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Gonzi Announces 2008 Maltese Budget

by Robert Lee, Tax-News.com, London

17 October 2007


Although there was an absence of any major taxation changes in Prime Minister Lawrence Gonzi's 2008 budget, he told parliament on Monday evening that that the budget allowed him to make some some modest tax cuts, including changes to personal income tax thresholds, a tax concession for first-time housebuyers, and more VAT concessions.

By revising the income tax bands, Gonzi explained that there would be an increase in the amounts of personal income which is subject to tax at lower rates. Under these changes, single taxpayers will pay no income tax on income up to Lm3,498 (EUR8,172), and couples will pay no income tax on the first Lm4,894 of income. Also, the 15% band has been extended to singles with an income of Lm6,000 and couples with a salary of Lm8,800. According to PricewaterhouseCoopers, these revisions should translate to savings of Lm341 (EUR794) per annum for those applying the joint computation (married rates) and Lm230 (EUR536) per annum for those applying the single computation.

Under changes to the stamp duty system, first-time house buyers will pay the 3.5% stamp duty rate on the first Lm50,000 of the value of immovable property, up from the current Lm30,000 threshold. Also, changes to the stamp duty regime with regard to inheritances will mean that the surviving spouse will be exempt from stamp duty on the inheritance of the couple's residence on the demise of the other spouse, provided that the house is not sold prior to the surviving spouse's death. In addition, there will be a reduction to 3.5% of duty on transfers of immovable property by parents to children to be used as the latter’s residence.

Under other fiscal measures, VAT will be refunded on expenditure on sports facilities, and reduced to 5% from 18% on the letting of sites for artistic or cultural activities.

Giving an upbeat assessment of Malta's economic outlook, Gonzi said that the island's economy is "credible and sustainable", and will grow by 3.6% in 2007.

A comprehensive report in our Intelligence Report series giving background tax and residence information on many of the key offshore jurisdictions is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report4.asp

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