Although no major changes to Malta’s tax regime have been proposed in the Budget Speech 2021, a number of measures are being implemented which are geared at softening the blow of the pandemic which yet stifles the global economy.
With an overall focus on improving the quality of life, incentivising economic growth, moving towards and ever-greener economy, developing the islands’ infrastructure further and constantly improving the level of education, public health services, safety and good governance, the following is a summary of some of the more interesting measures being proposed.
Improvements to several schemes encouraging the buying and selling of immovable property
The amount which is exempt from stamp duty for First Time Buyers is being increased from EUR175,000 to EUR200,000 and a reduced rate of 3.5% is applicable on the first EUR200,000 for individuals who are purchasing a residential property other than their first home.
The current reduced rates of 1.5% stamp duty and 5% transfer tax will remain applicable for properties currently being sold and applies also to properties with a promise of sale agreement registered till the 31 March 2021 insofar as the sale contemplated therein takes place by 31 December 2021.
The exemption from tax payable on the donation of immovable property by a parent to their children with the intention of the latter residing therein will be increased from EUR200,000 to EUR250,000 any amount in excess remaining taxable at 3.5%.
The 15% withholding tax on income or profits arising from the assignment of any rights held in terms of a promise of sale agreement will be extended to the full value of the rights throughout 2021.
Other measures include:
- An increase in the threshold for those who are exempt from VAT from EUR20,000 to EUR30,000;
- An additional allowance for the increase in the cost of living of EUR1.75 per week;
- An increase in the tax refund currently being granted to over 200,000 Maltese taxpayers;
- The distribution of additional vouchers to stimulate some of the businesses which are suffering the most as a result of the pandemic;
- An increase in the children’s allowance and in-work benefits;
- Additional benefits for pensioners including reduced taxes thereon and the extension of Government Saving Bonds targeted specifically at said pensioners;
- An increase to EUR3,000 on the amount exempt from tax when investing in a Third Pillar Pension scheme;
- Extension of the timeframe on the reduced rate of stamp duty applicable to the transfer of businesses;
- A reduction in the withholding tax on royalties from the sale of books.