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Malta Incentives: Investment Aid Tax Credits

Malta Incentives: Investment Aid Tax Credits

We can help your business to benefit from incentives, be it tax credits or cash grants, to facilitate new investment projects in Malta.

Doreen Fenech

Partner, Tax Services

KPMG in Malta


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Investment Aid Tax Credits

The Investment Aid Tax Credits 2014-2020 Scheme (‘ITCRs’) is a scheme available to Maltese companies designed to facilitate and incentivise initial investment projects in Malta by encouraging the setting up of new establishments and the expansion and development of existing businesses through assistance in the form of tax credits or cash grants.

This scheme is applicable to companies, partnerships, co-operatives, family business or similar set-ups operating from Malta and incorporated in the European Union, which may include an undertaking newly set up for the implementation of a new project.

Are you engaged in a qualifying activity?

The first test to be satisfied for an undertaking to benefit from ITCRs is that it has to be engaged in a qualifying activity as set out in the scheme guidelines. Qualifying activities include, but are not limited to, the following*:

  • Manufacturing;
  • Information Technology;
  • Pharmaceuticals;
  • Filming and Audiovisual productions;
  • Logistics Support;
  • Provision of Health Care services;
  • Provision of Education;
  • Cultural and Sports facilities;
  • The operation of Hotels and similar tourist accommodation facilities;
  • Knowledge intensive business services.

*May be subject to further conditions including a qualifying NACE Code

Do you have an Investment Project?

In addition to the ‘qualifying activity test’, the undertaking must have an ‘investment project’ with clearly defined objectives, for example a project aimed towards the growth of the enterprise.

Qualifying Expenditure

The qualifying expenditure which form the basis for funding may consist of either investment in tangible and intangible assets, or the wage costs of new employment created within three years of the completion of the project. The amount of tax credits or cash grant to be awarded is calculated as a percentage of the qualifying expenditure, ranging from 10%-30% depending on the size of the undertaking.

What is the size of the undertaking?

The determination of the size of the undertaking requires a group-wide analysis with reference to linked and partner enterprises rather than considering the applicant undertaking in isolation. This exercise, which can be quite complex, is central to the application process as it impacts eligibility and aid intensity.

Interplay with the Maltese general tax system

The interplay between the ITRCs and the Maltese general tax system comprising, where applicable, the tax refund system and the notional interest deduction results in further benefits for the qualifying company, including a very beneficial effective tax rate which can go down to 0% together with an increase in the longevity of the ITCRs.

How can we help?

Our Incentive Legislation team can provide a holistic service with regards to the applicability of ITCRs and its interplay with Maltese income tax legislation and other incentive schemes. This includes the analysis of whether the eligibility conditions are satisfied, restructuring advice to ensure the eligibility, as well as assistance in the application process and the claiming of the funding awarded.

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KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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