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21 April 2021

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Malta Publishes Investment Aid 2021 Regulations Including Tax Credit or Cash Grant

Malta has published Legal Notice 156 of 2021 in the Official Gazette, which contains the Investment Aid 2021 Regulations, 2021.

The regulations provide support for initial investment projects that result in the development, expansion, diversification, or a fundamental change in the carrying out of a qualifying economic activity. An undertaking carrying on or intending to carry out a qualifying activity that may contribute to the economic development of Malta shall be assisted by means of a tax credit (which may be claimed against future tax bills) or a cash grant calculated as a percentage of the qualifying expenditure. A qualifying activity in terms of the regulations is an economic activity consisting of a trade or business the profits or gains from which are chargeable to tax, carried on, or intended to be carried out by an undertaking in Malta which consists solely of one or more qualifying activities as may be prescribed.

The amount of investment aid that may be awarded in terms of the regulation for a specific investment project shall not exceed:

  • 30% of the qualifying expenditure for an undertaking that qualifies as a "Small" undertaking;
  • 20% of the qualifying expenditure for an undertaking that qualifies as a "Medium-sized" undertaking;
  • 15% in respect to initial investment projects carried out by "Small" and "Medium-sized" undertakings in the development of hotels, guest houses, and their amenities as licensed by the Malta Tourism Authority; and
  • 10% of the qualifying expenditure for an undertaking that qualifies as a "Large" undertaking.

The regulations are deemed to have come into force on 1 January 2021.

Applications for assistance under the regulations must be submitted by 31 December 2021. Projects starting before 1 January 2021 or having a start of works prior to the approval of the Malta Enterprise Corporation may only be awarded aid in the form of tax credits. Such projects shall only be considered where the activity was covered by the scheme implemented on the basis of the Investment Aid (July 2014) Regulations.

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