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Malta Budget 2012 Announced

Malta
16 Nov 2011

The Maltese budget for 2012 was announced on 15 November 2011.The budget introduces a number of fiscal measures as well as other incentives aimed at stimulating economic growth by targeting SMEs and the family as the main contributors to the Maltese economy. Although most of the measures are applicable to Maltese residents, a number of fiscal measures are also aimed to attract high calibre professionals to Malta. Taxand Malta explores the budget in detail, highlighting the key changes and what that will mean from a tax perspective.

Fiscal measures
The main fiscal measures include:
?Introduction of new income tax rates applicable to parents. The "parent computation" will result in a tax saving for married couples ranging from EUR150 to EUR840. Payment of the 15 percent tax under the Part Time Rules will be extended from February 15 to June 30 will also be included.

The rules applicable to highly qualified persons will be extended to:

  1. ?Highly qualified Maltese individuals working outside Malta who wish to return to Malta to work in important industrial sectors
  2. Highly qualified and skilled foreigners who are required for certain industrial sectors
  3. ??Persons who would like to carry out Research & Development in Malta.
  • Extension of the 15 percent income tax rate to professionals in digital gaming such as Game Directors and Game Designers. The scheme will also be extended to academic staff in the field of Research & Development.
  • Tax credits on research and development costs of up to EUR15,000 for local companies commissioning activities in educational or promotional digital games.
  • Tax exemption on income derived from intellectual property rights related to publication of books, film scripts, music and art. This exemption will make Malta more attractive as a jurisdiction for royalties, patents etc.
  • Extension of the Micro Invest Scheme for another year. This scheme entitles SMEs to a tax credit equivalent to 40 percent of certain qualifying expenditure. The tax credit is increased to 60 percent in the case of SMEs in Gozo.
  • Refund of the 15 percent final withholding tax to elderly individuals without the need to submit an income tax return.

Value Added Tax

  • Launch of a VAT amnesty for a limited time whereby those having VAT arrears will be able to regularise their position. Taxpayers who failed to file their VAT return in time or who have arrears to pay by 15 October 2011, will be given until 15 January 2012 to send the missing returns. The arrears will have to be paid by 15 January 2013, with a reduction in the amount of fines and accumulated interest, according to the length of the period of time during which the payment will be made.
  • Removal of VAT on private nursing and home help offered by the private sector to the elderly in their private homes will be removed. This will be effective from 1 January 2012.

Excise Duty

  • Excise duty on bunkering fuel of ships outside territorial waters will increase to EUR5 per tonne.
  • Excise duty on cement will increase by EUR3 per tonne.
  • Excise duty on cigarettes will increase by 5.8 percent on each packet of twenty cigarettes whereas excise duty on other tobacco products will increase by 8.5 percent.
  • Excise duty on mobile telephony will remain unchanged but the basic rate will be computed on volume rather than tariff charged.

 

Taxand's Take


The budget introduces a number of fiscal measures as well as other incentives aimed at stimulating economic growth by targeting SMEs and the family as the main contributors to our economy. Although most of the measures are applicable to Maltese residents, a number of fiscal measures are also aimed to attract high calibre professionals to our shores. Individuals and corporate entities should therefore seek advice to maximise the tax benefits available.

Your Taxand contact for further queries is:
Walter Cutajar
T. +356 2730 0045
E. walter.cutajar@avanzia.com.mt

Taxand's Take Author