Keeping up to date: Malta Enterprise and other support measures

March 2021

A number of legal notices relating to Malta Enterprise schemes have recently been published.  A short summary of salient updates below:

Recent Legislative Developments:

1. Business Development Scheme

L.N. 53 of 2021
MALTA ENTERPRISE ACT (CAP. 463)
Business Development 2021 Regulations, 2021

The Business Development & Continuity Scheme is intended to facilitate value added projects that are expected to contribute to the regional development of Malta and to support existing undertakings sustain operations during restructuring. Supported initiatives should lead to the development of new business opportunities, an increase in employment, and an increased market base or competitiveness.

Malta Enterprise Corporation may award tax credits or cash grants to undertakings that carry out a project aimed to expand their business operation or to consolidate their current operations. The aid shall be awarded to support eligible costs incurred, subject to various conditions and criteria, and which include the relocation costs of key personnel, payroll costs, lease and rental of real estate, support and advisory services, procurement and relocation of tangible assets and rights, licences and certifications. 

This Scheme primarily targets undertakings engaged in prescribed qualifying activities such as manufacturing, research & development activities, digitisation of processes and the development of digital services and systems etc. 

Despite this, undertakings not operating in such qualifying activities and which invest in projects which may lead to an increase in business performance and innovation may still be eligible for assistance under this Scheme and may receive aid in the form of tax credits.

This incentive scheme is regulated under the European Commission’s De Minimis Regulation and, as such, the aid awarded is subject to a maximum capping of €200,000 over a three-year period to a single undertaking. The scheme closes on 31 December 2023 and application forms, accompanied with a business plan, should reach Malta Enterprise Corporation by the 31 October 2023.

Business Development Scheme

2. Business Start 2021

L.N. 44 of 2021
MALTA ENTERPRISE ACT (CAP. 463)
Assistance to Small Business Start 2021 Regulations

Business START is intended to support small start-up undertakings (as defined) engaged in qualifying activities, including manufacturing, software development, pharmaceuticals and other innovative economic activities, which have a viable business concept throughout their development phase. Initiatives that are deemed to be economically feasible shall be supported through an initial grant of up to €10,000 and those start-up undertakings that present a viable business plan may receive additional assistance of up to €20,000 per quarter depending on the number of employees engaged.

A project may be considered eligible for assistance if it meets two of the following criteria:

  • the proposed products and/or services have the potential to generate income from various geographical markets; 
  • the applicant produces or intends to produce products which are new or substantially improved compared to existing products on the market or provides or intends to provide services which are new or substantially improved compared to existing services on the market; 
  • the applicant shall utilise processes, which are new or substantially improved compared to those adopted in current complementary activities.

Aid under this scheme is capped at a maximum of €200,000 and may be disbursed in the following manner:

Pre-Business Plan Support

At the early stage of development (where no business plan is submitted), an initial funding of up to €10,000 may be awarded to the start-up after taking into consideration various factors of the proposed business. In fact, this initial funding is awarded within 12 months from approval and is determined:

  • according to whether the applicant is a full-timer or part-timer (or employs an employee on a full-time or part-time basis); and 
  • as a reimbursement of costs if the beneficiary incurred costs for the mentoring of specific topics from academic institutions and for expenses incurred on advisory services for assistance on the business planning process.

Post-Business Plan Support

Start-up undertakings that present a business plan setting out an economically viable concept shall be awarded a maximum grant of €200,000, disbursed at quarterly intervals over a 3 year period. Each disbursement is calculated at the rate of €2,000 for each full-time employee that has been engaged with the undertaking for at least 1 month. 

Additionally, the Corporation may also award an amount of up to €5,000 to acquire the assets required for the running of the business operation. 

This incentive scheme is available till 31 December 2023, however, applications for this assistance should reach Malta Enterprise Corporation by 31 October 2023. Furthermore, during the funding process, beneficiaries are required to submit periodic reports and management accounts as requested by the Corporation.

