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Malta Budget
2016
How does it affect you?
Income Tax Measures
The Property Market
The Sports sector
Fiscal Consolidation
Incentives
See how individuals and companies will be affected by new income tax measures
See what has been announced in the Property Sector
See new measures introduced in the sports sector to promote it further
See what has been announced in the Property Sector
See what new or improved incentives have been announced for the industry
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Key points
1 Cost of Living Adjustment (COLA) 2 Changed personal tax bands 3 Members of the Police Force to the Malta 4 Donations Community Chest Fund
Income Tax Measures
5 Donations to the arts 6 Hybrid/electric vehicles 7 Pensions
(married computation) and from € 9,800 to €11,500 (parental computation). Income tax cuts will mostly benefit those with an annual income of €28,700 and under. They will save between €90 and €210 euro per annum. Rates 0% 15%
25% 35%
Single Up to €9,100 €9,101 €14,500 €14,501 €60,000 Over €60,000
Married Up to €12,700 €12,701 €21,200 €21,201 €60,000 Over €60,000
Parent’s Up to €10,500 €10,501 €15,800 €15,801 €60,000 Over €60,000
1
The Cost of Living Adjustment (COLA) for 2016 will be Euro 1.75 per week. This shall be received in full by pensioners and persons on social benefits.
2
Income tax will be reduced for those who did not benefit from lower income tax in the past two years. The Minister has announced a reduction in personal income tax by increasing the income on which no tax is payable from €8,500 to €9,100 (single computation), from €11,900 to €12,700
3
With effect from 1 January 2016, police officers’ income from ‘extra duties’ will be subject to a reduced rate of tax of 15%.
4
Corporate donations in excess of €2,000 to the Malta Community Chest Fund are to be allowed in full as a deduction for tax purposes, also a tax deduction equivalent to 150% of an actual donation made to the arts shall be allowed.
5
Businesses that buy hybrid or electric vehicles will be allowed a tax deduction equivalent to 50% of the cost of the vehicle in the year of acquisition.
6
Pensioners with an income of under €140 per week will get an increase in their pension of between €4.15 and €8.92 per week. The €300 per year benefit for pensioners over 75 will be retained.
Malta’s Economy In 2015, the Maltese economy experienced a GDP growth of 4.2% while a 3.6% growth is expected in 2016. Unemployment rate in 2015 stood at 5.8%, and is expected to fall further in 2016. The Government’s debt as a percentage of GDP is at 66.56%
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The Property Market Key Points -time 1 1buyers st
2 Inherited Properties
1
First-time buyers are to be exempt from paying stamp duty. This measure applies retrospectively from 1 July 2015 and will continue to apply until the end of 2016.
2
As a measure to reduce the number of vacant properties, inherited properties may be sold after the lapse of 3 years from the current 10.
3
Stamp duty on sale of regenerated property in urban conservation areas (UCA) is being reduced to 2.5% from the standard 5%, if the contract is executed between 1 January and 31 December 2016. Furthermore, the rate of FWT that will be levied on transfers of
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in 3 Properties UCAs
4 Commercial Property Rental
restored property within an UCA, effected in 2016, will be reduced from standard 8% to 5%.
4
5
15% final withholding tax on rental income will be extended to commercial properties. This shall not apply in case of property rental between related parties.
The 10% initial deduction of capital expenditure and a 2% annual wear and tear capital allowances will be extended to office buildings.
Allowances 5 Capital on offices
The Sports Sector VAT on sports activities will go down from 18% to 7%. The 7.5% tax on income earned from sports will be extended to include players and coaches of all sports.
Fiscal Consolidation, Incentives & Other Measures Companies within the same group will be able to present their income in an aggregate manner through a consolidated income tax return as if they were one company.
Mature students will now also get a stipend.
The allowance for Gozitan students working in Malta will be raised by €300 per year.
Individuals who earn between €6,600 and €15,000 annually will be receiving €1,200 for every child as an ‘in work’ benefit, a scheme introduced in the last budget.
To boost alternative energy, families who cannot install PV panels on their roofs may now invest in communal solar farms.
Working couples earning between €10,000 and €20,000 will be receiving up to €1,000 per child. Families with only one working person earning between €6,600 and €12,700 will receive up to €150 per child.
A €7,000 grant will be given to scrap your 10year-old car and buy an electric vehicle instead. A €2,000 grant will be given for an electric quad.
An environmental contribution is to be paid by tourists amounting to €0.50/night in Malta not exceeding a total of €5 per visit. Visitors aged under 18, including language students, will be exempt;
Registration fees for companies that are incorporated with an authorised share capital of €1,500 or less shall be reduced from €250 to €100.
The one tablet computer per child project will start being rolled out next year, starting from Year Four students.
Excise tax on cement, tobacco, fuel and alcohol to be increased.
A number of schemes are also being announced by the Malta Enterprise to facilitate business include aid to: Start-ups: Assistance will be in the form of financing of up to €200,000, repayable to Malta Enterprise over a 10 year period. This can increase to a maximum of €500,000 for enterprises developing high value added innovate products, processes, or services, and can be used to finance the purchase of equipment.
Tax credit or financial grant to encourage knowledge transfer from existing employees to new employees as well as the acquisition by Maltese workers of new skills necessary to attract more work to Malta.
A tax credit of up to €50,000 will be given to those small companies where a majority of the equity is controlled by women. Such measure is taken to promote entrepreneurship among women.
Entrepreneurs investing in Gozo and employing people for a minimum of three years will be eligible to a refund of up to €5,000 per employee.
The government will provide a subsidy for the wages of disabled employees of up to €125 per week, a refund of 25% of the wage paid and cover the social security contributions of such employees.
Public private partnership to modernize Mriehel industrial estate.
Assistance to small manufacturing firms wishing to rent bigger premises: Relocation allowance of up to €10,000 per year, for up to 2 years.
New childcare centres will be set up in Zebbug, St Julian’s and Floriana.
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