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Tax Cuts Announced in Malta's Budget for 2013

By Lorys Charalambous, Tax-News.com, Cyprus

03 December 2012


Malta's new budget includes progressive income tax decreases between 2013 and 2015, as well as incentives for new businesses, the tourist industry, and property buyers.

Earners currently within the 35% income tax band but earning less than EUR60,001 (USD78,000) will see a reduction to 32% in 2013, followed by decreases to 29% in 2014 and to 25% in 2015. The reductions will benefit single persons earning between EUR19,501 and EUR60,000, married couples earning between EUR28,701 and EUR60,000, and parents of children (and of adults under 21 in tertiary education) earning between EUR21,201 and EUR 60,000.

Those earning EUR60,001 or above will continue to pay 35%.

The budget also confirms the continuation of a EUR1,300 tax deduction for parents sending their children to child care centres, a one-year tax-free status for mothers returning to work after five years or after having a child, a tax rebate for students paying to obtain academic qualifications, and tax reductions for disability residency in respite centres.

Tax measures for businesses include "BSTART," a tax deduction scheme of up to EUR30,000 for seed capital investment, and benefits for the tourist industry. Tax credits worth 15% of capital expenditure will be made available to licensed hotels, while tax deductions will provide incentives to increase the number of boutique hotels in the Maltese capital, Valletta.

For property purchases, the current choice of paying capital gains tax or a 12% final withholding tax will be extended from seven to 12 years. The 3.5% stamp duty ceiling for first time buyers will be increased from EUR116,468.67 to EUR150,000, and sellers and buyers of properties worth more than EUR250,000 will be entitled to an architect’s valuation in order to determine stamp duty. There will also be a 2% reduction in stamp duty for properties purchased for restoration outside Urban Conservation Areas, and a 20% tax credit of up to EUR200,000. Stamp duty on the transfer of property from parents to children will also be abolished.

Also, excise duty on petrol and diesel will increase by EUR0.02 per liter, and on cement by EUR5 per tonne. There will also be excise increases of 6% on cigarettes and 8% on tobacco.

Malta’s government states that it expects the Maltese economy to grow by 1.2% by the end of 2012, while the EU economy is expected to shrink by 0.4%. The budget statement points out that 12-month inflation in September went down to 2.3%, and that the European Commission’s Excessive Deficit Procedure against Malta has been closed off due to the country's strengthening financial situation.

TAGS: tax | investment | business | European Commission | Malta | budget | excise duty | education | withholding tax | stamp duty | inflation | Europe

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