3. Loan Guarantees for Initial Investments

L.N. 71 of 2021
MALTA ENTERPRISE ACT (CAP. 463)
Access to Finance Regulations, 2021

This Scheme is intended to assist eligible undertakings by providing a guarantee to implement an investment project when such financing is not available through commercial banking institutions.  This Scheme is applicable to undertakings engaged in qualifying economic activities, including manufacturing, computer programming, technical testing and analysis activities and research and development activities on natural sciences.

The support awarded as a guarantee should be used to obtain a bank loan for the purposes of: 

  • the setting-up of a new establishment; or 
  • the extension of the capacity of an existing establishment.

The support consists of a maximum guarantee of €10,000,000, which is reduced annually in line with the repayment schedule. The guarantee is capped at 80% of the supported bank loan and may be used to finance construction costs and the acquisition of plant, machinery and equipment. However, the support provided shall not exceed 30% and 20% of the eligible costs for a small and medium-sized undertaking respectively. Additional conditions and criteria apply. 

This Scheme is applicable until the 31 December 2021, and application forms must reach Malta Enterprise Corporation by 31 October 2021.

Important Reminders 

Micro Invest

Assistance under this Scheme is provided to self-employed persons / undertakings employing less than 50 full-time employees and having an annual turnover of less than €10 million. Aid under this Scheme is granted in the form of a tax credit amounting to 45% of eligible expenditure (65% for undertakings operating from Gozo and in other specific circumstances) and should be utilised within a three-year period against the tax due on the income derived from the trade or business activity only. The maximum amount of aid awarded under this Scheme is capped at €50,000 over a three-year period on a group basis (may be increased to €70,000 in certain circumstances). Companies wishing to apply for this scheme in relation to capital expenditure and wage costs incurred in 2020 should submit the online application by 26 May 2021

 

Business Enhance ERDF (European Regional Development Fund) Grant Schemes

Under Operational Programme I for Malta’s EU Cohesion Policy programme (2014-2020), €51m had been earmarked for ERDF Grant Schemes in aid of SMEs. These grant Schemes are broadly aimed at supporting investments made by SMEs, and which provide for assistance in the following areas:

  • e-Commerce (latest cut-off date being 30 June 2021)    

  • Start up Investment (latest cut-off date being 30 June 2021)    

  • SME Growth (latest cut-off date being 30 June 2021)    

  • SME Diversification and Innovation (latest cut-off date being 30 June 2021)      

  • SME Internationalisation (latest cut-off date being 30 June 2021)   

  • SME Consultancy Services (latest cut-off date being 30 June 2021) (business plans, feasibility studies)

The aid provided depends on the particular Scheme, however, in all cases, no expenditure should be incurred by an enterprise before approval of the project first having been issued by the relevant intermediary body.

These schemes are administered through an open rolling call with scheduled cut-off dates and are currently available as indicated above.

Investment Aid 2021 Regulations

New Guidelines have been issued by Malta Enterprise on the above-captioned Scheme for initial investment projects which have a start of works date falling on or after 1 January 2021. Undertakings that wish to avail of aid provided under this Scheme on an initial investment project (as defined), should submit an application form by 31 October 2021, even in respect of initial investment projects commencing between 1 January 2022 and 31 December 2023 (or later if the start of works are delayed due to factors beyond the beneficiary’s control). Further information on this Scheme may be found here

Investment aid

Contact us

Bernard Attard

Bernard Attard

Tax Partner, PwC Malta

Tel: +356 2564 6726

Victoria Muscat

Victoria Muscat

Senior Manager, Tax, PwC Malta

Tel: +356 2564 6739

Maria  Demanuele

Maria Demanuele

Tax, PwC Malta

Tel: +356 2564 6789

Svetlik  Grima

Svetlik Grima

Tax, PwC Malta

Tel: +356 2564 2526

Daniela Burlo'

Daniela Burlo'

Manager, Advisory, PwC Malta

Tel: +356 2564 2607

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