Malta’s budget for the year 2021, was presented on Monday by the Finance Minister Hon. Edward Scicluna, delving into social measures, the economy, the environment, law, education, health, and infrastructure. The salient fiscal and financial measures may be found below:
Economic aspects
- 7.4% reduction in GDP for 2020 following the challenges brought by the COVId-19 pandemic.
- The deficit for 2020 is expected to reach €1.2billion, which the Government anticipates will be endured at a decreasing rate until 2023.
- It is expected that while the rate of unemployment will remain at 4%, there may be an increase in jobs by 2.3%.
- Cost of living allowance (COLA) will amount to €1.75 per week with student stipends increasing pro-rata.
- Over and above the COLA adjustment, pensioners should benefit from an increase of €3.25 a week for a total increase of €5 per week. Furthermore, the amount of exempt annual pension income should be increased from €13,798 to €14,058.
- Increase in the supplement granted to elderly who employ a full time carer to be increased by €700 per annum.
- Re-issuance of Government Saving Bonds for pensioners who are over 62 years of age.
- The rates for children’s allowances within families generating low and average income is expected to be increased.
- Foster Care Allowances is also set to be increased by €520 per year.
- Couples adopting a child from Malta may benefit from an Adoption Grant up to €1,000 to assist in covering the costs.
- Vacation leave entitlement should be increased by an additional day, amounting to a total of 28 days.
- Tal-Linja Card will be given free of charge to individuals who are over 70 years old.
- The COVID Wage Supplement should be extended up until the end of March 2021.
- In order to counter the economic challenges posed by the pandemic and to support businesses, the Government should issue a second round of €100 government vouchers to be utilised in 2021, which should be spent €60 on hospitality and €40 on goods and services.
Tax matters
- Tax refunds with respect to individuals who earn less than €60,000 should also be granted in 2021, which refunds range between €45 and €95 depending on the individual’s income bracket.
- A 15% final withholding tax should be introduced on royalty income derived from the publication of literary works.
- The amount of tax credits on private pension plans and voluntary occupational pension schemes should be increased.
- VAT exempt threshold to increase from €20,000 to €30,000.
- Increase in the tax exemption by €1,000 up to €3,000 for individuals contributing towards the Third Pillar Pension Scheme and the Voluntary Occupational Pension Scheme.
Property related measures
- The reduced rate of duty at 1.5% for qualifying business transfers in relation to particular intra-family donations of business property and securities should be extended by a year.
- First time buyer scheme has been extended for another year and should be exempt from duty on the first €200,000, increased from €175,000 on the value of the property.
- Second time buyers who sell their residential property in order to purchase another residential property should be eligible to receive a refund of duty up o €3,000 or €5,000 in instances of special needs.
- The reduction of stamp duty on the acquisition of property to 1.5% on the first €400,000 and the reduction of property transfer tax on the sale of property from 8% to 5% should be extended and should be applicable provided that the promises of sale is signed by March 2021 with the final deed of transfer being signed by 31 December 2021.
- No stamp duty should be charged on the first €250,000 (previously €200,000) of donations of immovable property from parents to their children where the immovable property being donated is used for the children’s residential purposes. The additional value of the immovable property is to continue being charged at 3.5%.
- Reduced rate of duty at 2.5% from 5% in relation to property purchased which is located in an Urban Conservation Area and reduced rate of duty at 2% from 5% in relation to property acquired in Gozo as one’s residential property.
- From 1 January 2021 up to 31 December 2021, any gains or profits arising on the assignment or cessation of any rights acquired under a promise of sale of immovable property or any rights thereon will be subject to a reduced rate of duty at 15%.
Environmental aspects
- Environmental measures introduced include extension of exemption for electric vehicles, refunds for bicycles and e-bicycles, increase in grants for changes in vehicles from petrol to gas. The continuation of the vehicle scrappage scheme with the maximum benefit to be received would amount to €7,000. A €10,000 grant should be granted to taxi drivers who purchase vehicles which are wheelchair friendly. Infrastructure regarding refund scheme of plastic bottle will be brought in whereby individuals may return plastic bottles in return for cash. The introduction of the ban of importing single-use plastics as from January 2021 and the ban on the sale of such products by January 2022. The offering of Green Bonds by the Malta Stock Exchange in order to assist projects which promote the use of renewable energy and low emissions.
Tourism
- Creation of the Aviation Policy and the enhancement of the Maritime Register.
- Long term implementation plan to assist the tourism industry to become a Net Zero Carbon Neutral Industry.
