10th June 2020

At a press conference held on the 8th June 2020, the Prime Minister, the Finance Minister and the Minister for the Economy, Investment and Small Businesses rolled out a recovery package aimed at continuing to support and regenerating the Maltese economy post COVID-19. The economic recovery plan focuses on the reduction of business costs, the stimulation of domestic consumption and measures supporting investment.

 A summary with selected highlights from this economic recovery package is set out below.

 COVID-19 Wage Supplement Extension

The all-important Wage Supplement will be extended until the end of September 2020 with the following changes:

  • In the case of businesses involved with tourist accommodation, travel agencies, language schools, event organisation and air transport), the Wage Supplement will remain the same until the end of September i.e. €800/month for full-time employees and €500/month for part-time employees;
  • Businesses falling under Annex A and benefitting from said Wage Supplement till end June 2020 but operating in other sectors than those indicated above shall be retained on Annex A but will shift to a reduced Wage Supplement of €600/month for full-time employees and €375/month for part-time employees for the period July-September 2020. Students and pensioners who are in employment shall fall within this new category;
  • Personal services and other businesses/self-employed who depend on local consumption will benefit from the partial Supplement under Annex B for the period July-September. Companies and self-employed who were being assisted under the partial Supplement (Annex B) will retain this aid until September.

Tax Deferral Scheme Extension

The Tax Payment Deferral scheme was initially intended to cover taxes such provisional tax, VAT and National Insurance Contributions on salaries and it was extended to the end of June 2020. National Insurance contributions, income tax and Maternity Fund contributions will resume from 1 July 2020. Other taxes due by business have been deferred to the end of August. Companies can pay the deferred tax by May next year, with no interest charged thereon.

Business Operating Expenses

Annex A and Annex B type businesses will be granted the following additional subsidies:

  • Rent refund: A cash sum (restart grant) of up to €2,500 to cover rental costs;
  • Electricity bill refund: 50% of electricity bills (capped at €1,500 per business) for the months of July, August and September will be refunded;
  • Grants of up to €5,000 per business to subsidise consultancy fees incurred to help businesses in Malta through a re-engineering process to help them develop new plans;
  • A new Skills Development Scheme will be launched for businesses employing less than 50 employees, aimed at encouraging inhouse training and sharing of skills;
  • A full refund of trade licence / permits paid during 2020 by businesses that were forced to close down during the pandemic;
  • For the period 1 June to 31 December 2020, a refund of 33% of port charges and 10% in container discharge fees incurred on the import and export of goods. Such aid will not cover transhipment activities;
  • A maximum 80% refund, capped at €10,000 per business, incurred by businesses in participating in fairs abroad that were cancelled;
  • Granting of export credit guarantees;
  • Support for export promotion with a focus on increased digital marketing, capped at €10,000 per business in terms of costs incurred in investing in campaigns aimed at foreign markets.
  • A grant of up to €200,000 per business to businesses operating in the construction industry for the purposes of modernising their machinery and equipment and increasing sustainability.

Micro Invest Tax Credits

30% of Micro Invest tax credits made available to businesses during 2020 will be converted into cash grants up to a maximum of €2,000 per business. The capping will be increased to €2,500 for undertakings operating in Gozo and for female-owned undertakings.

Property Tax Measures

The Final Withholding Tax rate on the sale of property will be reduced from 8% to 5% and the transfer duty rate chargeable on acquisition of property will be reduced from 5% to 1.5%. In both cases, such reduction applies on the first €400,000 of the value of the property. This reduction applies where the final deed of sale is published by the end of March 2021. This reduction will also apply to property transfers where a promise of sale agreement has already been concluded.

Voucher Grants

All residents aged over 16 years of age will be granted vouchers amounting to €100. €80 of such vouchers can be used on services provided by MTA licensed businesses (e.g. hotels, restaurants and bars) and the remaining €20 is to be used in shops which were closed down during the COVID-19 period, such as retail shops. The vouchers will be valid until September 2020.

Fuel Price Reduction

With effect from Monday 15 June, petrol and diesel prices will be reduced by 7 cents per litre.

In-Work Benefit

The maximum in-work benefit given to encourage parents to go to work will be increased to €1,400 per child (where both parents work) or €630 per child (where only one parent works or for single parents). In addition, a one time supplementary in-work benefit amounting to €250 will also be given to each family that is already in receipt of the in-work benefit.

Other Measures

  • A maximum refund of €2,000 per couple to cover expenses incurred with respect to the postponement of their wedding due to the COVID-19 crisis;
  • Financial assistance to be granted to nursing homes;
  • Support to be given to bond issuers to ensure that their obligations to bondholders are upheld. A new underwriting facility for private enterprise bonds will be set up through the Malta Development Bank, which will close this year.

How can we help?

We are monitoring developments on an ongoing basis and will provide further updates as more information becomes available. Meanwhile, should you require any assistance relative to how your business may benefit from this Economic Stimulus Package, the COVID-19 Wage Supplement measure, the Tax Deferral Scheme, Malta’s Financial Aid package and the various Malta Enterprise support measures generally, please do not hesitate to reach out to us personally.

For more information, please contact Dr. Rosanne Bonnici, Tax Partner, on rosanne.bonnici@fenlex.com.

©Fenech & Fenech Advocates 2020

Disclaimer │ The information provided on this Update does not, and is not intended to, constitute legal advice. All information, content, and materials available are for general informational purposes only.  This Update may not constitute the most up-to-date legal or other information and you are advised to seek updated advice.