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Malta Budget 2014
Date: 6th November 2013

The first budget to be completely drafted by Malta’s new government was presented to parliament by Malta’s Finance Minister,Prof Edward Scicluna. The Budget for 2014 aims at addressing the sustainability of the country’s public finances, with measures being proposed to support employment creation as well as tax deductions for entrepreneurs who offer work placements. No new taxes were introduced but the rate of excise on cigarettes, tobacco, fuel, beer and alcohol and on oil bunkering has been raised.  Plans were also laid out to nurture new industries in Malta and further strengthen the core contributors to the Maltese economy. During the second quarter of 2013, the Maltese economy expanded by 3.6 per cent, having increased by 1.6 per cent in the first quarter.  Growth was mainly spread across all economic sectors except construction.


Income Tax

The reduction in income tax was probably the most anticipated part of the budget presentation and most likely comes as a surprise to many outside Malta, given the austerity measures being implemented. It was announced that the Government will be reducing the income tax rate applicable to individuals who earn between €19,501 and €60,000 from the current 32 per cent to 29 per cent. Earnings over €60,000 per annum will continue to be taxed at 35 per cent.


Persons who receive income from rental of residential property have the option, under the Government’s proposed policy, to apply for a final tax at the rate of 15% on the gross rental income. The Minister of Finance said that in a bid to introduce more professionalism in sport, a reduced tax rate of 7.5% on the income of footballers was being introduced. 


For Married Couples
Chargeable Income in € Rate
0 - 11,900 0
11,901 - 21,200 15%
21,201 - 28,700 25%
28,701 - 60,000 29% (2014)
over 60,000 35%


For Singles
Chargeable Income in € Rate
0 - 8,500 0
8,501 - 14,500 15%
14,501 - 19,500 25%
19,501 - 60,000 29% (2014)
over 60,000 35%

Tax Deductions

The Government announced a new tax deduction for employers who are willing to offer apprenticeship placements to students in order to gain the necessary skills required for a future employment.  Employers will be given a tax deduction of €600 for each work placement and €1,200 for each apprentice.


Companies who employ workers aged between 45 and 65 years of age who have been unemployed for the previous 3 years will benefit from an income tax deduction of up to 50% on the cost of training, capped at €400.


Business Growth & Strengthening Malta’s Core Services

Malta’s Finance Minister emphasised the importance of the digital gaming industry, the financial services industry and the tourism sector to Malta’s economy.  To ensure growth of the financial services industry the Maltese Government commits to working with all stakeholders to build on the sound regulation and practices. To this end, an Investment Registration Scheme will be launched allowing individuals residing in Malta who hold assets on which relevant income has previously not been declared, to regularise their position.


Furthermore, work will continue to enhance Malta’s role as a hub for digital gaming activities while the set-up of a film co-production fund is intended to encourage the collaboration between Maltese and foreign companies in the production of films and TV series for international distribution. The Maltese Government is also envisaging a charter on the rights of small investors, a charter of rights for bank clients as well as an arbiter for financial services.


The Microinvest scheme will be reintroduced so micro enterprises and self-employed persons will be supported through a 45% tax credit on eligible expenditure and 65% tax credit if based in Gozo. In addition, the Jeremie scheme will be continued.


The Malta Government also made mention of plans to introduce the International Individual Investor Programme which is to attract Foreign Direct Investment for Malta by creating a National Fund for development.


Continuing the effort to strengthen the aviation sector the Maltese Government intends to set up an Aviation Authority within the Ministry for Tourism in order to allow the aviation industry to holistically, economically and efficiently engage in a National Aviation Plan.  



Auditing of the construction industry is the Government’s new policy in an effort to reduce VAT evasion in this sector.  Checks as to whether developers have VAT receipts to substantiate the estimated valuation of works are intended and in the absence of such receipts mechanisms will be put in place to ensure the correct VAT due will be paid. The new measures are intended to create a level playing field and promote transparency within the construction industry.


In a bid for the Maltese government to try and encourage businesses to confirm with the VAT laws, amendments are being proposed to the law and to procedures.  Penalties for the late filing of VAT declarations and the current system of appropriating payments to older balances shall be amended in a bid to encourage taxpayers' conformity with VAT dues and allow them to escape cash flow problems during VAT payments. The Minister of Finance’s words, "we want to help those businesses who are really doing their best to pay their VAT dues without having to burden them with new payments." The new 'tax in dispute' sector will introduce a new system in the VAT laws which will ensure that payments are not offset against arrears that are being appealed.



At the very core of the Labour Party’s electoral campaign was the reduction of water and electricity bills. As the Malta Government, they now appear to be delivering on this electoral promise as they announced reductions in water and electricity bills.  As from March 2014, it is expected that water and electricity bills will be reduced by an average of 5% and 25% respectively for families.  Reductions for businesses are forecasted for 2015.The Malta Government has committed itself to incentivise alternative sources of clean energy, with a 3% target for the generation of clean energy in 2014. A revision of the National Renewable Energy Action Plan will be undertaken so that the Government identifies policies and measures that will allow it to reach its targets.


Authors: Dr Jean-Pie Gauci-Maistre & Despina Xinou


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