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15 October 2021

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Malta Budget for 2022 Delivered Including Tax Relief for Individuals and Companies

Malta's budget speech for 2022 was delivered by the Minister for Finance on 11 October 2021. The main tax measures of the budget are mainly focused on individual taxation, although some measures for companies are included as well. The measures include:

  • A tax reduction on income from overtime, including a 15% income tax rate on the first EUR 10,000 of overtime income earned by employees whose basic salary does not exceed EUR 20,000, excluding those holding management positions;
  • An exclusion of pension income from income tax for pensioners that continue to work after reaching retirement age;
  • A reduction in the income tax rate on part-time work from 15% to 10%;
  • An increase in standard tax refunds of EUR 60 to 140 (up from EUR 45 to 95) for individuals depending on their level of income and tax status (single, married, or parent);
  • The introduction of an income tax rate of 7.5% for performers (artists);
  • Reforms in regard to interest and penalties for late tax payment, including stricter terms for interest forgiveness, as well as a change in the interest rate on outstanding income tax and VAT balance to 7.2% per annum from 1 June 2022; and
  • The introduction of a temporary capital allowance benefit for investments made by loss-making companies during the COVID-19 pandemic, including that unabsorbed or unused capital allowances in 2020 and 2021 as a result of losses due to the pandemic will be allowed for deduction against any taxable income of other companies in the same group for the 2021 tax year.

The budget speech also includes that Malta Enterprise will introduce an investment scheme providing tax benefits for the investment of retained profits of a business in eligible projects in the same business or another business within two years from 1 January 2022, although no details are provided. Lastly, it is noted that fiscal incentives will be introduced to continue to support more innovative, green, and digital investments by businesses, as well as investments in the social field.

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