Malta launches economic recovery package

Maltese government launches package to stimulate economic recovery post COVID-19

In order to stimulate the recovery of the post COVID-19 economy, the Maltese government has just launched a program that includes several measures to reduce business operating costs, stimulate domestic consumption and support investment. The following is a summary of the main measures:

Extension of the Wage Supplement

The Salary Supplement COVID-19, created to provide the worker with basic salary coverage to cope with the disruptions caused by the pandemic of COVID-19, will be extended until September 2020.

For companies involved in 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 euros/month for full-time workers and 500 euros/month for part-time workers. Other companies benefiting from the said Wage Supplement until the end of June 2020, but operating in sectors other than those indicated above, will benefit from a reduced Wage Supplement of 600 EUR/month for full-time workers and 375 EUR/month for part-time workers during the period July-September 2020.

Deferral of tax payments

The tax deferral scheme was initially intended to cover taxes such as the provisional tax, VAT and social security contributions on wages and was extended until the end of June 2020. Social Security contributions, income tax and the Maternity Fund will be resumed as of July 1, 2020. Other taxes owed by companies have been deferred to the end of August. Companies may pay the deferred tax until May next year and no interest will be charged on it.

Support for operating expenses

Eligible undertakings (referred to in Annex A and Annex B) will receive the following additional grants:

• Reimbursement of rent: A cash amount of up to EUR 2,500 will be allocated to cover the rental costs;
• Reimbursement of the electricity bill: 50% of the value of the electricity bills (limited to 1,500 euros per company) for the months of July, August and September will be reimbursed;
• Subsidies of up to 5,000 euros per company to subsidise consultancy fees incurred to help companies in Malta through a re-engineering process to help them develop new plans;
• A new Skills Development Programme will be launched for companies employing less than 50 workers, to encourage in-house training and skills sharing;
• A full refund of the trade licence / permits paid during 2020 by companies that were forced to close during the pandemic;
• For the period 1 June to 31 December 2020, a refund of 33% of port charges and 10% of container unloading fees on import and export of goods. This aid will not cover transhipment activities;
• A maximum reimbursement of 80%, limited to 10,000 euros per company, incurred by companies in participating in fairs abroad that have been cancelled;
• Granting of export credit guarantees;
• Support for export promotion with a focus on increasing digital marketing, limited to EUR 10,000 per company in terms of costs incurred in investing in campaigns aimed at foreign markets.
• A subsidy of up to EUR 200,000 per company to companies operating in the construction sector with the aim of modernising their machinery and equipment and increasing sustainability.

Micro Invest Tax Credits

30% of Micro Invest tax credits made available to businesses in 2020 will be converted into outright grants, up to a maximum of EUR 2,000 per business. The ceiling will be raised to EUR 2 500 for companies operating in Gozo and for companies owned by women.

Real Estate Tax Measures

The final withholding tax rate on the sale of real estate will be reduced from 8% to 5% and the transfer tax rate applicable to the acquisition of real estate will be reduced from 5% to 1.5%. In both cases, this reduction applies to the first EUR 400,000 of the value of the property. This reduction applies when the final deed of sale is published by the end of March 2021. This reduction will also apply to transfers of property where a promissory contract of sale has already been concluded.
 

Voucher subsidies

All residents over 16 years of age will receive coupons worth 100 euros. 80 of these vouchers may be used in services provided by companies licensed by the Malta Tourism Authority (e.g. hotels, restaurants and bars) and the remaining 20 euros will be used in shops which were closed during the COVID-19 period, such as retail shops. Vouchers will be valid until September 2020.

Fuel price reduction

As of Monday 15 June, petrol and diesel prices were reduced by 7 cents per litre.

Unemployment benefit

The maximum benefit at work granted to encourage parents to go to work will be increased to EUR 1 400 per child (when both parents work) or EUR 630 per child (when only one parent works or for single parents). In addition, a single supplementary benefit for work amounting to EUR 250 will also be granted to each family already receiving the benefit for work.

Other measures

• Financial assistance to old people's homes;
• Support to be granted to bond issuers to ensure compliance with their obligations to bondholders. A new private company bond subscription mechanism will be established through the Development Bank of Malta.