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Malta Business Review | SPECIAL EDITION
budget 2016 infographic review
global economic index
Malta Business Review | SPECIAL EDITION
MALTA BUDGET 2016
The Global Competitiveness Index 2015–2016 Rankings
On 17 October 2016 the fourth Budget for this legislature was presented to the Parliament of Malta. The key priorities of the Budget are: continuing to strengthen government
finances; reducing the fiscal burdens to increase the standard of living; attracting foreign investment; strengthening social services, the environment and regional development;
increasing infrastructure investment and improving overall Government efficiency.
0
0
The Budget seeks to amend the tax bands by widening the tax
exempt brackets for individuals in the following manner:
%
0
15
25
35
Separate
Computation
Income tax brackets for individuals
0-9100
0-12,700 0-10,500
9,101-14,500
14,501-60,000
60,000<
INCOME TAX
Joint
Computation
12,701-21,200
21,201-60,000
60,000<
Parents
rates
10,501-15,800
15,801-60,000
60,000<
• Individuals applying the single tax rates and earning up to €19,500
will save up to €90 tax per annum.
• Couples applying the married tax rates and earning up to €28,700
will save up to €120 tax per annum.
• Parents applying the parent tax rates and earning up to €21,200
will save up to €105 tax per annum.
Deductions
• Introduction of capital allowances for office buildings.
• Wear and tear allowances amounting to 50% of the purchase
price in the year of acquisition for businesses that purchase hybrid
or electric vehicles.
• Donations to the arts will be deductible at 150% of the amount
donated.
• A company that donates over €2000 to the Community Chest
Fund can deduct the donation amount.
%
Tax credits
• Micro-invest to be extended with a maximum €50,000 tax credit to
be made available for female entrepreneurs.
• Maximum tax credit of €10,000 in respect of research and
development for companies employing individuals with a
doctorate/ reading for a doctorate in science, IT or engineering.
• Tax credits to be made available for knowledge transfer activities
between employees.
Reduced rate of tax on sportsman income
• The reduced rate of tax on the income of footballers and
waterpolo players to a flat rate of 7.5% is going to be extended to
all players and coaches of all types of sport.
€
0
0
Fiscal Consolidation
• The introduction of a fiscal consolidation concept in income tax
legislation will allow companies forming part of a group to be
treated as a single taxpayer, thus, computing their taxable
income on a consolidated basis.
Other income tax measures
• A new 15% tax on police who carry out ‘extra duties’ for
organizations, individuals or companies.
TAX
VAT
Other tax measures
• Removal of registration tax on electric
motorcycles.
• The license for small motorcycles with an
engine of 125cc has been reduced to a
flatnominal rate of €10 per annum.
• Owners of hybrid vehicle or electric vehicle
will be exempt from paying CVA tariffs when
entering Valletta.
125cc €10
VAT
• VAT rate of 18% on sports
activities will fall to 7%.
• VAT refund on registration of
cars registered between 2005-
2008 will continue to be
refunded.
18%
7%
OTHER MEASURES
Property specific measures
• The first time property buyer programme will also be extended. The exemption
from duty on the first €150,000 of the value of immovable property will be
extended for contracts executed up to 31 December 2016.
• Stamp duty refund for first time buyers that concluded a promise of sale after 1st
July 2015.
• 15% withholding tax on rental income option is to be extended to the renting of
commercial property. The opt-in may also be availed of by companies. However,
intragroup rentals between entities shall be excluded from this measure.
• The waiting time before a sale of inherited immovable property by heirs can take
place,where some heirs object, is reduced to 3 years from the current maximum
of 10.
• Stamp duty on transfers of regenerated property in urban conservation areas is
being reduced to 2.5% from 5%.
• Property transfers tax reduction from 8% to 5% on transfer of regenerated
property inurban conservation areas.
Social measures
• Increase in the minimum contributory pension to €7,280 per year.
• Companies employing 20 employees and failing to employ a minimum number of
persons with disability will be liable to pay a contribution of €1,600 per person
that should have been employed.
• Extension of in-work benefit refunded.
REG
Company registration fees
TAX
INDIRECT TAX
Eco-Contribution and Excise Duty
• Continuation of process of removing eco-tax.
• Excise duty will be imposed on products seen as harmful to the
environment. Ex:chewing gum and plastic bags.
• Price of petrol and diesel to be reduced by €0.03 and €0.04
respectively.
• As from 1st April 2016, an environmental contribution tax will be
levied on all incoming tourists aged 18 and over at €0.50 for every
night spent in Malta capped at a maximum of €5 per visit.
• Excise duty on cement, cigarettes/tobacco products and alcohol
to be increased.
petrol
€0.03/L
Stamp duty on
transfers
5% to 2.5%
Property
transfers tax
8% to 5%
• The initial registration fee for companies registered in electronic format and
whose authorised share capital does not exceed €1,500 shall be reduced to €100.
Minimum
contributory pension
per year
Other key measures
• Reforms expected to insolvency legislation.
