Last Updated on Wednesday, 24 March, 2021 at 3:50 pm by Andre Camilleri
Moratoriums will be extended to September 2021 to help struggling businesses stay afloat during the pandemic, Minister for Finance and Employment Clyde Caruana announced.
Applications for moratoriums from Malta Development Bank, were initially open until June 2021, however they have been extended to enable businesses struggling due to the pandemic to pay back their capital, particularly with the closing of non-essential businesses and restaurants due to the latest Covid restrictions.
As of December 2020, €610,900,000 pre-Covid loans were benefitting from moratoriums across 847 business sectors – most notably in accommodation and food services.
The maximum duration of the mortarium period under the Covid Guarantee Scheme (CGS) will be extended from 12 months to 18 months. This will ensure that banks are not exposed to the risk of a sudden spike in non-performing loans with adverse repercussions on their capital adequacy ratios. Simultaneously, businesses will be given “breathing space” to recover from financial losses.
The CGS, simultaneously, will be extended from 30th June to 30th September 2021 in order to facilitate access to bank financing by businesses.
Caruana said that, as at 31 December 2020, 537 facilities had their moratoriums expiring within a month, with the value of these facilities totalling to €408,146,000.
Caruana also announced the Tax Deferral scheme – first announced in March 2020 – will be extended, such that the deferral period will now cover August 2020 to December 2021. The payment of these taxes will start from May 2022 and is inclusive of all taxes paid by the employer.
€152.4 million in income tax has been deferred to the present day, while €77 millions in VAT has also been deferred. Caruana said that the rate of tax payment has steadily declined since September 2020, where businesses were paying approximately €14 million in income tax and €4 million on VAT, and, by February 2021, were only managing to pay 4 million euros income tax and 2 million euros VAT overall.
Businesses with pending tax balances will be given a one-time concession to settle the tax owed to the Government. Additionally, businesses will be exempt from the Capital Gains Tax when selling property to settle the tax owed to the government.
The extension of the scheme will not remove the obligation of beneficiaries to submit documents and returns by the due date as required by law. “Forms need to be submitted so the government continues their administrative work”, Caruana urged. “Penalties will be implemented if the forms are not submitted”.
Caruana termed these new measures “a cushion that will support our banks and finances”.