Malta Budget Speech 2023
In the annual budget speech outlining the social, fiscal and economic policy for the next year, the Hon. Clyde Caruana presented a number of measures affecting the Maltese economy. Overall, there has been no major changes announced to Malta’s tax system, with several temporary measures, such as the first time buyers scheme and the 1.5% duty on donations to close family members being extended.
During the speech, the following key measures were mentioned:
Energy
The minister has confirmed that energy tariffs shall remain the same and shall not increase in line with international increases in energy and fuel prices, at an expected cost of €600m to the Maltese government.
Employment and Pension measures
COLA adjustment has increased to €9.90 weekly, equivalent to a €515 annual increase.
A new means-tested grant shall be given by government to around 80,000 people who earn less than the average income (€17,796), with the average grant being of €300, depending on the means of the persons.
Pensions have been increased by €12.50 weekly, equivalent to a €650 annual increase.
The exempt tax brackets on pensions has been increased to €14,968.
Service pensions and pensions for widows and widowers shall also be increased by €200 per year and €3.54 a week respectively.
A special measure was introduced for persons who missed up to two years of work between 18-30 due to mental health issues, to get their missed social security payments covered by Government.
Social Incentives
Increase in Children’s allowance of up to €90 per child.
Increase in grants to parents who quit their jobs to take care of disabled children, up from €500 to €4,500.
€200 tax credit each year to parents of children with disabilities, and the introduction of subsidies for wheelchair users.
Student stipends to increase by €50 per year.
Property Incentives
€10,000 grant for first time buyers, payable over 10 years, provided the property costs less than €500,000. This measure has been back dated to property acquired from 1st January 2022.
The scheme assisting persons who are unable to save for the 10% deposit required to acquire property has increased to properties valued up to €225,000, up from €175,000.
Increase in rent subsidy by €100 as follows:
- From €400 to €500 for one-bedroom
- From €500 to €600 for two-bedroom
- From €600 to €700 for three-bedroom
All first time buyer, second time buyer, UCA schemes and schemes to acquire property in Gozo to be extended to 2023 as well.
Economic Figures
The economy is expected to grow by 3.5% in real terms in the upcoming year.
Unemployment is expected to remain at 3.1%, while inflation is expected to ease at 3.7%.
Deficit was brought down to 5.8%, while the debt-to-GDP ratio is set to be 57%.
Fiscal measures
No tax cuts are being announced for the upcoming year.
The tax refund cheques granted in previous years shall return this year as well.
Working pensioners shall be granted an exemption on 40% of their income.
Authors and co-authors shall receive a reduction in the tax payments on royalty income from 15% to 7.5%.
The 1.5% duty rate on donations of shares shall be extended for another year.
An evaluation into the residence schemes will be undertaken, to understand whether certain residence programs need to be updated.
Grants and incentives
Extension of the Micro Invest schemes.
Intention to set up a one stop shop offering services to start ups, called Start Up Malta.
Introduction of a €40m cash grant scheme for SMEs, called Business Enhance.
New EU Funded Digital Innovation hub project, to help SMEs and start-ups introduce IT related matters such as cloud computing and AI into their work.
Increase in grants in favour of investment in sustainable and digital projects, up from €50,000 to €100,000, with the grant covering 50% of expenditure incurred.
Increase in grants on Electric and PHEV vehicles to €11,000, up to €12,000 if a previous car is scrapped.
Schemes to encourage the installation of solar panels, heat pump water heaters, solar water heaters and well restorations currently in place will remain for at least an additional year.
For more details on how the outlined budget will affect you, contact our experts on +356 2166 6690.
