THE

2018

BUDGET UPDATE

TABLE OF CONTENTS
General Overview
The Economy
Income Tax

Other Taxes

Immovable Property

Pensions

Social Measures

Other Measures

GENERAL OVERVIEW
The Malta 2018 Budget was delivered on Monday, 9th
October by the Minister for Finance, Professor Edward
Scicluna. In his introductory speech, the Finance Minister
noted various economic statistics which confirmed the
solid performance of the Maltese economy. This is further
proved by the positive comments to Malta by the main
international agencies.

The Minister expressed his satisfaction towards the
countrys movement out of a deficit, while confident that
following the positive results during 2016, another surplus
will be reached in 2017.

The Minister spoke about the ongoing decrease in
unemployment and increase in the number of women
returning to work. The number of people relying on social
services are also on the decrease.






THE ECONOMY
The Government reported an expected surplus of
88m, equivalent to 0.8% of GPD. For 2018, this is
expected to be 0.5% of GDP.

The GPD for 2017 is around 10.8bn, while for next
year, this is expected to increase by 5.6% in real terms.

The rate of unemployment is estimated at 4.1% of the
labour supply, which is less then 2,500.

The average rate of inflation stood at 1.1%, but is
expected to increase to 1.5% in 2018.

Weekly cost of living is to be increased by 1.75 per

week for 2018.





INCOME TAX
A tax refund of between 40 and 68 annually will be paid to individuals with income lower then
60,000 per annum.

Income Tax revenues are expected to increase to 3.7bn by end of 2017 and continue increasing to
4.4bn until 2020.

Assistance under the MicroInvest scheme will be increased from 30,000 to 50,000 for companies
based in Malta, and to 70,000 for companies based in Gozo. The scheme will be extended to
companies whose shares are held by women and those that employ more than 50 full-time
employees.

OTHER TAXES
Introduction of VAT Grouping for the financial services
and gaming sectors. This will enable related entities to be
registered as one taxable entity. As a result, supplies
between members of the same VAT Group will be
regarded as falling outside the scope of VAT.

The turnover under which small undertakings may opt
not to charge VAT will be increased from 14,000 to
20,000.

The VAT rate on the leasing of bicycles shall be reduced
to 7%.

Aligning the excise duty rate levied on certain steel rods
and bars to introduce a level playing field on the
importation of similar goods.

IMMOVABLE PROPERTY
The stamp duty exemption for first-time buyers on the first 150,000 of the value of the
property is being extended by a further year.

Refund of stamp duty on the purchase of a new residential home for Second-Time Buyer.
Where a person sells his residential property and such person does not own other properties,
he will be granted a reduction of stamp duty, by way of refund, of up to 3,000. Where the
persons involved has a disability, the refund increases to a maximum of 5,000.

The rate of duty for the purchase of properties in Gozo will remain at the rate of 2% instead of
the default 5%.

PENSIONS
Pensioners will receive an increase of 2 per week.

The maximum amount of exempt pension income,
will be increased to 13,200, as illustrated below.

Single Parent Married
13,200 13,200 13,200 (+ 1,000
tax free amount
derived from other
sources of income

Financial assistance of up to 25,000 for unutilised
private properties for the renovation and
rehabilitation to be used for social housing
purposes.


A grant of 300 will be paid to each person over 75
years who is still reside in their own household.





SOCIAL MEASURES
In-Work-Benefit rate increased from 350 to The Forster Care Allowance will increase to 100,
450 yearly per child where only one parent is in from the current 70, per week.
employment. Increase in the community worker
scheme of 200 per month. As from 2018, widowers who work and receive a
contributory pension at the same time, will be
Maximum aid of 10,000 for expenses incurred entitled to receive sickness benefits.
for adopting foreign children. This aid will also
apply to those already undergoing this process. Proposal for a white paper addressing issues
related to rental agreements, including a
The special allowance for orphans will also be proposal for the obligatory registration of rental
applicable to those in employment. contracts.

OTHER MEASURES

Employment Education
- Employees will benefit from an - During 2018, the Government will
additional day of leave. absorb half of the fees for SEC and
- Employees earning a minimum wage MATSEC Exam. From 2019, these
will receive a mandatory raise of 3 per examinations will be free of charge.
week during the second year of - Individuals under the age of 40 who
employment and 6 per week during the undertake a Masters or PhD qualification
third year. will be exempt from income tax for a
period one year and two years
Environment respectively. Tax credit will be granted up
- Investment of over 150m in waste to the level of the first 60,000 of income
conversion technology. earned.
- Initiative to plant a tree for every child - Extension of the One table per child
born. initiative.
- Discussions will be held with the private - Extension of club 3-16 to further
sector to introduce a system for return of incentivise women to join the workforce.
plastic and glass bottles. This will include
a refund to customers.

Health Transport
- Investment in two new primary health - Persons between 16 and 20 years old
centres and refurbishing of existing ones. will be granted one year of free public
- New Out-Patients block and parking transport.
facilities at Mater Dei - Free school transport to and from will
- Strengthening of the law regulating the be introduced between 2018 and 2019
treatment of IVF. for Church and Independent school.
- A number of training initiatives aimed at - No registration tax on eco-friendly
improving competences in the vehicles including those operated by
pharmaceutical industry. battery with a minimum range of 80km.
Furthermore, no road licence will be paid
Gozo on such vehicles during the first 5 years.
- Entrepreneurs who offer a minimum of - Further extension to scrappage
a 3 year full-time employment in Gozo to schemes and grants in respect of vehicles
a Gozitan employee, will receive a 30% converted from petrol to gas
refund, up to a maximum of 6,000, on - A grant of a maximum of 10,000 will be
the employees wage. awarded to individuals and companies
- Gozitan entrepreneurs operating in the investing in wheelchair accessible taxis.
tourism industry will be allocated funds
aimed at improving tourist
establishments.

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