1. Malta Budget Highlights 2017
Main
Highlights
2016 deficit
slashed to 1.1%;
2017 deficit
forecast at 0.5%
Construction of
three new
primary schools
Increase in
Pensions over
two years; tax
on pensions to
be phased out
A year of free
public transport
for 18 year olds
Reduced stamp
duty on
acquisition of
property in Gozo
Euro 23 million
to help lower
income
households
First
Development
Bank project
Fiscal incentives
for
contributions to
private pensions
Stamp duty of
1.5% on transfer
of business by
parents to
children
Tax credits for
research and
digital games
2. Economic Review and Outlook
The deficit for the year 2017 is expected to decrease to 0.5% of GDP.
In June 2016, the number of people registering for work amounted to 9,822. This represents
4.9% of the labour supply.
Government debt, as at the end of 2016, is expected to amount to 63.3% of GDP. This is expected
to reduce to 56.5% of GDP by the year 2019.
The weekly cost of living increase for the year 2017 shall be Euro 1.75 per week.
The visible trade gap reached Euro 1.8bn between January and July of the year 2016.
The estimated tax revenue for 2016 is expected to be Euro 3.3bn and is expected to rise to Euro
3.9bn by 2019.
Tourists visiting Malta up to July 2016 amounted to 1,055,189. This represents an increase of
9.7% over the same period last year.
3. Tax Related Measures
Pension income shall be exempt from income tax as of January 2017.
The maximum amount of pension income subject to the exemption shall be as follows:
Calendar year Single Parent Married
2017 Euro 10,500 Euro 11,500 Euro 13,000 (+ Euro
500 deduction
against other
income)
2018 Euro 13,000 Euro 13,000 Euro 13,000 (+ Euro
1,000 deduction
against other
income)
Increase in the income tax ceilings for couples with children where only one parent is in
employment. This shall also apply for single parents.
Malta shall witness the setting up of a Joint Enforcement Task Force for the combatting of tax
evasion.
Registration tax shall be levied on the transfer of motor vehicles, with the amount payable
being proportionately spread over a ten-year period. This applies in respect of vehicles
acquired by a person who previously benefitted from an exemption on grounds of disability.
As of 1st
January 2017, the letting of property for a period of 3 months or more shall be
registered with the Inland Revenue Department.
Eco-contribution tax on toiletries, mattresses, batteries, vehicle filters and detergents will be
removed.
Tax on cigarettes and cigars will increase by 3.76%, whilst that on tobacco will increase by
5.5%.
Tax on non-alcoholic drinks, excluding water, will increase by 2%.
Construction material typically used in large scale projects, including tiles, concrete and glass,
shall be subject to tax.
Toiletries, non-biodegradable utensils and garbage bags shall be subject to excise tax.
4. Throughout the year 2017, there shall be a reduction of stamp duty from 5% to 1.5% on the
transfer of family businesses from parents to their children.
The stamp duty exemption for first time buyers on the first Euro 150,000 of the property’s
value shall be extended till the end of 2017.
Stamp duty on acquisitions of immovable property in Gozo, executed until 2018, shall be
reduced from 5% to 2%. This shall be applicable in cases where the promise of sale agreement
is concluded and registered with the Inland Revenue Department during 2017.
Inherited immovable property which is sold by judicial auction shall be subject to a final tax
rate of 7%.
As of 1st
January 2017, persons who own less than 0.5% of the nominal share capital of, or
rights to receive profits from, companies that are listed on the Malta Stock Exchange, will be
eligible to claim the tax at source deducted through their income tax return.
Gains on the sale of listed shares held prior to listing on the Malta Stock Exchange shall be
exempt from tax.
Investors in an SME, or a fund investing in a number of SMEs listed on an alternative trading
platform, will benefit from a tax credit of up to Euro 250,000 per annum through the Risk
Incentive Scheme.
Private pension rules shall be extended to cover business associations.
In the case of optional private pensions, any contributions made by employers will be treated
as a tax deductible expense. Moreover, employers shall be benefitting from a further tax
credit of Euro 150 per Euro 1,000 of contributions.
