Last Updated on Tuesday, 31 October, 2023 at 1:00 pm by Andre Camilleri
Malta to host EU Startups Summit for next three years
SME complex planned for Ħal Far
€215 million to be invested in new national airline next year
Finance Minister, Clyde Caruana, also said that consultation with banks on the basic rights for businesses to have a bank account is ongoing as well.
A number of measures to reduce bureaucracy were also announced.
The budget contained a number of measures for start-ups. The Government mentioned, for instance, that the Seed Investment Scheme, which offers incentives in the form of tax credits to Maltese companies after they would have invested in start-ups and passed through due diligence, will again be relaunched next year.
The Budget also reads that Malta Enterprise concluded negotiations with the EU Startups Summit, which for the first time will be held in Malta during 2024, 2025 and 2026. In the coming years, Caruana said, the summit is expected to attract 4,500 participants, as over three years.
The iStartup Finance Scheme will also be extended for another year. “This, aside from the launch of a consultation document regarding a legal framework to simplify the lives of startup businesses, in particular the more innovative ones.”
As for businesses in general, among the schemes which are being extended, are the iSkills Development Scheme, the Rent Subsidy Scheme, the Innovate Scheme, the Smart and Sustainable Scheme and the Investment Aid for Energy Efficiency Projects, as well as an assistance scheme for SMEs to receive consultation services regarding ESG.
A number of workshops on the Green Transition will also be organised.
The Minister mentioned the microchips sector, which employs 1,800 people. He made mention of a project by Malta Enterprise and ST Malta, which was accepted as part of the Important Projects of Common European Interest in the sector of semiconductors and communication. “This project should result in more investment and innovation in the microchips sector in Malta.”
Separately, the Minister mentioned that to continue developing the semiconductors and microchips sector, Malta Enterprise will be working within the framework of the European Chips Act so that Malta will have a Centre of Competence within the semiconductors sector. This centre will focus on improving the skills of future workers in this sector. “Through this measure, we will continue encouraging development of startups and SMEs, and also attract foreign direct investment in the form of companies that design fabless chips. This will place us on the European map in such an important sector.”
As regarding the manufacturing sector, the Minister said that it will continue working to attract industries that bring high quality jobs and which leave a bigger impact on the economy, with the least impact on the environment and quality of life.
“Intense work by INDIS is ongoing”, he said, adding that the Government plans to next announce a number of projects with foreign direct investment in a number of localities. “In Ħal Far, we are planning a complex for SMEs, so they would have a dedicated space cut off from residential spaces.”
He also spoke about the aviation industry, saying that it continues to grow in Malta. He mentioned the past inauguration of Taxiway Lima through which the airport could accommodate bigger planes for maintenance as part of the MRO industry. Next year, the Government plans to create other facilities for the parking of planes.
As regarding the gaming sector, the Government plans to continue implementing the National Esports Strategy, and will continue with initiatives to strengthen the education and training with regards to the digital gaming sector.
Minister Caruana spoke about international taxation, saying that work with the OECD on the Two Pillar Solution continues. The first pillar deals with the reallocation of taxation rights between countries, while the second pillar deals with minimum global taxation (an effective 15% tax rate) for companies that earn more than €750 million or more a year. This second pillar is already a reality with the EU countries agreeing on a directive to implement it, he said. This directive gives countries the option not to implement it for six years where particular circumstances apply. He said that, as such, it makes sense for Malta not to introduce any of the Pillar 2 rule components in 2024, in order for the country to follow global developments and take action as needed in the context of these developments. He said that Malta will continue working to have measures and incentives in the form of grants or tax credits which conform with EU and OECD regulations, and as such, despite the transitional period, taxation on these companies might increase a bit.
Financial Services Strategy
He made mention of the Financial Services Strategy that was launched this year, and said that over the next 18 months the Government will work on implementing a number of priorities.
In order to help family businesses, the Government will extend the concession on the reduction of Stamp Duty from 5% to 1.5% when family businesses are transferred to children and younger generations. In addition, he said, family businesses registered with the Office of Family Businesses can benefit from a higher capping of tax credits on the investment that they would make in their business.
The Minister announced that in the coming days, a consultation will be launched as regarding fiscal incentives for Real Estate Investment Trusts, in order to strengthen regulations. These are seen as a way for small investors to be given the opportunity to invest in shares of companies that have a property rental portfolio and which tie themselves to divide no less than 85% of their profit in dividends each year, he said.
The Government is working to facilitate the financial infrastructure to strengthen aircraft leasing, the Minister said. “For this to happen, we need to work on amending the relevant laws, prepare a specialised framework for depreciation and attract banks that offer a complete service in order for them to back this initiative.” He said that Malta already has professionals working in this sector and he believes that the country can establish itself in this sector, and that by the end of next year it would be able to also attract new investment.
The Minister announced that a consultation on fiscal incentives for investors to make sustainable investments will be launched.
As regarding tourism, the Minister made a number of pledges, such as saying that the Government will continue working to improve tourism infrastructure, continue advertising Malta abroad and sustain air connectivity to the island. “We will be taking decisions through which we will improve the services offered across the spectrum of the hospitality sector.”
Regarding Gozo, he said that the Government will continue with incentives for more collective investment to improve the Gozo tourism product. He also said that investment in promotion will continue to increase, and will sustain the Extended Stays in the low season, as amongst other things.
He also mentioned the new national airline that will launch operations next year, after Air Malta closes down. €215 million capitalisation will be invested in the new airline, so that on 31 March it will start operating.
This year, he said, the Government had announced the squaring off project through which the Freeport would see improved infrastructure. This agreement will lead to the first Freeport expansion in 20 years and will extend the Freeport zone by 30,000sqm, he said. This, Caruana said, would also allow for the mooring of ships that are larger than 400 metres, and that they would be moored outside the residential zone. Preparatory work on this expansion project began, and next year it seems that structural works will begin, he said. Work on the onshore power supply will also continue.
EU funds for businesses
Opportunities for cash grants, through a €40 million investment for SMEs under the Business Enhance scheme will be offered, he said. Amongst other things, the INVEST EU financial instrument will continue offering support to SMEs by facilitating access to financing from local banks in the form of reduced interest rates and collateral requirements.
The Government is also making preparations for the implementation of Sustainable Urban Development through €58 million in European funds, of which the initiatives and actions taken will all be focused on Gozo.
The Government will also be launching a socio-economic study to identify the localities and zones with special regeneration needs. These localities will be given priority when it comes to infrastructural investments, community projects and urban greening. In addition, companies and businesses in these areas are to be given more generous grants, especially when it comes to renovating buildings as well as creating quality jobs.