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Welcome to the Malta Budget Highlights for 2023. This budget contains measures aimed at sustaining economic growth in a post pandemic environment against a volatile global economic and geopolitical backdrop. It also introduces various environmental and sustainability related measures.
COLA €9.90 and pensioners to receive an additional €2.60
Non-taxable pension income threshold to increase to €14,968
Mental health care beneficiaries to be credited with 2 years of Social Security Contributions
A €600m fund allocated to counteract rising energy and cereal prices
€10k grant for qualifying first time buyers
Income tax on royalty income for authors to decrease from 15% to 7.5%
Tax refunds of between €60 and €140 to be reissued
One-stop shop for start-ups to be launched in 2023 and incentives for digitisation projects
Extension of 1.5% reduced stamp duty rate on transfers of shares in family businesses
Implementation of masterplan to enhance the aviation sector
Extension of up to €12k grant for new electric vehicles
Increase to €300 on tax deduction to parents for children's sports, arts and cultural activities. €200 annual tax credit for parents of children with disability
Following robust economic growth in 2021, Government is projecting GDP to increase by 6.0% and 3.5% in real terms in 2022 and 2023 respectively. Against this backdrop of significant economic growth, the debt-to-GDP ratio is expected to amount to 57% of GDP in 2022, increasing to 59.1% next year, as Government substantially increases its energy support measures. Meanwhile, the annual inflation rate for 2022 is anticipated at 5.7%, after which it is expected to decrease to 3.7%, with energy price inflation remaining contained. Finally, for 2022, unemployment is set to remain low, projected at 3.1%.
The main income tax measures include a number of initiatives targeting pensioners, such as an adjustment to the income tax rates, to ensure that increased pensions continue to fall within the tax free bracket. A reduction in income tax rates for authors and a tax credit for parents of children with disabilities will be introduced. There will also be an increase in the tax deduction for parents whose children attend certain extracurricular activities. Furthermore, another round of tax refunds, ranging between €60 and €140, will be paid to eligible individuals.
The MicroInvest scheme will be extended to social enterprises.
The Minister also announced that the reduced stamp duty rate on certain transfers of family businesses and the intra-group transfer of capital allowances for certain companies will be extended further. Proposals will also be put forward for changes to the various residency programmes.
The Budget caters for a number of initiatives aimed at improving the overall well being and standard of living of people with different social needs.
The cost of living adjustment for 2023 amounts to €9.90 per week and that for pensioners will amount to €12.50 per week.
Certain measures increase or improve pension benefits, whereas others are targeted at providing assistance to the elderly, the vulnerable, and those suffering from certain health (including mental health) issues/ chronic conditions.
Other social measures include an increase in the paternity leave, assistance for those who wish to purchase their own property, investment in public bodies (such as the police force and the civil protection), increase in certain social benefits, grants, allowances and tax credits for parents of children with disabilities and an increase in the children's allowance. The Minister also announced an increased Government investment in the health sector in general.
The Government is committed to eroding bureaucracy and creating a more business friendly environment. It will also make more space available for industry, help the start-up scene (including with financial intervention) and assist all the key economic sectors that are, or have the potential to become, important to the economy.
The Minister announced a number of incentive schemes for businesses aimed at supporting digitalisation, energy and water consumption savings, and reduction of waste and excess raw materials.
Schemes incentivising the purchase of electric vehicles and other means of clean transport and scrappage of old vehicles, both for business and private use, installation of PV panels for residential houses and renovations of private sector buildings will be extended.
The Government is also committing to material environmental projects including the coordination of green urban reclamation projects and increased investment in green urban areas, treatment of greywater discarded by businesses alongside the Maltese coast and waste reduction and conversion of organic waste into energy and agricultural compost.
Watch the Malta Budget 2023 key highlights discussion which was held on LinkedIn Live on Tuesday 25 October at 12.30pm. David Ferry, Bernard Attard and Ian Abela analysed the Malta Budget 2023. Apart from highlighting its key takeaways, our experts offered insights about what this Budget will mean for the coming year and for the Maltese economy.
What will the main socio-economic impacts that will affect Maltese society in the coming year be? How will these measures affect you and/or your business?
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