On the 8th June, the Prime Minister, Minister for Finance and Financial Services and the Minister for the Economy, Investment and Small Businesses held a press conference setting out an economic recovery plan comprising a multitude of measures aimed at regenerating the Maltese economy post the COVID-19 pandemic. The said plan targets the following economic objectives:
- Reducing business costs;
- Incentivising domestic demand; and
- Supporting businesses and employment
The main highlights of the economy recovery plan are outlined below.
1. Reducing Business Costs
Extended Tax Deferral Scheme
The Tax Deferral Scheme introduced in March 2020 and which has granted businesses an aggregate four-month postponement of their VAT, provisional tax and employee taxes, will be retained until September 2020.
Nevertheless, the payment of deferred social security and employee taxes is expected to be made as from the 1st of July 2020. On the other hand, the settlement period for the remainder of deferred taxes will span across a period of 12 months.
Conversion of Tax Credits into Cash Grants
30% of the tax credits under the Malta Enterprise MicroInvest scheme, are to be converted into cash grants, capped up to a maximum of €2,000 per business.
Gozo-based businesses as well as female-owned undertakings will be entitled to benefit from a higher cash grant than the above, capped at €2,500 per business.
2. Incentivising domestic demand
Reduced Rate for Tax on Immovable Property
It was further announced that the Property Transfers Tax levied on a seller of immovable property will be reduced from the current rate of 8%, to 5%. The rate of stamp duty levied on the acquisition of immovable property was similarly reduced, from 5% to 1.5%. Both reductions will apply on the first €400,000 of the value of the property where final deeds of sale are published until the end of March 2021.
The reduced rate of stamp duty will additionally apply to all purchases of immovable property that are currently covered by a promise of sale agreement.
Modified Scheme for First Time Buyers
Persons who currently do not qualify as first time buyers due to them already owning property, will be eligible as first time buyers in relation to any deeds of sale concluded from the 9th June onwards.
3. Supporting businesses and employment
Extending the COVID-19 Wage Supplement
As one of the principal measures introduced to counter the effect of the pandemic, the COVID Wage Supplement will also be retained and its applicability has been extended until the end of September 2020 as follows:
(i) Businesses operating in sectors which have been most adversely hit by the pandemic, namely, the tourism-related sectors, will remain entitled to the full monthly wage supplement amount at €800 for full-time employees, and €500 for part-time employees;
(ii) Businesses currently qualifying under Annex A and which are personal services providers, will continue to avail of the wage supplement, however at the rates applicable to the Annex B category, as from July 2020, i.e. €160/month per full-time employee and €100/month in case of part-timers (different rates apply to in the case of Gozo-based businesses and self-employed);
(iii) With respect to the remainder of Annex A businesses not qualifying under (i) or (ii) above, the monthly wage supplement will be reduced to from €800 to €600 for full-time employees, and from €500 to €375 for part-time employees, as from July 2020;
(iv) From July 2020, students and pensioners who are also in employment and who were previously ineligible for the wage supplement, will now be entitled to avail of the wage supplement until the end of September.
Improving the In-Work Benefit
Where both parents work, and in the case of single parents, they will be incentivised to return to work through an increased in-work benefit, amounting to a maximum rate of €1,400 per child. Where only one parent works, the maximum rate has been increased to €630 per child.
An additional one-time supplement amounting to €250 will be granted to families already availing from the in-work benefit.
Supporting Local Bond Issuers
Owing to the uncertainty brought about to economies and financial markets worldwide, the Government, through the Malta Development Bank, will step in and underwrite bonds issued by private companies which are due for rollover, thereby ensuring that all bonds issued by such private companies will be subscribed to.