Following the budget speech delivered by the Minister of Finance on the 11 October 2021, Bill No. 247 was published before Parliament to implement some of the Budget Measures for the Financial Year 2022 and other administrative measures.
Principal Amendments to the Income Tax Act
The exemption from tax on transfers of securities listed on the Malta Stock Exchange or recognised under the Financial Markets Act is to be extended to securities listed on stock exchanges in the European Union / European Economic Area. It is also being proposed that the wording ‘stock exchange recognised under the Financial Markets Act' in this and other provisions will be changed to ‘stock exchange recognised by the Commissioner for the purpose of [each respective] provision'.
It has also been proposed that the exemption on gains or profits derived by non-Maltese residents from the transfer of certain securities and other interests will be extended to cover the transfer or any rights over those assets. Interests in property companies/partnerships or gains/profits derived (directly or indirectly) by beneficial owners who are ordinarily resident and domiciled in Malta will continue to fall outside the scope of the exemption.
In cases when IP (or IP rights) are acquired through an exempt intra-group transfer (falling under Article 5(9) of the Act), it is being proposed that the deduction of IP capital expenditure will be capped at the lower of the cost of acquisition and the market value of the IP (or IP rights) at the time that the exempt transfer takes place (less any deductions claimed by the transferor with respect to the same IP or IP rights).
The amendments also propose widening of the definition "industrial building or structure” for the purposes of claiming initial allowances and/or capital allowances on certain expenditure.
With regards to taxes on employment outside Malta, the changes proposed to Article 56(17) of the Income Tax Act (currently providing a 15% rate on income derived from employment outside Malta where the contract requires the performance of work or duties mainly outside Malta) add a proviso prohibiting access to the special rate in the case of:
- contracts of employment for periods of less than 24 months (or which last less than 24 months); or
- individuals who were present in Malta in the relevant year for more than a total of 30 days (disregarding days of vacation/sick leave in Malta and the period preceding the commencement/following the termination of the contract).
Another amendment was proposed in relation to the clause establishing the 7.5% tax rate for income of sport players, athletes and coaches, providing that this will become chargeable on every Euro of the gross amount of employment derived, be final and that no set-off or refund shall be granted to any person in respect of the tax so charged.
Other Considerations
With regards to the Social Security Act, some of the initiatives being proposed include:
- a reduction in tax on Service Pensions, given certain conditions;
- other benefits for pensioners in certain circumstances;
- the ability for employees with more than one part-time employment and no full-time employment to pay Social Security Contributions on more than one of their jobs;
- further medical benefits for certain persons over the age of 80;
- further assistance and initiatives for people with disabilities and their carers in certain circumstances;
- further assistance for certain widows/widowers; and
- an increase in child benefits.
Other changes include amendments to the Motor Vehicles Registration and Licensing Act which, inter alia, continue to promote the use of vehicles with low or no emissions and changes to the Customs Ordinance and the Excise Duty Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
