Malta Budget 2023

Yesterday evening, the Minister for Finance Clyde Caruana announced the national budgetary estimates for 2023.  The Finance Minister also explained that in 2022, the economy is expected to grow by 6% while in 2023, the economy is expected to increase by 3.5% in real terms, and 7.3% in nominal terms.  Furthermore, Minister Caruana stated that following the global pandemic, the Maltese economy recovered and grew by 10.3% which is 4.9% more than the EU average.

Government aims to minimise the impact of local inflation as much as possible by absorbing over €600 million of the increased cost of energy and grains. This also by imposing the wages cost of living adjustment to €9.90 per week, payable in full to all employees, pensioners, and beneficiaries of social benefits.

These are the highlights from the 2023 Budget, which saw the Government introduce energy subsidies, announce cost-of-living increases, and not introducing any new taxes:

Economy:

• A new one-stop-shop will be set up to offer services to start-ups which establish themselves in Malta
• A new business incubation centre
• A €40 million fund for cash grants for SMEs
• Malta Enterprise will double financial assistance with the form of cash grants for Maltese companies investing in digital and sustainable projects.  The grant will cover 50% of the investment, up to a maximum of €100,000
• Research efforts for the setting up of a venture capital fund
• Rent subsidies for businesses
• Social enterprises will be eligible for a tax credit of up to €70,000 over three years
• Laws governing residency programmes to be reviewed and updated
• Maltese enterprises will benefit from a maximum of €40,000 tax credit when investing in digital projects, projects that reduce energy and water consumption or in investments that increase efficiency by reducing the waste of raw materials or waste

Working Families:

• This year’s cost of living adjustment (COLA) clocks in at €9.90 per week for employees, or €514.80 over a year
• 80,000 low-income earners will receive cheque payments to compensate for rising prices. The average grant will be €300
• Annual tax refund to continue, with refunds ranging from €60 to €140
• Children’s allowance to be increased by €90 per child
• Tax-rebate for parents who send their children to sports, arts or cultural activities increases from €100 to €300
• Police and army officers to get 23% pension increase if they work four years after the 25-year retirement period

Real Estate:

• A €10,000 cash grant for all first-time property buyers, payable over 10 years on property that does not exceed €500,000
• Interest-free loans on 10% down payment to continue, with the maximum property value raised to €225,000
• Previous property schemes, including tax breaks for buying old properties, and the first- and second-time buyer schemes to be extended

Transport:

• Financial incentives of up to €12,000 for those scrapping a vehicle and buying an electric car
• Electric and plug-in hybrid cars to be exempt from registration tax. They will also be exempt from license fees for the first five years
• A maximum grant of €900 for the installation of PV panels on coaches and minibuses

Pensions and the Elderly:

• 100,000 pensioners to receive an extra €650 next year, amounting to €12.50 weekly
• Widows and widowers to benefit from an additional increase reaching a maximum of €3.54 weekly
• The taxable ceiling on pensions is being raised to €14,968, up from €14,318
• Service pensions to be increased by €200
• Pensioners who have not made all their social security contributions will benefit from a payment ranging from €450 to €550
• A €1.6 million investment in a CT scanner and ultrasound machine at St Vincent de Paul
  Tax breaks for pensioners who opt to continue working

Education:

• Stipend increase based on the COLA
• Works on Ħal Għaxaq, Msida and Rabat schools, as well as on a new sports complex for the Santa Lucija school, will be completed in 2023
• Free fruit and vegetables to be distributed in primary schools
• Year seven students to receive a free laptop
• Scholarships and tax credits for those wishing to continue their studies
• Works on new ITS campus at Smart City to begin

Energy, Environment, and the Green Economy:

• Consultation process for offshore wind farm
• Multi-Material Recovery Facility in Ħal Far to become operational
• €50 million project for organic processing plant
• New gate fees to be introduced to help reduce the amount of waste ending up in landfills
• An estimated €600 million subsidy to keep energy and grain prices stable
• Incentives for the installation of PV panels and heat pumps
• Charging points for electric cars to increase from 340 to 1,200 by 2024
• €700 million to be spent over seven years to implement the government’s greening projects

Health and Disability:

• Medicines for people suffering from multiple sclerosis to be given for free
• Chemotherapy pumps for cancer patients to use at home
• Oncology clinics within primary healthcare system
• Long-term projects include new blood bank, a new outpatient’s center at Mater Dei Hospital
• Grant for parents who opt out of working to take care of a disabled child will increase to €4,500 yearly, up from €500
• People aged between 18 and 30 who spent time out of work due to mental health issues will be given up to two years of credits to cover lost social security contributions
• Parents of a disabled child to receive €200 tax credit
• Subsidies for the purchase of vehicles adapted for persons with a disability
• Means testing for social housing will no longer include income government allowances

Infrastructural Projects:

• New plans for Msida creek project
• Over the next three years, other major projects such as the Imrieħel Underpass and the airport intersection project will be continued
• Dredging works in Grand Harbour to improve port infrastructure

Arts, Culture & Tourism:

• Authors to benefit from reduced tax rate of 7.5% on book sales and royalties
• Works on crafts village in Ta’Qali to continue
• An incentive scheme to encourage long stays in Gozo
• Foundation for Tourism Zones to be transformed into agency
• Gozo to receive €60 million in the newly set up Sustainable Urban Development fund

Justice & Home Affairs:

• New courtrooms to increase the number of sitting and increase the courts’ efficiency
• The Asset Recovery Bureau will be fitted with the latest technology to preserve confiscated items.
• Malta’s non-permanent seat at the United Nations Security Council to strengthen bilateral relations between countries
• Reforms to maintain trust in the institutions following Malta’s delisting in line with the guidelines provided by the FATF and Moneyval

This summary reflects high level announcements made during the Budget Speech, which are still to be implemented through detailed legislative amendments. Clients are advised to contact us on malta@ecovis.com for more information.