Highlights budget 2011

Cost of living allowance

·         The weekly cost of living increase for 2011 is €1.16 with full compensation applicable also for pensioners.

·         Cost of living allowance will not be taken into consideration when calculating benefits which are means tested ensuring that the increase in cost of living would not result in a decrease in benefits.

Employment Assistance

·         Further sustaining of schemes currently offered by the Employment Training Corporation (ETC) including Training Aid Framework, Employment Aid Programme, Apprenticeship Scheme and Work Trial Scheme.

·         A new scheme is also being introduced whereby those earning a minimum wage who enrol themselves for a special training scheme to be offered by ETC will benefit from a weekly allowance of €25.

Working Women

·         The tax credit scheme for women returning to employment is being extended for 2011.

·         Another incentive for women relates to those families on social welfare. An amount equivalent to the difference between the minimum wage and the full rate of social benefit will be exempted from the means test applicable to determine the level of social benefits receivable by that family.

·         Self-employed women may opt to pay a rate of 15% national insurance contributions in lieu of the current minimum rate.  However, this contribution will entitle the payers for a pro-rata entitlement to social benefits.

Agriculture

·         Full-time farmers will benefit from a reduction in their payment of Social Security Contributions from 15% to 12%.

Value Added Tax related measures

·         The filing due date of the VAT return will be extended by 7 days if this is filed through the VAT Department’s on-line service facilities.

·         Persons, whose turnover does not exceed €7,000 per annum, would be exempt from VAT registration.

·         As from 1 January 2011 the rate of VAT on tourist accommodation will increase from 5% to 7%.

Excise duty

·         Excise tax on cigarettes and tobacco is being increase by 3% and 4% respectively.  Excise tax on beer bottles of 25cl will increase by less than €0.01 while duty on spirits will increase by 13%. 

·         Duty on fuel is being increased, with immediate effect, by 3 cents per litre.

·         Duty of €9 on every tonne of cement is being introduced.

Tax Credits and Tax Deductions

·         An investment of €250,000 is being allocated to a Quality Improvement Programme aimed to facilitate the franchising of Maltese products and services for the export market. A tax credit of 150% up to a maximum of €10,000 will be granted to persons who invest in improving the quality of their product or service offering.

·         The tax benefit for parents who send their children to private schools is being increased.  The maximum deduction in respect of each child attending primary school or kindergarten is being increased to  €1,200 while for each child attending secondary school it is being increased to €1,600.

Tourism

·         The continuation of a €3 million programme to improve the skills of persons working in the tourism industry at a managerial level.  Besides this and other various investments in the tourism sector, the government is allocating €10million in aid to businesses in the tourism industry to develop their product.

·         Hotels and restaurants who invest in projects that reduce independence on traditional energy in favour of clean energy will have the opportunity to benefit from soft loans.

Sport

·         Grants of 15.25% of the value of new sports equipment acquired by non-profit making sports organisations recognised by the Malta Sports Council. This scheme excludes purchases of sports apparatus for commercial purposes.

·         Refund scheme of 15.25% up to a maximum of €150 is being given upon purchases of new bicycles.

·         The removal of 6.5% registration tax on the purchase of motor sport vehicles used on racing tracks or other authorised areas by Transport Malta.

·         Grants in total amounting to €250,000 in assistance to local sports organisations utilised in the attraction of sports tourism in Malta.

·         Financial assistance aimed at professional athletes employed within the private sector who opt for reduced working hours to practise sport activities is being proposed.

Environmental Issues

·         Re-introduction of assistance relating to solar water heaters. Those investing in solar water heaters can benefit from a maximum of €400 on the amount paid for the equipment.

·         As from 15 November 2010 those persons who scrap an old car and replace it by a new car will benefit from a 15.25% benefit on the cost of the new car up to a maximum of €2,000. This is dependent on the emissions, and size of the new car.  If the old vehicle is not scrapped, the benefit entitlement would amount only to 7.625%.

·         Removal of excise tax exemptions on mineral oils to encourage the consumption of renewable fuel such as biodiesel.

·         In order to further encourage the purchase of hybrid motor vehicles, for the purposes of computing the registration tax for hybrid cars, the carbon dioxide portion will be reduced from 30% instead of 20%.

·         The annual motor vehicle license for electric motor vehicles is being reduced from €75 to €10.

·         An incentive up to a maximum of €5,000 for the installation of grid-connected  enewable energy sources for those acquiring an electric vehicle.  Companies investing in electric vehicles would earn a tax rebate of 125% of the value of the vehicle. These schemes are being offered in addition to the scrap benefit listed above.

Investment in local enterprise

·         Government’s participation in the EU Fund “Eurostarts” to enable local small and medium-sized enterprises engage into joint projects with foreign EU companies in the research and development sector.

·         Assistance to industry in respect of training and consultancy in connection to the franchising of local products in foreign markets.

Vehicle taxes

·         Classic car collectors can register their cars with unique registration plates with a consequent reduction in the licence fee.

·         Removal of license payable on wheelchair accessible vehicles.

·         Introduction of a system whereby the registration tax on commercial vehicles may also be computed on the basis of the depreciated value or mileage of the vehicle.

Other Measures

·         Students – All students in the first three forms of secondary schools will be given €15, to be used in artistic and cultural activities.

·         Assistance to private independent schools – A 15.2% refund on qualifying expenditure incurred by independent schools on new premises is being granted.

·         Disabled persons – Exemption for families with more than one disabled person when purchasing one wheelchair accessible vehicle. Exemption is also extended to families with one disabled person when purchasing the second wheelchair accessible vehicle.

·         Supplementary assistance – Assistance will be increased to a maximum of €4.57 per week for single persons and a maximum of €8.13 per week in respect of married couples.

·         Service pensions – A further €200, in addition to the current €666 service pension will not be taken into consideration when calculating the amount of social security pension.

Disclaimer

The information contained herein is being provided as a general guide only and should not be considered as a substitute for professional advice.  For further details please do not hesitate to contact us