Malta Budget Highlights 2022
On the 11th of October, the Minister of Finance Hon. Clyde Caruana presented the budget for 2022 entitled ‘The Malta we want for our children’. The budget is illustrated in a way that helps the Maltese economy recover in an efficient manner from the repercussions of the COVID-19 pandemic.
Nevertheless, in 2021, Malta’s economy has recouped quite well in the past year and prospects by the Ministry for Finance look positive. Real GDP is expected to grow by 6.5% in 2022, 4.7% in 2023 and 4.5% in 2024. That being said, the government is envisaging a national deficit above the thresholds dictated by the Stability and Growth Pact, at 5.6% of GDP and national debt at 61.3% of GDP. On a positive note, employment is expected to increase by 2.2% over 2022 whilst unemployment is expected to stabilise at 4%.
In 2021, the government implemented a number of schemes to aid sectors/individuals which were negatively impacted by the pandemic, particularly in terms of income. Similar to 2020, the government introduced a set of vouchers to help various sectors. The vouchers amounted to €100 including four €15 vouchers which could be used for restaurants and accommodation and another three €10 vouchers to be used for retail and services.
During the budget speech for 2022, some main points that were announced include the cost-of-living adjustment (COLA) increase to €1.75, as well as a higher threshold for the in-work benefit. Workers who do not work in a managerial capacity and earn up to €20,000 will benefit from a flat 15% tax rate on the first €10,000 they earn from overtime labour. In terms of yearly tax refunds, the greatest refund available will be €140, while the lowest refund would be €60.
Parents who work late hours, shifts, or weekends will now be eligible for free childcare. Also, working pensioners will pay income tax on solely their employment income, not their pensions. Business succession is also taken into consideration as the government is extending the reduction in stamp duty from 5% to 1.5% when family businesses are transferred to younger generations. Even more interesting is how this budget allocated funds for a massive and much-needed afforestation project at Inwadar Park with the aim of planting over 50,000 mature trees.
This budget also steers away from the usual direction by providing relief from capital gains tax and stamp duty on the purchasing of old and vacant properties, and/or situated in urban conservation areas and/or built in a traditional Maltese style. Buyers who opt to renovate such properties will also be able to benefit from a VAT refund of up to €54,000.
Our team of economists has the pleasure of providing a summarised version of the salient points emanating from this year’s budget. We invite you to stay up to date with our socials and website at www.pkfmalta.com for more economic insights and analysis concerning next year’s budget.
View the Summary of the Malta Budget Highlights 2022: here