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Malta Budget 2022 - An Overview

Updated: Dec 10, 2021

With the world recovering from the disruptions and economic-halting restrictions stemming from the global fight against the COVID-19 pandemic, policy-makers around the world are working towards creating and adopting polices that cultivate economic re-generation as well as stimulate investment in various sectors in a bid to restart the economy and world-wide trade. On Monday 11th October 2021, Minister of Finance Clyde Caruana announced various key measures as part of the upcoming year's budget to address Malta's part in restarting trade and alleviate the country's economy.


A brief overview of the key highlights of the Malta budget for the year 2022
Malta's Budget for 2022

2021 - An Overview

  • Malta is expecting an increase in its deficit which is expected to be around 11% of its GDP, which is expected to stand around €13.9 billion.

  • Debt is set to increase to 61.3% of the country's GDP by the end of 2021.

  • Unemployment rate stood below the EU's average by 3.6%, and stood at 3.2% as opposed to the average of 6.8%.

  • Tourism figures continued to slow down with the total inbound tourist up to July 2021 standing at 261k as opposed to the 419k seen within the same period in 2020 and the 1.5m for 2019.

  • The 12-month moving average inflation rate in August 2021 stood at 0.2%.


2022 - A Forecast

  • A reduction in deficit is expected, with the figure lowering to a 5.6% of the GDP from the 11% of 2021.

  • Weekly cost of living adjustment (COLA) is set to remain the same as last year at €1.75.

  • Various benefits listed hereunder aim to shift the country's economy to a more greener one as well as help vulnerable people and pensioners.


 

Incentives


Income & Other Taxes

Sustainability and Environmental Measures

Social Measures

Other Measures

  • Exempt pension income increased to €14,318 with couples opting for a joint-computation entitled for a €3,000 tax-free amount on income form any other sources.

  • Free public transport as of October 2022

  • Cost of living allowance shall be set at €1.75 per week with further mechanisms being adapted for low-income families.

  • Endeavor to ensure parity between public sector workers and private sector workers working for contractors who service the public sector.

  • Pensioners who continue to work beyond retirement age, will see their pension income gradually not considered as part of the taxable income.

  • Schemes for business to subsidise the cost of changing existing fleets from petrol to electric.

  • Social security pensions shall be increased by a further €3.25 per week, with pensioners who retired after 2008 benefitting from a maximum increase of €2.50 per week to their COLA bonuses.

  • ​Government undertakes to continue discussions with all relevant stakeholders to enable an increase to the statutory minimum wage, balanced by an appropriate reduction to businesses’ income tax rates.

  • Qualifying overtime income, up to an amount of €10,000 shall be taxed at the 15% rate (Provided that employee is not in a managerial position and annual salary does not exceed €20,000).

  • Scheme for mini-buses and bus drivers to install DPF filters on their vehicles as well as PV panels on board their vehicles.

  • Individuals who have reached their retirement age yet are not eligible for a contributory pension, shall be granted an annual bonus of €150. Moreover, individuals who have a minimum of ten years contributions paid prior to January 1979, shall be eligible for the minimum two-thirds pension of €50 per week.

  • A census will be conducted to obtain understanding about the skill set of the local working population and aim to establish a training fund for industries to train and upskill its workforce through programmes developed by industry.

  • Part-time tax rate has been reduced to 10% from 15%.

  • Increase in grants to €11,000 when purchasing hybrid or electric vehicles with an additional €1,000 when scrapping a vehicle.

  • Increase in the thresholds of the in-work benefit. For couples: from €35,000 to €50,000 and for single parents from €23,000 to €35,000.

  • Identity Malta will continue to promote a digital strategy including the strengthening of the E-ID platform.


  • Searches Unit is developing an online platform to allow registration of notes digitally by notaries.

  • Transfers of family businesses within the family shall be subject to a reduced duty rate of 1.5%.

  • Investment in stronger charging point infrastructure around the island, with the installation of another 1,200 charging points around the island in the coming three-year period.

  • Part-time workers given the option to pay SSC on multiple part-time employments.

  • Further investments in a number of sports complexes including the Velodrome in Ta' Qali.


  • Development for the Soundstage in Malta as part of the Malta Film Studios masterplan should commence in 2022.

  • Companies who suffered losses as a result of the pandemic and who have unabsorbed capital allowances for 2020 and 2021, may transfer such allowances to another group company.

  • Extensions of existing schemes relating to road licenses and registration taxes on electric vehicles.


  • Extension of the reduced flat rate on home tariffs for residential charging of electric vehicles.

  • Increase in the supplementary allowance for low-income earners ranging from €3.47 to €6.50 per week based on their income.

  • Rental Cost for warehousing will be subsidised to lessen the impact of increasing international transportation costs.

  • Increase in annual tax refunds which were paid in the past-years. The refund may vary between €45 and €140.

  • Introduction of an aesthetic policy by the Planning Authority to ensure uniform development.


  • Afforestation project in Inwadar Park. An investment of €20m is to be done over a period of 5 years.

  • Increase in Carer's allowance from €6,000 to €7,000 per year and increase in the 'Home Helper of Your Choice' scheme from €5.50/hr to €7.00/hr.

  • A new set of incentives are to be introduced following the phasing out of the COVID wage subsidy scheme to help continue supporting businesses.

  • ​No income tax and stamp duty on the first €750,000, on the transfers of vacant properties, 'UCA' properties and properties with traditional Maltese features.


  • First-time buyers buying such type of properties shall also receive a grant amounting to €15,000 (or €30,000 if in Gozo).


  • Furthermore, any individual acquiring such type of properties shall be eligible for the VAT portions paid on the restoration expenses up to a maximum of €54,000 (i.e. on the first €300,000 worth of expenses)

  • Introduction of re-use centres within the Bulk refuse sites.


  • Introduction of smart bins with controlled access


  • Conservation projects and development of Natura 2000 sites, green spaces in urban zones and public gardens and parks. This includes the Ta' Qali National Park Project.


  • Funds will be allocated for solar panels to be installed on all government buildings, where technically possible.


  • Extension of grants to assist with the restoration of domestic water wells and the installation or replacement of reverse osmosis systems.


  • Measures to promote more efficient energy production using solar panels, solar water heaters, and heat pumps, investment in photovoltaic panels, and energy-storing battery solutions.

  • Increase in the capital-means test for individuals who are entitled for the non-contributory pension yet are in receipt of an inheritance.


  • Individuals with severe disabilities will no longer be capital-means tested.


  • Increase in children disability allowance by €5 per week.


  • Increase in the grant for the birth of a child, to a total of €400.


  • Increase in annual benefit for parents who stop working to care for children with sever disabilities.


  • Funds made available to schools to provide basic food and other resources to vulnerable children.

  • Various incentives and programmes aimed at start-ups are to be introduced to attract start-up businesses to set-up in Malta.

  • Artists shall have their income taxed at a reduced rate of 7.5%

  • Various extensions to the water networks and the launch of a technical feasibility study for a hydrogen pipeline development.

  • Numerous additions to the list of free medication and treatment.

  • Stipends set to increase by 10% as well as allow students to work on a part-time basis up to 25 hours per week without forfeiting the stipend.


 

You may view the full 2022 budget speech below: