Budget 2013 highlights

November 28, 2012
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The Minister of Finance, the Hon. Tonio Fenech, presented his 2013 Budget Speech on 28 November 2012.

Cost of Living Adjustment

Cost of Living Adjustment (COLA) will amount to €4.08 per week.  All social benefits are to be increased by the COLA.

Personal Income Tax

Reduction in income tax will be implemented over the next three years through the introduction of a new 32% tax bracket in 2013, reducing further to 29% in 2014 and to 25% in 2015.

Women in Employment

Maternity leave entitlement will increase to 18 weeks in 2013.

Women returning to work after 5 years or after having children will maintain one year tax free status.

Children’s allowance

Allowance will increase from €350 to €450, and to €527 for families dependent on a minimum wage.

Fiscal and financial incentives

The microinvest credit scheme is being extended by 2 more years and Enterprises employing up to 30 employees are eligible.

BSTART  – a tax deduction scheme for existing businesses of up to a maximum of €30,000 for investing in seed capital investment in new companies as approved by the Malta Enterprise.

New factoring financing regime to be drafted and enacted.

Youth Entrepreneurship Act to be drafted.

New Energy ERDF scheme for Gozo.

Extension of “20 million to industry” scheme: €42 million in schemes to support international competitiveness, innovation, e-Business, R&D, environment and start-ups.

Malta Enterprise to open office in Misurata Libya to stimulate business between Malta and Libya.

Group restructuring

Empowerement to tax authorities to grant tax exemption for group reorganisations, such as mergers and divisions, if it can be proven that such reorganisations are affected for bona fide commercial reasons and not for tax planning purposes.

Life Sciences

The Government of Malta is funding a state-of-the-art life sciences centre named the BioMalta Campus which will provide infrastructure and facilities for companies involved in the biotechnology and the development of life sciences.

Digital Gaming

At the University of Malta, a specialised course in digital gaming is being offered and there is the development of plug in/plug out facility for ICT and Digital Content Businesses.  Malta is set to become a hub for digital gaming which is to place artists, investors and students and various institutions in the digital gaming area, together on the implementation for a strategy in digital gaming.

Film Industry

Rebate for production increased from 20% to 23% and to 25% if Malta is featured as Malta.

Research and innovation

Continuation and development of Interactive Science Centre.

Property

The present choice on paying capital gains tax or 12% final withholding tax is extended from 7 to 12 years as from 2013.

Persons purchasing the first residential home through a bank loan will be allowed to use the valuation made by the bank’s architect as evidence of the property’s market value.

In case of properties whose value exceeds €250,000, at the promise of sale stage, the seller and buyer may request the Inland Revenue department to appoint an architect to issue price valuation on which stamp duty is paid. This valuation remains valid for 6 months from date of issue.

As from 01/01/2013 removal of stamp duty on donation and inheritance of property from parents to their children will be removed.

A reduced rate of stamp duty of 3.5% per €100 or part thereof currently applied on the first €116,468.67 of the aggregate value of the consideration paid for the acquisition of immovable property for the purpose of establishing sole ordinary residence is being increased to €150,000.

Transport

  • Euro Standard 5 car registration tax to be capped at 30%  and Euro Standard 4 car registration tax is increased on average by 10%.
  • Registration tax on type N1 commercial vehicles is reduced by 12.5%.
  • A €500 grant for those who scrap their old vehicle and buy a new one of type N1.
  • Removal of registration tax on motorcycles with 250cc engine capacity and 25% reduction in registration tax for motor vehicles having an engine capacity of over 250cc.
  • Removal of registration tax on Classic, Vintage or Veteran vehicles cars aged 50 years and over.  In addition, Classic care definition is lowered from 35 to 30 years and licence fees on these vehicles will be removed and replaced by an administrative fee of €8.
  • A €200 grant for conversion of cars to autogas. Furthermore, autogas powered vehicles will enjoy a reduction in licence fees.

Hotels

Malta Enterprise to revisit investment guidelines for Hotels through an uncapped 15%  tax credit of capital investment made. Incentives such as tax deductions and reduction in MEPA and Malta Tourism Authority fees, for Boutique Hotels in certain regions, namely Valletta, Mdina and The Three Cities, are to be granted.

Energy and Environment

Feed-in tariffs for the installation of photovoltaic (PV) panels as follows:

Installation of less than 1MW on rooftops – 18c/kWh for 20 years;

Installation of less than 1MW on the ground or more than 1MW on rooftops – 17c/kWh for 20 year; and,

Installation of more than 1MW on the ground – 16c/kWh for 20 years.

Extension of refund of 40% of the cost of solar water heaters up to a maximum €400 and of the15.25% rebate up to €1,000 on the cost of double glazing apertures.

Pensions and the Elderly

A credit on social security equal to one year for every child or two years for a child with disability, will be granted to parents born between 1 January 1952 and 31 December 1961, who stopped working in order to bring up their children and then returned to work.

An increase of €200 being granted to those in receipt of a service pension and the annual total exempt amount is now of €1,266.

Those over 78 years of age are being given €300 allowance.

Excise Duty

Increase in excise duty on fuel consumption of 2c per litre on petrol and diesel and 5 euro per tonne on cement. Increase of 6% on cigarettes and 8% on tobacco.

Persons with disability

A tax deduction not exceeding €2,500 against the income of parents or relatives who pay for the accommodation of persons with disability.

Removal of the ten year retention period in case of inherited property by persons with disability from their parent/guardians for the application of the exemption from stamp duty.  The inherited property still has to be at the time of the transfer, the ordinary residence of both the deceased and the heir for the exemption to apply.

Property Restoration

Recognised NGOs to be granted refunds for restoration of Scheduled Properties.

Incentives for those buying properties outside Urban Conservation Areas with the aim of restoring them.

Voluntary activities

Stipends and credits on social security contributions to youths involved in voluntary activities.

Tax exemptions for voluntary organisations that conform with the Voluntary Organisations Act,2007.

For more information

Camilleri Galea Ltd.
1st Floor, Suite 3
Central Business Centre
Mdina Road
Zebbug 9015
Malta

www.cg.com.mt

info@cg.com.mt

Disclaimer:  The above updates reflect high level accouncements made in the Budget Speech on 28 November 2012, which are typically implemented through detailed legislative amendments and tax guidelines that have yet to be published.  Persons using this information are advised to seek appropriate professional advice following the publication of such detailed amendments or guidelines and prior to implementing any actions based on the information given in these updates.  This update contains general information only, and Camilleri Galea Ltd.is not rendering professional advice or service by means of this update. Before making any decision that may affect your business or finances, you should consult a qualified professional adviser.  Camilleri Galea Ltd. shall not be responsible for any loss whatsoever sustained by any person who relies on this information.

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