COVID-19: Fiscal support measures for businesses

18 March 2020

Government has announced a number of measures in a bid to encourage retention of employees and alleviate imminent cash flow and liquidity concerns that are expected to be faced by certain local businesses in the light of the Coronavirus outbreak. These initiatives are mainly targeted at those businesses that are suffering a significant downturn in their turnover as a result of the economic constraints arising from the coronavirus pandemic and, as a result face substantial cash flow difficulties.

More measures may be announced in future as the need arises.

Postponement of certain tax payments

The measures announced by Government include the postponement of certain tax payments (see details below) otherwise due by end of March and April 2020. No interest or penalties will be charged on tax payments that are postponed in terms of this measure.

The Commissioner for Revenue has also committed to accelerate pending tax refunds.

The deadlines for submission of statutory tax documents and notifications will however remain unchanged.

Who is eligible? How can one apply?

Companies and self-employed persons experiencing a significant downturn in turnover and facing substantial cash flow difficulties as a result of the coronavirus pandemic qualify for this benefit. Such economic difficulties will be declared in an online application form, which will be required to be completed and submitted to Malta Enterprise Corporation by 15 April 2020

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Who is not eligible?

Specifically excluded from this benefit are companies and self-employed persons that failed to comply with their Income Tax and VAT compliance obligations (i.e. submission of documents and returns, and payment of taxes) falling due by 31 December 2019.

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Forfeiture of benefit

The benefit is forfeited if the applicant is found to be in breach of any of the scheme’s terms and conditions and making use thereof under false pretences. In particular, beneficiaries should be able to prove their substantial cash flow difficulties arising as a result of this pandemic.

In such case, all dues should be settled as demanded by the Commissioner for Revenue and interest / penalties will become due as stipulated by law. 

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Other measures

Other measures in connection with the Coronavirus outbreak were announced and implemented. These include aid supporting teleworking initiatives and employment law-related matters.

Aid supporting teleworking initiatives

This measure relates to a "Call for the Facilitation of Teleworking Activities" and falls under the Business Development and Continuity scheme administered by Malta Enterprise Corporation.

This call is open to all local undertakings, including self-employed persons, who incur certain telework expenses in relation to employee roles that can be continued remotely and in respect of which an active teleworking agreement commencing on or after 15 February 2020 is in place.

The aid provided is in the form of a cash grant calculated at 45% of the following eligible costs incurred between 15 February 2020 and 8 May 2020:

(a) purchasing and/or leasing of computer hardware (including operating systems) which are considered portable, including installation and setting up of connectivity software; and

(b) communication solutions (hardware and software) that allow different users to connect to their place of work (e.g. VPN, Point-to-point connection etc.). 

The aid is capped at €500 per teleworking agreement and up to €4,000 per undertaking. This scheme falls under the de minimis regulations.

Applications under this call should be submitted to Malta Enterprise electronically by 8 May 2020. The application form may be accessed below.

Access Application Form

 

Employment law matters

Quarantine Leave has been introduced into Maltese law in terms of amendments to the Minimum Special Leave Entitlement Regulations (S.L. 452.101) by the Minimum Special Leave Entitlement (Amendment) Regulations, 2020 (L.N. 62 of 2020). 

Such Quarantine Leave is defined in the recent legal notice as:

  • leave to be granted to the employee without loss of wages;
  • in such cases where the employee is legally obliged to abide by a quarantine order confining the employee to a certain area or to certain premises as determined by the Superintendent of Public Health under the Public Health Act or by any public authority under any other law.

Therefore, employees should be entitled to be granted such paid quarantine leave by their employer for any period of quarantine as may be determined. Such quarantine leave entitlement should apply even where the employee is covered by an applicable Wages Council Wage Regulation Order.

Documentation may be requested by the employer from the employee showing, amongst others, that the event has occurred. Persons failing to comply with such requirements are guilty of an offence and should, on conviction, be found liable to a minimum fine (multa) of €465.87.

In this regard, in terms of the Period of Quarantine (Extension of Countries) Order, 2020 (L.N. 63 of 2020), the Superintendent of Public Health has ordered that any person arriving in Malta from any country must submit (as well as the persons who live in the same residence) to a 14 day period of quarantine immediately upon arrival in Malta. Prior to such legal notice, the Period of Quarantine Order, 2020 (L.N. 40 of 2020) had set out a specific list of countries in this respect.

 

Other developments

Extension: MicroInvest scheme primary deadline

The primary deadline for the submission of the application under the MicroInvest Scheme for self-employed persons in relation to eligible costs incurred in 2019 was extended from 24th March 2020 to 30th April 2020.

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Extension: Gozo Transport Grant Scheme

The deadline for the submission of the application form for support in respect of eligible expenses incurred in 2019 relating to the transportation of plant and machinery, materials, goods and products that are required for an undertaking’s manufacturing activities in Gozo has been extended from 3 April 2020 to 3 June 2020.

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Other legal measures

Anyone coming into Malta will be placed under a two-week mandatory quarantine. Defaults will automatically incur a €3,000 fine for every default. Fines of up to €10,000 may also apply for breach of quarantine in certain circumstances.

 

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Postponement of tax payments announced by Government & other measures

Income tax

Provisional tax payments due by 30 April 2020 to be settled in four equal monthly instalments in the four month period between May and August 2020.

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Employee related taxes

  • Final settlement system tax
  • Social security contributions
  • Maternity fund contributions

Amounts due in March and April 2020 to be settled in four equal monthly instalments in the four month period between May and August 2020.

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Social security contributions of self-employed persons

Social security payments due by 30 April 2020 to be settled in four equal monthly instalments in the four month period between May and August 2020.

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VAT

VAT payments due by 15 March 2020 and 15 April 2020 to be settled in two equal instalments with the two quarterly returns immediately following the quarter in relation to which the VAT was deferred.

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Upcoming deadlines that have not been impacted by the announced measures

The following deadlines still continue to apply:

March 2020

Payments

Income tax due by companies having their financial year ending between January and June, in respect of their financial year ended 2019.

Submissions

  • Certain income tax returns (late filings for financial years prior to 2019 and  manual tax returns for companies having their financial year ending between January and June 2019)
  • VAT returns
  • FS5 forms for February emoluments
  • CbCR notification forms for companies having their financial year ending between January and June 2019.

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April 2020

Payments:

  • Company income tax due by 30 April 2020 (companies in respect of their financial year ended 31 July 2019)
  • 15% final tax on rental income derived during the calendar year 2019.

Submissions:

  • Certain income tax returns for financial year 2019 (manual tax returns for companies having their financial year ending July 2019)
  • VAT returns
  • FS5 forms for March emoluments
  • CbCR notification forms for companies having a July 2019 financial year end.

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Contact us

Neville Gatt

Neville Gatt

Head of Tax, PwC Malta

Tel: +356 2564 6791

David Ferry

David Ferry

Tax Partner, PwC Malta

Tel: +356 2564 6897

Mark Lautier

Mark Lautier

Tax Partner, PwC Malta

Tel: +356 2564 6744

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