Malta’s budget for 2021 presented to the House of Representatives by the Hon. Prof. Edward Scicluna, Minister of Finance on 19 October 2020, prioritises the country’s economic recovery from the COVID-19 pandemic with a deficit of €1.2bn that is expected to continue at a decreasing rate until 2023.
The Malta Developers Association (MDA) welcomed incentives boosting economic activity and expressed its satisfaction that several of its proposals have been taken on board by the government. The announcements are a step forward so that the property market and other important sectors such as the renewable energy, also represented by the MDA, continue to contribute towards the sustainable development of the Maltese economy at large while giving a much needed input towards a rapid boost and increased confidence in the current difficult economic scenario.
A scheme for first time property buyers which has already proved successful over the past years has been tweaked to increase the purchasing power of this important cohort and make property more affordable them.
Following the very positive results achieved through the introduction of lower taxes for property buyers and sellers last June, which have resulted in record promises of sale agreements registered in the subsequent months, the MDA also welcomes the extension of these incentives, which should continue to ensure more growth in this crucial sector.
Sustainability is key towards the development of a modern property industry, and the new initiatives announced towards more investment in modern, efficient, and sustainable machinery and equipment as well as other incentives in favour of the green economy is another step forward in tune with the MDA’s overall vision.
MDA President Sandro Chetcuti said that the association is satisfied that through these various announcements, the sectors represented by the MDA have the right tools in place to post important economic results to the benefit of all the community at large. Director General Marthese Portelli acknowledged that the government has listened positively to its suggestions and the industry will be responding with more investment and increased enthusiasm to create more confidence and possibly rapid growth in the economy.
Other highlights of the 2021 budget include:
> No new taxes for a fourth consecutive year.
> €50 million worth of vouchers to be spent on hotels, restaurants and retail outlets for all individuals over 16 years of age resident in Malta.
> COVID Wage Supplement given to pandemic-affected businesses extended until end of March 2021.
> Income tax refund to increase to between €45 and €80 for single people and €50 to €95 for married couples;
> Extension of the Second Time Buyers scheme as well an extension of the reduced rate of stamp duty of 1.5% introduced as part of the Economic Regeneration Plan.
> Increase of tax refunds for individuals and increased incentives for private pensions.
> Applying part of the €2.25bn of European Funds to sustain employment in industries adversely impacted by COVID-19 and to further stimulate economic recovery.
> 10-year strategy for tourism and a new state aid application to assist Air Malta.
> VAT exempt threshold for businesses to rise to €30,000 from €20,000;
> Commitment to green, carbon-neutral and sustainable energy policies.
> Prioritising public infrastructure: investment in road networks, industrial clusters, health facilities and schools.
> Total revenue from taxes has decreased (compared to initially budgeted figures) by approximately €900 million and government spending has increased by approximately €300 million.
> Weekly cost of living adjustment of €1.75 per week. Social security pensions increase by €5.00 weekly.
> Vacation leave entitlement increased by one day to total of 28 days.
> Introduction of 15% final withholding tax on royalties from literary works.
> A €1,000 grant to couples who adopt a child locally.
> People hiring a carer to look after a person with a disability are now eligible for a €6,000 yearly grant.
> NGOs to be exempt on tax if their income is under €50,000.
> Extension and enhancement of reduced stamp duty on donations and property transfers.
The content of this article has been supported by data sourced from Gov.mt, MDA, PwC, Deloitte and Times of Malta.
