Malta weathering the Covid-19 storm

In response to the Covid-19 pandemic, the Maltese Government took immediate and decisive action to protect the health and well-being of people living in Malta, and announced several effective measures as part of a financial package to help the Maltese economy. These were mainly aimed at easing pressures on the liquidity of businesses, protecting jobs and helping the most vulnerable during this challenging period. Following the initial measures, in June, attention then shifted on an Economic Recovery Plan aimed at reducing business costs, stimulating domestic consumption and directly supporting businesses.

Some of these general measures included:

• As from 9th March 2020, the Government financed a wage supplement of €800 per month per full-time employee to businesses or self-employed that have been hardest hit by the COVID-19 outbreak (€500/month in the case of part-timers).
• For those engaged in the less critically hit sectors, such as wholesale and retail, manufacturing and warehousing, the equivalent of €160/month per full-time employee (€100/month in case of part-timers); €320/month per full-time employee employed by Malta-based individuals or employed by Gozo based businesses €200/month in case of part-timers); and €480/month per full-time employee employed by a Gozo-based individual (€300/month in case of part-timers).
• For the period from July to September, for businesses dependent on tourism (tourist accommodation, travel agents, English learning schools, event organisers and air transport), the wage supplement remained the same until the end of September i.e. €800/month for full-time employees and €500/month for part-time employees.
• Businesses dependent on local demand such as personal services had their wage supplement fall to €160/month per full-time employee and €100/month in case of part-timers.
• The wage supplement was also extended to pensioners and full-time students who are also in employment.
• A quarantine leave supplement of €350 grant is awarded to employers for each employee required to be on mandatory quarantine leave.
• Unemployment Benefit for workers who lost their job with effect from 9 March 2020. These were entitled to a new temporary benefit of €800 per month (€500 per month for part-timers).
• Persons with disabilities who had to stay at home due to health concerns as a consequence of COVID-19 and could not telework, were entitled to a benefit of €800 per month for a specified period (€500 per month for part-timers).
• A benefit of €800 per month (€500 in case of part-timers) to one of the parents (including single parents) who took additional unpaid leave to take care of children whilst schools remain closed, when both parents work in the private sector.
• For persons employed in the private sector, who were ordered by the Superintendent of Public Health not to leave their home, and were not able to work from home and were not being paid by their employer during their absence from work, a benefit of €800 per month (€500 in case of part-timers) was issued.
• Teleworking grants were issued for employers who invested in a teleworking set-up. These could benefit from a cash grant of up to €4000, capped at €500 per teleworking agreement, awarded against 45% of the eligible cost.
• Deferral of certain taxes for companies and self employed persons due in March, April, May and June 2020

Other measures included:

• Assistance for Third Country Nationals to find alternative employment in case of job termination.
• An emergency fund for voluntary organisation to provide assistance to registered and compliant Voluntary Organisations by providing financial support in case they are facing difficulties. The Fund is aimed at VOs whose operations are related to, and essential for, the COVID-19 pandemic. The Fund’s budget currently amounts to €125,000 and every voluntary organization may be given a sum of up to €5,000.
• An e-learning platform was launched to offer free online courses to individuals working in the tourism sector.
• Projects to restore and upgrade venues with the capacity to host MICE events in Gozo, can benefit from a reimbursement of up to 50% of the works and expenses incurred, capped at €50,000 for year 2020 in case of NGOs and at €25,000 for year 2020 in case of private businesses.
• Gozo Back Office Employment Refund Scheme, where eligible employers can benefit from a partial refund of the salary cost of employees carrying out back office operations in Gozo, up to a maximum of €8,700 per employee, spread over 3 years, capped at €35,000 a year.
• A partial reimbursement of costs of or grants for partly/fully relocate/establish business in Gozo.
• Malta-based businesses offering teleworking facilities to Gozitan resident employees may be eligible to receive a partial refund of 75% of the purchase cost of teleworking equipment up to a maximum of €850 per employee and a partial refund of the salary cost, up to €10,000, based on the number of hours that the employee teleworks, spread over 3 years up to a maximum of €3,000 in each of the first two years and a maximum of €4,000 in the third year.
• The Malta Council for Science and Technology (MCST) launched a ‘COVID-19 R&D Fund’ of €5.3 million with a mechanism through which cash grants are given to eligible applicants undertaking R&D projects with outcomes addressing innovative and/or improved approaches with regards to current and/or future infectious disease prevention, control and contain the spread and other antiviral relevant research.

