The Malta 2024 budget unveiled on Tuesday by the Finance Minister Clyde Caruana arrives at a time when both the Maltese economy and the principal markets with which the nation conducts business are confronting serious difficulties. With the anxious inflationary pressures, the ongoing conflict between Russia and Ukraine, and the recent combustible scenario in the Middle East, the managing of the country's debt whilst setting sights on the segment of the population finding it difficult to cope, is no easy feat.
Key Highlights from the Malta 2024 Budget
Cost of living Allowance will amount to €12.81 per week.
Pension income exemption set to increase to 60%.
Refund of tax ranging between €60 and €140 set to be distributed to eligible individuals.
Rules for Highly Qualified Persons set to be revised.
Implementation of Pillar II regulations set to be delayed through a derogation application.
1,200 electric vehicle charging stations set to be installed.
Immoveable property fiscal incentives extended.
1.5% stamp duty reduction on transfer of family business assets extended.
Children’s allowance set to increase by €250
With the growth experienced in 2022, the government expects the country's GDP to grow by 4.1% and 4.2% in 2023 and 2024, respectively.
With the economy expanding significantly, the debt-to-GDP ratio is predicted to be 52.8% in 2023 and rise to 55.3% in 2024, assuming the government keeps most of its energy support policies in place. As a matter of fact, the anticipated deficit for 2023 shall stand at 5.0% of GDP, with a forecasted decrease to 4.5% the following year. Although this is significant when compared to previous levels, the government anticipates that it will decrease by a yearly half a percentage point on average, bringing the deficit to GDP ratio down to 3% by 2027, in compliance with EU regulations.
Annual inflation rate is anticipated to reach 5.7% in 2023 before leveling out at 3.7%, with energy price inflation kept contained. Unemployment rate is predicted to stay low in 2023 and 2024 at 2.7%.
In 2024, the cost of living adjustment will be €12.81 per week for workers, and €15 per week for retirees.
Some policies raise pension benefits, while others focus on helping the old, the vulnerable, and people with chronic illnesses or other health issues (including mental health). The Minister also emphasised on private and occupational pensions.
Additional social initiatives include raising certain social benefits, grants, allowances, and tax credits for parents of children with disabilities, improving the pensions associated with the disciplined corps, and raising the allowance for children.
Pensions - The maximum pensionable income for those born before 1962 has been adjusted to bring them in line with those born on or after 1962.
Additionally, starting in 2024, those who delay receiving their retirement pension will be eligible for an increase in pension of 6.5% if postponed by one year, 13.5% if postponed by two years. 21% if by three years and 29% if by four years.
Service Pensions - An additional €200 has been added to the part of any service pension that will not be deducted from the social security pension. Additionally, there are situations where the commuted portion of the service pension will not be deducted from the social security pension. Service pensions have been increased by 29% combined with allowances for individuals who serve the disciplined forced for more than 29 years.
Widow Pensions - A widow's pension for spouses of disciplined force personnel has been introduced.
Non-Contributory Pensions - Individuals with mental health issues who have paid at least 50 social security contributions over their lifetime will be eligible for an invalidity pension. On the other hand, persons who have achieved retirement age but do not qualify for a pension due to insufficient social security contributions will get a €50 bonus increase every year. In 2024, the bonus for people with fewer than 5 years of social security contributions will be enhanced to €500 per year (from €450), while those with more than 5 years but less than 10 years of contributions would receive an increased bonus of €600 per year (from €550).
Minimum Wage - The minimum wage will be raised between €12 and €18 per week by 2027, excluding COLA. The minimum weekly wage will rise to €213.54 (including COLA) in the coming year.
€500 bonus for their first newborn kid and a €1,000 bonus for their second child beginning next year. Families who adopt a child are also eligible for this benefit.
A €250 per child per year increase in children's allowance.
Elderly individuals over the age of 80 will receive €450 per year (a €50 increase from the previous year), while those between the ages of 75 and 79 will continue to receive €300.
Increase in the annual Carer at Home allowance to €8,000.
Carer Allowance and Additional Carer Allowance will be increased in accordance with the COLA adjustment.
Increases in unemployment benefits based on the length of unemployment.
The annual compensation awarded to qualifying parents who care for their adult children with severe disabilities would be increased by €487 to slightly under €5,000 beginning in 2024.
Aid for disabled individuals will increase with the minimum wage and COLA increases. In addition to this increase, assistance for persons with severe disabilities will be increased by €12.81 per week, while assistance for people with disabilities will be increased by €8.54 per week.
Social assistance for persons undergoing rehabilitation will be increased to €50 per week.
In-work benefit will be increased by €50 for each child under the age of 23. Furthermore, employees who work unusual hours and have a basic annual wage of less than €20,000 will continue to receive a grant of €150 per year.
Additional COLA awarded to low-income families in comparison to the national median income, payable in two installments (December and May) totaling between €100 and €1,500 per year.
