Malta's Finance Minister Comments On Pre-Budget Document

by Ulrika Lomas, for LawAndTax-News.com, Brussels

05 September 2008

Malta's Minister of Finance, the Economy and Investment, Tonio Fenech, has spoken out this week to comment on the country's recent pre-budget report.

The Minister's speech concentrated closely on the future of the country's business economy, and the steps government will be taking to both sustain and nurture Malta's economic environment.

Mr Fenech began:

"It is government’s intention to nurture and support private enterprise as we strongly believe that much of our national wealth creation is dependent on a dynamic and healthy enterprise. We do appreciate that businesses face challenges and burdens.

"A number of problems, such as cash flow limitations due to late payments, accessing EU funds, energy costs or administrative burdens, hinder further growth. For this reason, overarching aims of the pre-budget include providing business with the necessary support through:

  • Improved access to finance
  • Further simplification of the tax system
  • Reduced costs for enterprise
  • Support services for enterprises
  • Reduction of non-wage labour costs and
  • Advancing entrepreneurship through education.

"In practice," Mr Fenech continued, "in order to reach these objectives, government is proposing a mix of specific policy measures, including:

  • Better regulation
  • Reviewing fiscal and public procurement legislation
  • Providing fiscal incentives in respect of ICT and manufacturing enterprises
  • Constructing of new factories for allocation
  • Incentivizing R&D
  • Creating of an innovation fund for SMEs
  • Expanding the business incubation centre and
  • Establishing a Research Unit to help SMEs access EU funding."

The Minister went on to add:

"Malta is also leading the support on a European level on the proposed Small Business Act: a package of ambitious actions to be implemented at EU and Member State levels. The Act will allow SMEs to fully benefit from the Single Market and to expand internationally by orienting more resources to access finance, to research and development as well as to innovation.

"On another level, we are also working on the implementation of the Services Directive, which will come into force in December 2009 and which will not only provide another important tool for the reduction of administrative burdens for service providers, but will also create increased competition and improve productivity," he explained, adding:

"Lately, we have embarked on a constant review process of accounting and reporting requirements. One outcome is the General Accounting Principles for Smaller Entities. Its objective is to reduce the audit and financial statement reporting requirements for smaller and medium businesses to a more realistic requirement. This should free up financial service provider time and effort to make the service more affordable whilst maintaining the standards required to support the users of the audited financial statements."

"Finally," he concluded, "a word on better regulation. Vision 2015 sets government's targets on improving our standards in selected value added knowledge based sectors. One main tool in achieving this is by removing unnecessary obstacles to socio-economic development."

"The Pre-Budget Document lists a number of actions that have been taken while proposing concrete measures for the future. These include reducing the frequency of reporting to the minimum levels necessary, reviewing whether similar information is being requested through different channels, reducing paper-based reporting in favour of electronic reporting and more importantly reducing costs, especially fees charged to small companies by regulatory authorities in relationship to company formation and registration and annual fees."

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