The scope of this scheme is to encourage small and medium sized undertakings, including self-employed, to invest in their business, to innovate, expand and implement compliance directives or to develop their operations.
Duration of the Incentive
The scheme covers costs incurred between 1st January 2014 and 31st December 2020. The respective applications in respect of costs incurred during a particular year must be submitted with the pertinent department by March of the following year.
Conditions for Eligibility
The following conditions must be satisfied:
- During the year in which the costs were incurred, the applicant did not employ more than 30 persons (Full-Time Equivalent) and the turnover did not exceed €10million;
- The applicant must at least employ one person (full-time or part-time) at the date of application, which employment must be registered with the Employment and Training Corporation. In the case of self-employed persons, the person employed may be the applicant himself;
- The applicant should be registered for VAT, where applicable;
- Self-employed persons must be registered with the Employment and Training Corporation;
- The applicant must be duly licensed to carry out its trade or business;
- Applicants must not be defaulting on payments of VAT, Income Tax, and Social Security Contributions.
The following are the qualifying expenses on which tax credits may be claimed:
- Furbishing, refurbishing and upgrading of business premises including extensions or modifications to premises in line with the permits issued by MEPA (Malta Environment and Planning Authority);
- Investments in acquiring new (or first time used in Malta) machinery, technology, apparatus or instruments which enhance the undertaking’s operations , including systems which help to save energy or to produce alternative energy;
- Capital Investment in Information Technology;
- Investment in one motor vehicle (over a period of 3 years) which is involved in the carrying of goods (category N1, N2 or N3) and Special Purpose Motor Vehicles;
- Wage costs covering the first 12 month period pertaining to new full-time jobs created, as long as it constitutes a net increase in the total number of full-time employees. Wages pertaining to part-time employees are also eligible as long as the employee works at least 20 hours per week.
How does it work?
The aid is administered by Malta Enterprise and is granted in the form of a tax credit, meaning that it is directly deducted from the applicant’s tax liability. The tax credit is calculated as a percentage of the eligible expenses. The percentage is 45% in the case of undertakings established in Malta and 65% in the case of those operating from Gozo.
Tax credits are utilized against tax incurred on income derived from the trade or business activity only. Any excess tax credits are carried forward to subsequent years and must be utilized by the fourth year of assessment following the year in which the Certificate is awarded in the case of start-ups and by the third year of assessment in all other cases.
The tax credits shall not give rise to any tax refund.
Maximum Aid Intensity
The maximum amount of tax credit that can be claimed by an undertaking is €30,000 over any period of 3 consecutive years, starting from any tax credits granted in 2014 in respect of expenses incurred in 2013. With respect to start-ups established in Gozo, the capping is of €50,000 over any period of 3 consecutive years, starting from any tax credits granted in respect of costs incurred in 2014.