Parents with children who continue to study full-time (beyond the obligatory age) will be entitled for a Special Allowance of €500 each year for three years.
An increase in the maximum subsidy amount available to tenants under the Private Rent Housing Benefit Scheme.
New programs will be established to encourage renewable energy investment in solar systems, renewable power storage batteries, heat pump water heaters, and the rehabilitation of wells in historic homes.
The government is working on a number of initiatives including energy storage systems based on batteries, the first of which is being installed at the Delimara power station.
Programs allowing private investors to create large renewable energy installations have been extended, and new programs for even larger installations generating more than 1MWp have been launched.
Studies on renewable offshore energy and the usage of hydrogen for local industry fuel requirements. will be carried out.
The government is still working on a second interconnector connecting Malta and Sicily.
Extending the shore-to-ship connection in Grand Harbour and continuing to develop such a system in the Freeport.
The installation of 1,200 electric vehicle charging stations throughout Malta and Gozo is still proceeding (so far 372 have been installed). In addition, the government is planning to create a single national digital platform that will integrate the charging station network.
Extending sustainable transportation schemes such as grant schemes for the purchase of new electric vehicles, motorcycles, and e-bikes; scrapping older vehicles; converting vehicles to run on LPG; wheelchair accessible taxis; and introducing incentives for personal e-scooters. will be extended.
Exemption from registration tax and the first five years of driving for electric and hybrid vehicles.
Other measures including sustainable finance
Expansion of sustainability-related programs such as the Smart and Sustainable Investment Grant Scheme, Investment Aid for Energy Efficiency Projects, the ESG Grant Scheme, and free energy audits for SMEs.
The scheme for the installation of water purification equipment will be expanded.
Discussions about potential fiscal incentives to stimulate investments in sustainable finance, such as green bonds, have been announced.
The Environment - Spaces, Water and Waste
More projects for the regeneration of public and green spaces will be launched in the following years, notably in Ta' Qali, Santa Lucija, Kalkara, and Marsaskala.
Schemes for facade restoration work on certain houses will be re-launched.
Preparations are now being made to implement Sustainable Urban Development using €58 million in EU funds earmarked for Gozo.
Other projects, such as the ECOHIVE waste management project, will be continued. The reverse osmosis extension, replacement of outdated water mains pipelines, and land reclamation studies will also continue.
Pillar II - Malta will use the exception provided for in the EU Minimum Tax Directive under pillar II, delaying the implementation of the 15% minimum tax rate for enterprises that are part of a group with a minimum annual turnover of €750 million.
This means that the Income Inclusion Rule ('IIR') and Undertaxed Profits Rule ('UTPR') will be delayed for up to six years. Furthermore, a Qualified Domestic Minimum Top-up Tax ('QDMTT') is not expected to be implemented at this time.
Currently, no modifications to the complete imputation system are planned, and new types of grants and tax credits, known as Qualified Refundable Tax Credits ('QRTCs,' are expected to be established.
Sport Activities - The 7.5% rate of tax on income derived by players, licensed coaches and athletes will be extended to other persons engaged in sports activities.
Start Ups - The Seed Investment Scheme, which provides incentives (in the form of tax credits) to Maltese enterprises that engage in startups and follow the necessary due diligence procedures, will be extended.
Family businesses - The lower stamp tax rate of 1.5% on certain transfers of family assets to descendants has been extended once more. Family enterprises who register with the Family Business Office will benefit from a higher maximum on tax credits for company investments. The Family Business Act now includes new elements to allow for more flexible family business restructuring. These steps will include guidelines to enhance the legal framework that governs family charters.
Fiscal incentives are available for family firms that internationalize, innovate, and digitize.
The proposed legal changes in the Wealth and Asset Management industry aim to incentivize Family Offices to transfer their activities to Malta.
Tax credits incentivising further studying such as the Get qualified scheme, are set to be extended.
The current fiscal incentives available to Highly Qualified Personnel will be altered and harmonised to meet the needs of the Maltese economy.
Businesses can deduct up to €500 when donating to registered voluntary organizations focused on social, environmental, and animal welfare causes.
Starting in 2024, the government will raise the annual tax credit for parents of children with disabilities attending non-government therapy to €500 from €200.
No capital gains tax and stamp duty on the first €200,000 of property value for tenants who previously leased the property for years under a Housing Authority scheme.
Continuation of schemes in relation to immoveable property.
The first and second-time buyers scheme will be extended for another year, with first-time buyers eligible for a yearly grant of €1,000 for 10 years from 2022.
No income tax and stamp duty on properties meeting specific conditions: constructed more than 20 years ago, and has been vacant for more than 7 years; or is situated in an UCA.
The VAT refund assistance on renovation works for first-time home buyers is being extended and made equally accessible to single individuals and couples.
Incentives for first-time buyers who will get grants of €15,000 for properties in Malta and €40,000 for properties in Gozo; as of 2024.
The reduced stamp duty rate for property acquisition in Gozo will be discontinued.
Read the full budget speech here: