterprises that invest in projects reducing their energy and water consumption and wastages will benefit from a tax credit of a maximum of €40,000. Interest-free loans shall also be granted to companies to invest in electric vehicles and charging stations.
Malta Budget 2023 - other measures
All employees, pensioners and those receiving social benefits shall receive a cost-of-living adjustment for amounting to €9.90 per week for 2023. Student stipends shall increase pro rata. An additional cost of living adjustment shall also be introduced for vulnerable persons. An additional weekly increase of €2.60 shall be granted to pensioners in their cost-of-living adjustment.