On 14th October 2019, the Minister for Finance the Hon. Edward Scicluna, presented the Budget for 2020. The Budget Speech did not refer to major changes to the Maltese tax system. Unlike previous Budget Speeches the Budget Speech for 2020 contemplated very few new tax measures. The tax measures that the Minister referred to are the following:
- With effect from 1 January 2020, a final tax of 15% will apply on the first €100,000 of gains or profits derived from the transfer of a promise of sales. Any gains or profits over and above the €100,000 will remain taxed at 35% in terms of Property Transfers Tax.
- A reduction in tax on over-time employment income paid in respect of the first 100 annual hours of overtime work derived by persons whose base salary does not exceed €20,000 per annum and who are not in a management grade to 15%.
- Individuals whose income is less than €60,000 will continue to benefit from a refund of tax. Individuals whose income falls within the tax free bracket will also benefit from such refund.
- Pension income of less than €13,799, will not be subject to tax.
- Other income exempt from tax received by couples with a single pension will be increased to €2,000, i.e. total income exempt from tax will amount to €15,798.
- Certain pensioners will be exempted from paying provisional tax payments.
- Tax Refunds will be provided within 6 months.
- Voluntary Organizations that are registered with the Registrar of Legal Persons will be exempt from income tax as long as their annual income is less than € 10,000
Duty on Documents and Transfers
- The following existing tax schemes will be extended for another year:
- the Scheme originally contemplated in Legal Notice 59 of 2016 providing for a reduced rate of duty of 2.5% on the higher of the amount or value of the consideration paid upon the acquisition of vacant immovable property situated within an Urban Conservation Area.
- the Scheme originally contemplated in Legal Notice 384 of 2016 providing for a reduced rate of duty of 2% on the higher of the amount or value of the consideration paid upon the purchase of residential immovable property situated in Gozo.
- the Scheme originally contemplated in Legal Notice 131 of 2017 providing for a reduced rate of duty of 1.5% on the real value of shares held in a family business or immovable property used in a family business donated to close family members.
- the Scheme originally contemplated in Legal Notice 39 of 2018 providing for a refund of a portion of the duty paid by second-time buyers upon the acquisition of their second immovable property situated in Malta.
- The first time buyers scheme providing for an exemption from duty on the first part of the consideration introduced by Legal Notice 393 of 2013 has been extended. In addition, the exempt portion has been increased from €150,000 to €175,000.
- Those individuals acquiring property for the purpose of establishing their own residence who are either acquiring it by inheritance or are not first time buyers will now be subject to duty at the reduced rate of 3.5% on the first €175,000 instead of €150,000.
- The VAT exemption on the provision of education provided for in Item 12 of Part 2 of the Fifth Schedule to the Maltese VAT Act, Cap. 406 of the Laws of Malta, will be extended to cover a wider range of services including vocational training and other educational services.
- The VAT refund scheme associated with the acquisition of Bicycles and other types of Bicycles as per Government Notice No. 1.231 dated 15 December 2015 will be extended for another year.
General Compliance Obligations
- Couples will be allowed to submit separate tax returns and the new system will provide for separate assessments for couples.
- As from January 2020, a new online system will improve existing processes relating to VAT and PE de-registration.
- More efficient tax compliance procedures will be introduced, certain taxpayers will be exempt from submitting an income tax return if they validate a provisional assessment.
- The Grant on the Purchase of Special Equipment for use by Persons with Disability originally introduced by Government Notice number 951, published in Government Gazette number 19,587 of the 1st September, 2017 will be increased by €400 with the maximum capping increasing to €1,000.
- Operators involved in the construction industry which scrap their machinery and replace it with new machinery with low emission standards will now benefit from assistance up to €200,000. Those who will be acquiring additional machinery (except vehicles) having similar attributes will be eligible as well.
- Schemes administered by Malta Enterprise for the assistance of SMEs will remain available. These Schemes include MicroInvest, Business Start, Startup Finance and Fondazzjoni Start-Up Malta.
No new taxes have been introduced .