Output Potential, Families and Education
Wages shall increase by Euro 1.75 per week, reflecting the cost of living adjustment (COLA).
The COLA will also be reflected in stipends pro rata.
Married pensioners on a minimum pension shall receive an increase of Euro 4 per week.
All 4th
year primary students shall be provided with an educational tablet.
5. Teachers wishing to further their studies may apply for a sabbatical year. Euro 400,000 is
being allocated in this regard.
The infrastructure and Wi-Fi access in schools shall be improved, together with an investment
in computers.
Three new primary schools shall be constructed in St. Paul’s Bay, Marsaskala and Rabat
(Gozo).
Pensions and Social Measures
The minimum retirement pension, as from January 2017, shall be increased by Euro 4 per
week.
The first Euro 1,866 pertaining to a service pension shall not be taken into account in reducing
the retirement pension.
There shall be an increase of a maximum of Euro 20 per week in pensions.
The disability pension shall be reformed in order to introduce 3 levels of disability pension.
As of 2017, the Carers’ Pension shall no longer be means tested and will be re-named
“Increased Carers’ Allowance”.
The Increased Carers’ Allowance shall increase by Euro 35 per week.
A Savings Bonds for pensioners, which shall offer higher than market interest rates, shall be
introduced.
There shall be an extension of the period of free medical coverage from 3 months to 1 year
for persons with disability under the Pink Form Scheme.
A Euro 8 million fund to cater for injustices suffered by persons in the past shall be established
and maintained.
Financial assistance, not exceeding Euro 5,200 per annum, shall be given to elderly who are
on waiting lists for admission into an elderly people’s home.
6. Married couples who take in their parents and care for them shall be eligible to Euro 90 per
week.
The current rent subsidy given to 1,400 vulnerable families is being revised, with the number
of targeted families being doubled to 2,800. The criteria for eligibility will also be widened.
A grant of Euro 300 shall be given to persons aged 75 years and over, who still live in their
own household.
The rent on houses which are leased from the Government shall not be increased upon
renewal. Moreover, there shall also be a refund on the increase that was imposed in 2013.
Incentives for Businesses and other measures
An international accelerator programme is being introduced in Malta. This programme is
aimed at assisting local businesses, particularly businesses involved in the development of
new technologies.
Companies engaged in the development of digital games with a cultural theme shall be
entitled to tax credits, amounting to 30% of the expenditure, for the development of the
game.
A trading licence shall no longer be required for retail and other commercial outlets to carry
on their business.
A National Development Bank, which shall specialise in the development of investment in
Malta, shall be operative in 2017.
Planning fees for projects in industrial zones shall be reduced.
7. Energy, Environment and Transportation
Malta shall be witnessing the closure of energy plants which operate on heavy fuel oil and the
decommissioning of the Marsa Power Station.
The dismantling of the Delimara Power Station shall commence during 2017.
A gas pipeline linking Malta and Sicily is still being evaluated.
In 2017, geological tests shall be carried out to search for the best route to pass the pipeline
underground to Delimara.
In 2017, the grants to residents wishing to install solar panels on their residences shall be
extended.
New schemes with the aim of incentivising the use of heat pump water heaters, double
glazing, roof insulation, solar water heaters and the restoration of wells shall be introduced.
Enemed shall be modernising the storage facilities at Has-Saptan, with an investment of over
Euro 50 million.
Grants promoting the replacement of old appliances shall be made available.
As of 2017, a tax deduction to companies on 150% of their expenditure for the provision of
free transport services to their employees shall be made available.
One year of free public transport shall be offered to youths who reach the age of 18 during
2017. This shall be capped at Euro 312 for every youth.
The scheme incentivising companies to invest in bicycle racks shall be extended to next year.
A new fast ferry service between Valletta and Mgarr (Gozo) shall be launched.
Investments shall be made in fiber optic link infrastructure between Malta and Gozo, and
between Malta and Marseille.
