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Main Budget Highlights 2021

Economy outlook

The first half of the year: Due to the Covid-19 pandemic, the first half of the year saw a loss in GDP of 7.7%, which is slightly lower than the loss in the Eurozone of 9% in GDP for the same period.

Unemployment rate in August stood at 4.1% while that of the Eurozone was 8.1%.

The remaining half of the year and next year: An expected loss of 7.4% in GDP compared to an expected loss of 8.7% in GDP of the Eurozone. This loss is expected to be recovered next year with a forecasted growth of 6.4% in GDP when compared to 6.1% growth in GDP in the Eurozone.

Social Measures:

  • COLA increase of €1.75 per week
  • Vacation Leave to increase by 1 day for a total 28 days in a year
  • Increase in individual refund ranging between €45 to €90 of tax paid in previous year
  • Covid Wage Supplement to continue until March 2021, subject to certain conditions
  • Extension of voucher scheme for next year providing for a €100 voucher, €60 of which shall be used in accommodation and restaurants and €40 on retail and services
  • Children’s allowance – Additional supplement for every child depending of €70 per child per year or €50 per child per year depending on income bracket of household
  • Pensions – increase of €3.25 per week over COLA i.e a total increase of €5 per week
  • Social Security – applicability of ‘widowed’ status to persons who are registered in civil union or co-habitation

Key Fiscal Measures:

Income tax Measures

  • Increase in exemption applicable to pension income up to €14,058. Married couples opting for joint computation will benefit from a further exemption €3600 on any other source of income
  • Increase in the eligible annual exempt private pensions investment to €3000 per year
  • Extension of Covid Regeneration plan – Sellers of Immovable property are able to continue to benefit from a reduced rate from 8% to 5% on the first €400,000 of the property value for all promise of sales registered up until 31st March 2021 on condition that the final deed of purchase is made by no later than 31st December 2021
  • Tax on Cession agreements i.e transfer of rights over immovable property shall be changed to a final tax of 15% on the total transfer value instead of the profits.
  • Authors of books may start benefiting from a final tax of 15% on their royalty income

VAT measures

  • Increase in the small undertaking VAT exemption threshold from €20,000 to €30,000
  • Extension of the current VAT refund scheme on purchase of bicycles and electric motorcycles or scooters – capped at €400

Stamp Duty

  • Increase in exemption under first time buyer scheme from €175,000 to €200,000 of the property value
  • Non-first time buyers will benefit from a lower rate of 3.5% instead of 5% on the first €200,000 of the property value
  • Extension of Covid regeneration plan – Buyers of immovable property shall be able to continue to benefit from a reduced rate from 5% to 1.5% on the first €400,000 of the property value for all promise of sales registered up until 31st March 2021 on condition that the final deed of purchase is made by no later than 31st December 2021
  • Increase in exemption from stamp duty on donation of immovable property from parents to their children for the purpose of taking up residence from 200,000 to €250,000

Proposed fiscal incentives:

  • Plans to incentivise EU start-ups through Malta by means of government funding aimed at venture capital
  • Plans to incentivise online business
  • Aviation and Martime Sector – Creation of stakeholder forum with representative from the sector to continue to strengthen this sector
  • The introduction of attractive ‘Green Bonds’ available to investors in order to finance renewable energy projects

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