Budget 2021

On 19th October 2020, Minister Edward Scicluna presented the Budget for 2021.  Below is a summary of the salient tax measures presented to Parliament by the Minister in the Budget Speech.

Economy

  • Estimated tax revenue for 2020 is expected to be 4bn and is expected to rise to €4.6bn by 2021
  • The deficit for 2020 is expected to amount to around 9.4% of GDP, and 5.9% for 2021
  • GDP for 2020 is expected to be €12.5bn

Taxes

  • Tax refunds of between €45 - €95 for individuals earning less than €60,000
  • Increase in threshold for self-employed (from €20,000 to €30,000)
  • 1.5% duty rate reduction on certain intra-family donations of business property and securities in companies, to be extended by another year.
  • The maximum amount of exempt pension income will be increased to €14,058
  • Tax credits on private pension schemes to be increased
  • Reduced tax rate of 15% on royalty income derived from the publication of literary works

Grants & Schemes

  • Extension of the COVID Wage Supplement till end of March 2021
  • Additional €100 Government vouchers to be issued of which €60 to be used for accommodation, hotels and restaurants and remaining €40 at other shops.
  • E-Commerce Scheme for companies to invest in online shopping solutions
  • Extension of Malta Enterprise Schemes focusing on research and innovation, internationalisation and to attract new investment capital
  • A grant of €10,000 upon the registration of new wheelchair accessible taxis.
  • Grants equivalent to the tax paid of the sale of products by fisherman and farmers at the fish and vegetable markets.

Environmental Measures

  • Releasing Low Carbon Development Policy by 2020
  • Green bonds for investors seeking opportunities in the renewable energy sector
  • Improvements on waste management
  • Prohibition of single-use plastics by 1 January 2021
  • Investments in urban green spaces
  • Extension of the vehicle scrappage schemes and support to eco-friendly automobiles
  • Support to alternative means of transport
  • Accessible taxicabs and weekend drivers
  • Commitment to green, carbon-neutral and sustainable energy policies.

Social Measures

  • The cost of living (COLA) increase for 2021 will be €1.75 per week
    • An additional day of vacation leave for all employees
    • Incentives for employers to offer their employees a better work-life balance
    • Social security pensions to increase by €3.25 per week
    • Increase in thresholds for the in-work benefit
  • Allocation of €9 million for the continuation of the fund created to cater for inequalities suffered by certain persons in the past (such as port workers)
  • Introduction of a National Youth Policy to focus on youths aged between 13-30yrs old

Pensions

  • Re-issuing of Savings Bonds for pensioners who are over 62 years of age.
  • An increase of between €70 - €108 per annum in the supplementary allowance to be granted to persons who are 65 years and over
  • Increase of €50 per annum for persons who are not entitled to receive a pension
  • Similar to previous years, the portion of any service pension which is not to be reduced from the social security pension is being increased by a further €200
  • Extension of the grant scheme providing €300 for persons ages 75 years and over, and €350 for those aged 80 years and over

Gozo

  • Better connectivity between Malta and Gozo (e.g. fast ferry, tal-linja extra 100, tunnel, etc.)
  • Diversification of the economy, to reduce dependency on the public sector and tourism
  • Infrastructural upgrades e.g. pilot projects, VR for Citadel, rebuilding of roads, etc.

Infrastructure

  • Investment of €450 million over a seven year period to upgrade the industrial infrastructure and creation of new office spaces for business
  • Completion of the regeneration plan of the Ta’ Qali Artisan Village 
  • Investment aimed for further growth in the aviation industry, in particular the renovation of the taxiway Lima project
  • €11 million expenditure over a 3 year period on new sport facilities
  • Grand Harbour Clear Air Project to help reduce the air pollution at Grand Harbour with the support of a shore side electricity system 
  • A new authority on building and construction to be setup
  • A commitment to extend, strengthen and release new schemes targeted at foreign direct investment
  • Feasibility studies in connection with a local mass-transit system shall continue into 2021

Others

  • Launch of the Strategy for Tourism 2021-2030
    • Establishment of a new authority – Malta Sports Integrity Authority and publication of a new act to regulate EquistriMalta.
    • Measures to assist artists and operators in the cultural and ancillary sectors
    • Opening of new underwater sites, continued investment on archeological sites
    • Launching of accredited and higher educational online courses for adults and employees to further improve their skills
    • An educational strategy to reduce the rate of early school leaners and continue lifelong learning

The full budget speech and documents can be accessed here: https://mfin.gov.mt/en/The-Budget/Pages/The-Budget-2021-ND111213.aspx