Malta Chamber of SMEs pushes for tax relief and business aid in 2025 budget proposals

As the 2025 budget looms, the Malta Chamber of SMEs has put forward a series of pre-budget proposals aimed at bolstering the business ecosystem in Malta. With a focus on incentivizing investment, supporting self-employed individuals, and preparing the workforce for future challenges, the SME Chamber’s proposals offer a comprehensive roadmap for economic recovery and sustainable growth.

 A four-pillar approach to economic growth

The Malta Chamber of SMEs has structured its proposals around four key pillars: incentivizing investment, supporting good business practices, empowering self-employed and micro-enterprises, and preparing for the future of work.

 1. Incentivizing investment

Investment is the lifeblood of any economy, and the SME Chamber’s proposals highlight the need to create an environment that encourages local businesses to invest and grow. One of the central proposals is a reduction in income tax rates for businesses from 35 per cent to 25 per cent, a change that was initially included in the 2022 electoral manifesto but has yet to be implemented.

The SME Chamber argues that this reduction will enhance cash flow for businesses, enabling them to reinvest in expansion, job creation, and innovation. Additionally, the tax cut would help level the playing field for local companies, which currently face a competitive disadvantage compared to foreign-owned enterprises that benefit from lower tax rates.

Another significant proposal under this pillar is the Business Turnaround Grant, aimed at helping businesses in distress recover and restructure. The grant would cover costs related to developing recovery plans, including professional fees for certified experts.

This grant, alongside a Business Turnaround Finance scheme, would provide distressed businesses with the capital needed to regain stability, safeguard jobs, and ultimately contribute to a more resilient economy.

 2. Supporting good business practices

Supporting responsible businesses is crucial to fostering a sustainable economy. The SME Chamber advocates for reforms that improve governance, particularly in public procurement, where a lack of transparency and trust has long been a concern.

One proposal involves establishing a Public Procurement Ombudsman, who would oversee the adjudication process for tenders and ensure fairness in awarding government contracts. The SME Chamber stresses the need for smaller lots in tenders to encourage participation from small businesses, as well as more stringent controls over direct orders.

Another key aspect of supporting good business is reforming the Cost of Living Adjustment (COLA) mechanism. The SME Chamber calls for a mature discussion between social partners to modernize COLA, which, in its current form, places a significant burden on businesses, particularly those with lower-income workers.

In 2024, due to high levels of inflation, the COLA was set at €12 weekyl, implying an additional cost of €600 per employee annually. At a time when businesses were facing exploding running costs, many employers called for a rework of the COLA mechanism.

 3. Empowering the self-employed and micro-enterprises

With more than 99 per cent of businesses in Malta falling into the SME category and a significant portion being self-employed or micro-enterprises, the SME Chamber places special emphasis on supporting this sector.

One of the most notable proposals is the establishment of a Parliamentary Secretary for Self-Employed and Micro-Businesses, ensuring that the unique needs of these entities are adequately represented at the policymaking level.

The SME Chamber also proposes expanding the MicroInvest scheme, which currently offers financial assistance for investments in equipment and technology. The proposal recommends increasing the threshold from 45 per cent to 65 per cent for micro-enterprises, making it easier for them to access funds for growth and development.

Additional measures include enhancing grants for training and coaching, allowing micro-businesses to upskill their workforce and improve operational efficiency. These initiatives are designed to address the challenges faced by small businesses, from limited resources to a lack of expertise, and empower them to thrive in a competitive market.

 4. Preparing for the future of work

The digital transformation is rapidly reshaping the world of work, and the SME Chamber’s proposals focus on ensuring that Malta’s workforce is prepared for these changes. The introduction of Making Tax Digital (MTD) is a key initiative that aims to modernize tax administration, reducing the administrative burden on businesses while improving compliance.

The SME Chamber also proposes forming a taskforce for the future of work, composed of government, industry leaders, and social partners. This taskforce would be responsible for developing a cohesive strategy to address the challenges posed by digitalization, including job displacement and the need for upskilling.

The SME Chamber also suggests extending current grant schemes to help businesses adopt new technologies and improve their digital infrastructure. This is crucial not only for improving productivity but also for ensuring that Maltese businesses remain competitive on a global scale.