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Malta Budget 2021: The Highlights

Malta Budget 2021

Highlights from the Malta Budget for the year 2021, presented by the Finance Minister, Honourable Edward Scicluna on the 19th of October 2020 are detailed in the table below, including the extension of support measures for Covid-19.

Malta Budget 2021 Overview

Support Measures Detail
Covid-19 Support Measures​​
  • Extension of the Covid-19 Wage Supplement until March 2021.
  • Further stimulus for restaurants and retail outlets. An additional round of €100 spending vouchers will be given to all Maltese residents aged 16 and over in 2021, of which up to €60 may be spent on accommodation and up to €40 in retail outlets.
  • Existing Government support Schemes including: the moratorium, tax deferrals, the Guarantee Scheme and Interest Rate Subsidy Scheme, will be continued and re-assessed at the end of March 2021.
Business Measures
  • Increase of the VAT exempt threshold from €20,000 to €30,000 enabling more taxable persons to take advantage of the simpler type of VAT Registration under Article 11 of the VAT Act.
  • Voluntary Organisations that are compliant and their annual profit is not more than €50,000 will be exempted from income tax.
  • Extension of the reduced rate of duty of 1.5% on the transfer of family business until the end of 2021.
Property Measures
  • First time home buyers will be exempt from duty on the first €200,000, increased from €175,000, as from 20th of October 2020.
  • The rate of duty on the acquisition of residential properties shall be reduced to 3.5% on the first €200,000.
  • Immoveable property gifted to direct descendants for use as their main residence shall be exempted from duty on the first €250,000 (increased from €200,000). The duty charged on amounts higher than this will be subject to the rate of 3.5%.
  • The reduced rate of duty of 2.5% for the acquisition of vacant immovable property within an Urban Conservation Area (UCA), will be continued in 2021.
  • Reduced Duty of 2% to be paid on the purchase of residential immovable property in Gozo, to be extended for 2021.
  • For second-time property buyers, the initiative to refund a portion of the duty paid on the second property in Malta will be extended for another year.
  • The reduced duty of 1.5% for the first €400,000 of the immoveable property will be extended for promise of sale agreements registered until 31 March 2021.
  • The reduced income tax on the inter-vivos transfer of immoveable property of 5% will also be continued on promise of sale agreements registered by 31 March 2021.
  • From the 1st of January 2021, a final tax of 15% will apply on all profits derived from the transfer of a promise of sale agreements. This extension will apply until 31 December 2021.
  • Extension of the reduction of Property Transfer Tax from 8% to 5% on the transfer of property.
Individual Tax Measures
  • Individuals earning less than €60,000 will continue to benefit from a tax refund along with individuals who fall within the tax-free bracket. The refund will be increased to €45 - €95, with the higher refund being applied to individuals with lower incomes.
  • Royalty Income received by authors and co-authors from book sales will be subject to a 15% final tax.
  • The Voluntary Occupational Pension Scheme income tax exemption to be increased to €3000 per year.
Measures for Pensions & Senior Citizens
  • Individuals receiving social security pensions will receive €3.25 more per week, in addition to the extra €1.75 increase for the cost of living.
  • Tax rebates for pensioners will increase. Income up to €14,058 will be exempt from tax.
  • Individuals born before 1962, who did not qualify for state pension due to contributions effected prior to the age of 19 years, will now have such contributions considered for pension purposes.
  • Extension of the grants supporting persons over 75 years who live in their home or private residential home. €300 for individuals aged 75 years and over & €350 for individuals aged over 80 years.
  • The Supplementary Allowance for individuals who are 65 years and over shall be increased by between €70 to €108 per annum. For those individuals who are 65 and over, and at risk of poverty shall continue to benefit from the additional supplementary allowance of €150.
  • Individuals not entitled to receive a pension, will benefit by a bonus increase of €50 per year.
Family Measures
  • For families earning an annual income of €25,318 or less, the per child allowance will increase to €70. For families earning more than €25,318, they will be entitled to a €50 per child yearly increase.
  • Couples who adopt a child locally we benefit from a €1,000 grant.
  • The allowance for Foster Care in 2021 will increase by €520, making a total allowance of €5,720 per year.
  • The yearly Carers Allowance will increase from €5,291 to €6,000 in 2021. The eligibility criteria will also be extended.
  • New financial assistance of €300 for parents who stop work to care for their children with disabilities.
Sustainability & Environment Measures
  • ‘Green Bonds’ to be issued by the Malta Stock Exchange to be used by investors to finance renewable energy projects and decrease air pollution.
  • Renewable energy scheme to be extended promoting the installation of PV panels, solar water heaters and batteries to store renewable energy.
  • Several waste management projects to be carried out to improve waste processing, organic waste and completing the Waste-to-Energy facility.
  • A scheme to encourage private residences and business to install Green Walls will be introduced.
  • In 2021, collection machines for recycled bottles are to be installed.
  • Incentives for the restoration of wells and installation of reverse osmosis systems will be renewed.
  • Vehicle owners can benefit from a grant up to a maximum of €7,000 to scrap vehicles older than 10 years in favour of electric, low emission vehicles.
  • Electric and plug-in hybrid vehicles will continue to be exempt from registration tax and the annual road license fees for the initial five years.
  • Motorcycle owners with a cubic capacity between 125cc and 250cc will benefit by a reduction in the annual road licence fees from €65 to €25.
  • Vehicle owners who convert their cars from petrol to gas and thereby reducing the CO2 emissions by 25% can benefit from a €400 grant. Owners of vehicles used for passenger and goods transport may also benefit from this conversion scheme up to €800.
  • The VAT refund scheme for acquiring Bicycles and Pedelec Bicycles (electric bicycles) will be extended for another year.
  • Fishermen and farmers to be given grants equivalent to their tax due on qualifying produce. Such grants will be linked to investment in projects that reduce produce waste.
  • The annual licence fee of vehicles to be reduced by 35% when registered for use only during weekends and public holidays.
  • Further studies on the feasibility to build a light railway network in Malta.

Reference

Disclaimer

Whilst we endeavour to provide precise and timely information, there can be no assurance that such article is accurate as of the date it is received. The information provided herein is merely intended for general information purposes and cannot be construed as professional advice without seeking an appropriate consultation.

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