Start-up visas, seed funds & lower taxes on business inheritance: Budget measures for the business community

As the COVID wage supplement is poised to end by the end of 2021, Government has come out with a raft of measures aimed at providing financial support for investment, with the aim of those investments generating growth and creating jobs. 

Additionally, Government has included measures to simplify bureaucratic processes businesses are faced with on a daily basis.

Budget 2022 measures aimed at the corporate sector and business community include:

Incentivising enterprises to invest

Groups of companies will be able to net off capital allowance benefits on investments against their taxable income, Minister Clyde revealed. This measure is aimed at groups of companies that had to sustain loss-making arms of their business with those that continued operating during COVID and had no choice but to use reserves gained from pre-pandemic years of success. 

Groups of companies that had non-absorbed or unused capital allowances in 2020 and 2021 due to losses stemming from the pandemic may apply for this benefit, which will see their tax bill reduced against any taxable income from companies within their group, for 2021 (2022 year of assessment).

In 2022, Malta Enterprise will be launching a scheme where companies that retain a percentage of profits to invest in projects within the company itself and/or will be investing in another business will receive a tax benefit so long as the investment takes place over a period of two years starting from 1st January 2022.

Government said it will introduce fiscal incentives to support private sector investment in innovative, ecological, digital and/or social upgrades.

Measures to cushion the increase in international shipping/transport prices

Minister Clyde said Government will be widening the number of businesses eligible for a rent subsidy on warehouses containing imported stocks.

Industrial Infrastructure

Government this year committed itself to invest €470 million to modernise Malta’s industrial zones, which will be administered by INDIS Malta. Minister Caruana said the investment will see new industrial zones without encroaching on ODZ land.

Among the areas to benefit from this investment is the Life Sciences Park, Kordin Business Incubation Centre, Hal Far, Bulebel, Marsa, Kardin, San Gwann and Hal Luqa. 

Government said it will also aid aviation maintenance companies with infrastructural needs as well as the Park 4 zone at the Hal Farrug airport.

Road Infrastructure

Government committed itself to continue works on the tunnels of Kirkop, the Airport Intersection Project, and the Mriehel Bypass. Minister Clyde said the projects will be landscaped with mature trees and other foliage.

Reform on remission (amnesty) system for interest rates and penalties

Minister Caruana said that Government will no longer tolerate those in a fiscally sound position not paying their fair share of tax and announced a reform on the amnesty system on interest rates for late or non-tax payments 

From 1st June 2022, the rate of interest payments on tax balances and VAT due will be 7.2 per cent annually. 

Tax incentives on the inheritance of businesses

Family members inheriting businesses will only pay 1.5 per cent stamp duty on the transfer, down from the current five per cent. 

Launch of a Seed Fund

In collaboration with Malta Enterprise and the University of Malta, a Seed Fund will be launched to incentivise researchers and innovators to develop their ideas through financial support. 

Start-up visas

Minister Caruana says that Government, in a bid to attract start-ups to Malta, will be offering a dedicated visa, and will work with Community Malta to develop the programme and attract non-EU entrepreneurs.

No more details were provided.

Exclusive economic zone

With the introduction of an exclusive economic zone, Minister Caruana said Government will start to explore maritime opportunities in the area of renewable energy, among others. No further detail was provided here. 

Financial Services

Minister Caruana added the Government is committed to protecting the financial services sector from headwinds and announced a series of bureaucratic initiatives undertaken to improve the sector.

He said Government will launch a simplification drive on regulatory processes, on the set up of institutions, consolidation of management at Identity Malta, the launch of a committee for the reform of the financial services sector, modernisation of Malta’s tax system and attracting talent within the financial services. 

Identity Malta

In 2022, work will be undertaken so that through Government investment, a new electronic system will be launched for notaries who will be able to submit formal notes digitally, using their electronic signature. 

ESG investments

A project will be launched in the coming weeks to help Maltese companies assess the environmental impact or social development of their projects, which information will be publicly accessible so that foreign private investors will be able to allocate capital to Maltese companies investing in projects environmentally sustainable, enhancing social progress and business governance.

Investing for sustainable enterprises

The Government will begin the process for public entities and private individuals to be able to invest in green and environmental projects, with a view to creating a surplus in carbon credits that can then be voluntarily purchased by other public or private entities to meet their carbon targets.