Malta 2015 Budget Highlights
The Prime Minister Edward Sicluna has presented his budget for 2015 on the 17th November 2014. The main measures are the following:
The highest personal tax income applicable to persons earing less then €60.000 per year is being reduced from 29% to 25%. The dividend income will continue not being affected by the income tax rate reduction.
Minimum wage earners will not be subjected to tax. As well as pensioners whose pension does not exceed the minimum wage.
Water polo players will benefit from a reduced rate of the income tax.
Tax exemptions and reductions.
Student’s stipends are exempted of the tax.
With effect from year of assessment 2015, 50% of donations of at least €2000 to the Malta Community Chest Fund will be allowed as a deduction against the taxable profits of companies.
Parents with child who assist to church or private school will have a deduction of €150 when they choose to use school transport.
Tax benefits to incite investments.
A maximum of €250.000 tax credit will be introduced to help the start-up companies, to encourage new investments.
Income tax on capital gains.
With effect from 1st January 2015, the final tax on property transfers will be reduced from 12% to 8% with respect of the immovable property situated in Malta acquired after 1st January 2004. This system has two exceptions:
- Transfers of property acquired prior to 1st January 2004 will have a final withholding tax of 10% of the property value.
- Individuals who are not property traders and who transfer the property within 5 years from the date of acquisition will be taxed at 5 % on the transfer value.
Duty on documents and transfers.
- Duty on policies of insurance (excluding the life insurance policies) will increase by one cent per euro with the minimum being of €13.
- On the transmission mortis causa of assets held in a trust where the beneficiary is a disable person no stamp duty will apply.
- The one-time exemption from the payment of duty on the first €150,000 of the value of immovable property granted to first time buyers acquiring immovable property in 2014 will be extended for contracts executed up to 30 June 2015
From the 1st January 2015, licence on certain cars will be increased attending to the type of fuel and the CO2 emissions. Nevertheless, licence fees of vehicles registered on or after the beginning of 2009 and whose CO2 emissions do not exceed 100g/km shall not increase.
Registration tax on quad bikes is reduced since the 1st January 2015.
The registration of vehicles classified as “vintage” and whose engine capacity is less than 250cc shall be exempt for the registration tax.
Excise duty will be introduced in some products like cigarettes and tobacco, on the feed used in fish farms, the wine, the cement, fuel and telecommunication services.
Value added tax
When the annual turnover is less than €7000, persons are obliged to register the VAT and to issue fiscal receipts in respect of supplies made.
VAT on digital eBooks
The minister announced that VAT on eBooks is to be reduced from the current 18% to 5%.
Combat tax evasion.
The government will continue to combat the tax evasion. In this context, the government has introduced some measures. It will be helped by the IMF’s fiscal departments specialist to merge the tax departments.
Measures for disadvantaged persons.
- Employers who employ disabled persons will be exempt of paying the social security contributions in respect of qualifying employees.
- The law requires that 2% of persons employed by companies should be persons with disabilities. The law has some penalties for the companies which doesn’t apply this requirement.
- The European Social Fund will entitle to access funding to the employers who help disadvantaged persons
Unemployment social benefits.
- A program is offered to unemployed persons under the age of 23 years. This program is also available for single parents who are under the age of 23 years.
- Unemployed single persons who commence employment will continue to receive 65% of their unemployment benefits in the first year of employment. The rate will be reduced to 45% in the second year and to 25% in the third year. Their employers will also benefit from 25% of the unemployment benefit for the first three years of employment.
- A single person receiving social benefits will continue receiving them even if he gets marriage or a civil union with an employed person.
A work program has being introduced to help the long term unemployed and inactive persons to return to employment. Employers making use of the Work Programme to employ such persons will be eligible up to €2,750 for every employee on a 3 year period.
Employment in Gozo
Employers who employ a full-time employee in the tourism industry will receive a partial refund of the social security contribution. The refund shall amount to €1000 for every full-time employee.
A training program will be organised for employees in the tourism industry. Employers will receive €30 per training day.
All private enterprises will contribute to a special fund which is going to finance maternity leave. In conclusion, maternity leave will be paid by this fund.
Women in self-employment will have their maternity benefit rate increased to the minimum wage for their 14 weeks of maternity leave.
The rate of women in employment who benefit a maternity leave will be increased and paid at a rate equivalent to the national minimum wage for this period.
The government has decided to establish Malta as an arbitration centre.
Swimming pool licences
From the 1st January 2015, swimming pool licences should be increased by 15%.