• Malta Stock Exchange to continue working on place to develop a capital market in Malta.
diesel
€0.04/L
€7,280
Source: EC Europa
Economy Score 1 Prev. 2 Trend 3
Switzerland 5.76 1
Singapore 5.68 2
United States 5.61 3
Germany 5.53 5
Netherlands 5.50 8
Japan 5.47 6
Hong Kong SAR 5.46 7
Finland 5.45 4
Sweden 5.43 10
United Kingdom 5.43 9
Norway 5.41 11
Denmark 5.33 13
Canada 5.31 15
Qatar 5.30 16
Taiwan, China 5.28 14
New Zealand 5.25 17
United Arab Emirates 5.24 12
Malaysia 5.23 20
Belgium 5.20 18
Luxembourg 5.20 19
Australia 5.15 22
France 5.13 23
Austria 5.12 21
Ireland 5.11 25
Saudi Arabia 5.07 24
Korea, Rep. 4.99 26
Israel 4.98 27
China 4.89 28
Iceland 4.83 30
Estonia 4.74 29
Czech Republic 4.69 37
Thailand 4.64 31
Spain 4.59 35
Kuwait 4.59 40
Chile 4.58 33
Lithuania 4.55 41
Indonesia 4.52 34
Portugal 4.52 36
Bahrain 4.52 44
Azerbaijan 4.50 38
Poland 4.49 43
Kazakhstan 4.49 50
Italy 4.46 49
Latvia 4.45 42
Russian Federation 4.44 53
Mauritius 4.43 39
Philippines 4.39 52
Economy Score 1 Prev. 2 Trend 3
Malta 4.39 47
South Africa 4.39 56
Panama 4.38 48
Turkey 4.37 45
Costa Rica 4.33 51
Romania 4.32 59
Bulgaria 4.32 54
India 4.31 71
Vietnam 4.30 68
Mexico 4.29 61
Rwanda 4.29 62
Slovenia 4.28 70
Macedonia, FYR 4.28 63
Colombia 4.28 66
Oman 4.25 46
Hungary 4.25 60
Jordan 4.23 64
Cyprus 4.23 58
Georgia 4.22 69
Slovak Republic 4.22 75
Sri Lanka 4.21 73
Peru 4.21 65
Montenegro 4.20 67
Botswana 4.19 74
Morocco 4.17 72
Uruguay 4.09 80
Iran, Islamic Rep. 4.09 83
Brazil 4.08 57
Ecuador 4.07 n/a
Croatia 4.07 77
Guatemala 4.05 78
Ukraine 4.03 76
Tajikistan 4.03 91
Greece 4.02 81
Armenia 4.01 85
Lao PDR 4.00 93
Moldova 4.00 82
Namibia 3.99 88
Jamaica 3.97 86
Algeria 3.97 79
Honduras 3.95 100
Trinidad and Tobago 3.94 89
Cambodia 3.94 95
Côte d’Ivoire 3.93 115
Tunisia 3.93 87
Albania 3.93 97
Serbia 3.89 94
Economy Score 1 Prev. 2 Trend 3
El Salvador 3.87 84
Zambia 3.87 96
Seychelles 3.86 92
Dominican Republic 3.86 101
Kenya 3.85 90
Nepal 3.85 102
Lebanon 3.84 113
Kyrgyz Republic 3.83 108
Gabon 3.83 106
Mongolia 3.81 98
Bhutan 3.80 103
Argentina 3.79 104
Bangladesh 3.76 109
Nicaragua 3.75 99
Ethiopia 3.75 118
Senegal 3.73 112
Bosnia & Herzegovina 3.71 n/a
Cape Verde 3.70 114
Lesotho 3.70 107
Cameroon 3.69 116
Uganda 3.66 122
Egypt 3.66 119
Bolivia 3.60 105
Paraguay 3.60 120
Ghana 3.58 111
Tanzania 3.57 121
Guyana 3.56 117
Benin 3.55 n/a
Gambia, The 3.48 125
Nigeria 3.46 127
Zimbabwe 3.45 124
Pakistan 3.45 129
Mali 3.44 128
Swaziland 3.40 123
Liberia 3.37 n/a
Madagascar 3.32 130
Myanmar 3.32 134
Venezuela 3.30 131
Mozambique 3.20 133
Haiti 3.18 137
Malawi 3.15 132
Burundi 3.11 139
Sierra Leone 3.06 138
Mauritania 3.03 141
Chad 2.96 143
Guinea 2.84 144
Note: The Global Competitiveness Index captures the fundamentals of an economy. Recent developments, including currency (e.g., Switzerland) and commodity price fluctuations (e.g., Azerbaijan,
Qatar, Saudi Arabia), geopolitical uncertainties (e.g., Ukraine), and security issues (e.g., Turkey) must be kept in mind when interpreting the results.
1 Scale ranges from 1 to 7.
2 This shows the rank out of the 144 economies in the GCI 2014–2015.
3 The trend line shows the evolution in percentile rank since 2007; breaks in the trend line reflect years when the economy was not included in the GCI.
The Global Competitiveness Report 2015–2016 | xv
22 © 2015 World Economic Forum
www.maltabusinessreview.net 23
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Commonwealth of
Independent States
Emerging and
Developing Europe
Sub-Saharan
Africa
Credit: © 2016 World Economic Forum