Economic stimulus measures included:

• A scheme approved by the European Commission under the Temporary Framework for State aid measures to support the economy, to enable commercial banks, accredited by the Malta Development Bank, to leverage the €350 million guarantee fund into €777.8 million in new working capital loans.
• The maximum individual loan amounts is €2 million for SMEs and €5 million for large enterprises. Higher amounts require the prior ad-hoc approval of MDB and are to be capped at €4 million for SMEs and €8 million for large enterprises. Additional conditions apply.
• Commercial banks need to give an interest rate reduction to beneficiaries of at least one percentage point on the average lending rate as compared to similar facilities prior to the introduction of the guarantee scheme.
• The term of the loans is between 18 and 48 months. The term can increase to 72 months, subject to additional terms and conditions.
• A moratorium on both interest and capital repayments is given for a minimum period of 6 months with the possibility to extend to one year on a case-by-case basis.
• This scheme does not cover restructuring or rescheduling of existing facilities and these loans are mainly intended to cover salaries, leases, utilities, working capital creditor balances, creditor balances for investment expenditure contracted for before the approval of the Scheme, acquisition of material and stock, maintenance costs and expenses directly related to contracts which were cancelled or postponed because of the COVID-19 outbreak excluding penalties and other liabilities incurred due to non-performance of contracts.
• An interest rate subsidy of up to 2.5%on bank loans.
• Six month moratorium on bank facilities for individuals, households and businesses sanctioned before 1st March 2020.
• Specific business classifications identified as hardest hit by the effects of the global pandemic will receive a one-time grant of up to €2,500.
• Certain businesses will receive a refund of 50% of their electricity bills for the months of July, August and September, capped at €1,500.
• Fuel prices reduced by 7c per litre to €1.34 per litre of petrol and €1.21 per litre of diesel
• Commercial licences paid to the Commerce Department and the Malta Tourism Authority are being refunded back to businesses.
• A temporary refund of 33% of port charges for vessels which import goods to Malta and 10% of container discharge fees, excluding transhipment.
• €100 vouchers are being sent to each person aged 16 years and over to be spent locally to the extent of 80% on accommodation, restaurant and bar services and 20% in outlets that have reopened following a period of forced closure.
• Couples who had to postpone their wedding due to the disruptions caused by Covid-19 will get reimbursed for their forfeited deposits up to a maximum of €2,000.
• Increase in in-work benefits for eligible beneficiaries, and a one-time grant of €250 will be given to beneficiary families.
• Through the Malta Development Bank, Government will act as underwriter for bonds issued by private companies which are due for roll over.
• 30% of approved MicroInvest tax credits can be converted into a cash grant, capped at €2,000 for enterprises operating in Malta and at €2,500 for female-run or Gozo-based enterprises.
• €5,000 financing for businesses to use on advisory services aimed at identifying new ways of operating such as through the use of innovative technology.
• €2 million allocated for certain homes for the elderly in recognition of their valuable work during the COVID-19 pandemic.
• Companies employing less than 50 employees may benefit from skills development training schemes.
• Grants of up to €10,000 to companies undertaking digital campaigns in new foreign markets.
• A maximum of 80% reimbursement of costs incurred for the participation in international fairs that have been cancelled due to the pandemic.
• Companies which seek to export their products to new markets will benefit from an export credit guarantee scheme to be launched in collaboration with the Malta Development Bank and Malta Enterprise.
• €5 million investment in a new platform for local businesses to help them promote their products.
• Construction enterprises which undertake investment to modernize equipment which is environmentally friendly may benefit from a grant of up to €200,000.

In addition to the above, a series of property related measures were also introduced. These included:

• Rent subsidies or increased rent subsidies to employees who lose their job and have rent to pay.
• Rent Subsidy Regulations published on 8th May 2020, provide for subsidy assistance to eligible undertakings requiring support to rent industrial space for developing a business activity. The aid shall not exceed €25,000 per annum and shall cover up to 50% of the cost of the rental. Applications for this scheme are open until 31 December 2022.
• Persons who did not qualify as first-time buyers due to them being part-owners in property or owners of a garage, are now able to qualify for the first-time buyers incentive.
• Income tax on the sale of property is reduced from 8% to 5%
• Stamp duty is reduced to 1.5% from 5%. This is applicable for the first €400,000 on contracts published by the end of March 2021.
• Through the Home Deposit Scheme, the Government will be offering interest-free loans repayable over 25 years, to eligible first-time buyers, aged less than 40, to finance the 10% deposit payable upon signing a promise of sale agreement. The property value must not exceed €175,000.

The above is merely an overview of the measures introduced, sourced from official publications and an in-depth analysis carried out by KPMG Malta. No liability is assumed for any outdated or incorrect information published in this article.