In today’s Malta budget speech before Parliament, the Finance Minister, the Hon. Prof. Edward Scicluna announced key economic indicators as well as a number of key tax and other measures.
Enjoying a budget surplus for the third consecutive year, Malta has maintained its economic momentum, remaining one of the best performing economies in Europe. The economy grew by 6.7% in real terms in 2017 and positive results have been achieved in various sectors, including local and foreign investment, tourism and exports. The public debt target of 60% of GDP has been surpassed and stands at around 47% and is projected to continue to reduce to 43.8% in 2019. Unemployment stands at 3.8% and 90% of the new jobs created were in the private sector. Inflation as at September 2018 stood at 1.7% and the cost of living adjustment (COLA) has been set at €2.33 per week for the coming year.
The following are the main measures arising from the budget speech:
The introduction / implementation of a number of international anti-tax avoidance measures was announced including:
The introduction of a patent box regime based on the modified nexus approach and therefore in line with the EU Code of Conduct on Business Taxation and the OECD BEPS action 5 standard was announced.
A number of other measures are in the process of being transposed for implementation by the applicable deadlines including ATAD II, EU Mandatory Disclosure and the EU Dispute Resolution Mechanism. These measures are being introduced so as to update the Maltese provisions and bring them in line with international standards and the common EU rules being introduced, but will not bring about any changes to Maltese general tax system or the tonnage tax regime.
The Minister emphasised Malta’s commitment to combating tax avoidance based on a three-pillar strategy of enhanced cooperation with other jurisdictions, further improvements in the efficiency and effectiveness in the administration of taxes and increased transparency.
Following the conclusion of this year’s National Risk Assessment in respect of money laundering, the Minister noted the strategic action plan which has been launched with some 45 anti-money laundering initiatives which will be implemented over the next 3 years to further strengthen regulatory and supervisory institutions in their fight against money laundering.
Reference was also made to the recently launched white paper entitled Renting as a Housing Alternative. The Minister noted that whilst 78% of Maltese families who own property are seeing an increase in the value of their properties, others are renting while some may require social housing or other assistance. It was announced that a number of measures will be introduced in the coming year to regulate the Housing Market, particularly to incentivise landlords to charge affordable rents. Other initiatives in this space will include a reorganisation of the Housing Authority, the development of social housing units, and the restoration of dilapidated Government properties with a view to placing affordable social housing on the market.