Maltese Finance Minister Tonio Fenech delivered his 2010 budget speech on November 9, presenting tax measures to encourage business development as well as support for struggling industries.
In the budget, small businesses will benefit from increased funding, aimed at encouraging them to expand their activities and attract new investments. Small firms will benefit from grants for marketing, research, innovation, software development and staff training, and a EUR2.5m fund has been established to aid struggling but viable businesses. Businesses will also benefit from the removal of a levy on credit cards, which stood at EUR16.31 a year.
'Micro' businesses (i.e. those with less than 10 employees) will be given incentives to expand their activities with the introduction of a tax credit of 40% on investments of up to EUR25,000. They will also benefit from guaranteed loans of an additional EUR25,000.
Innovation will be encouraged through the development of existing industrial zones, and the creation of new ones in Mellieha and Xewkija. EUR20m has been allocated for the creation of a new biotech park.
Sectoral support will be provided to the housing industry. The industry has welcomed the government’s decision to extend a scheme which allows those selling their second home in Malta to opt to pay withholding tax of 12% instead of the 35% capital gains tax on profits providing the property is sold within a period of less than seven years after its purchase, extended from five years, with immediate effect.
The island’s ship registry is also to gain from the Bill. Fenech announced that those registering boats under the Maltese ensign will be subject to lower taxes.
The registration tax for commercial and heavy vehicles is to be reformed under the Bill. Vehicles reaching the European standard Euro 4 or higher will be exempt from the tax, while commercial vehicles with the Euro 3 standard will continue to pay the tax, although it will be levied based on weight rather than value.
Finally, energy tariffs will be reduced for those using less than 10,000 units of energy, which accounts for 97% of taxpayers. The duty on tobacco products will be increased by EUR0.15.
The budget factors in a deficit of EUR233.8m for 2010, 3.9% of GDP, increasing marginally on the projected deficit for 2009 of EUR217.6m (3.8%).
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