New wage supplement scheme will be tiered according to business losses

The government’s new wage supplement scheme will be tiered according to how much losses businesses have faced as a result of Covid-19.

In a press conference on Tuesday, Minister for Energy and Enterprise Miriam Dalli and Malta Enterprise CEO Kurt Farrugia said that the assistance will be based on VAT returns as compared to the same period in 2019.

On 25^th March 2020, the government announced a wage supplement scheme which was launched in order to aid businesses which felt the economic effects of Covid-19.

Now, a revised wage supplement scheme, based on VAT returns, has been introduced.

The system will replace the fixed Annex-system, where different businesses were classified in different annexes according to their VAT number, with different annexes being eligible for different amounts of wage supplement.

“It is aiming for those which got hit worst by the pandemic. With today’s scheme we would like to sustain today’s enterprises,” Minister Dalli said

The new scheme will aid businesses as follows:

·        Those that had a drop in sales of 55% or greater will take the full wage supplement, ie. €800

• 45% to 54% drop: €640
• 35% to 44% drop: €480
• 25% to 34% drop: €320
• 25% to 10% drop: €160

Dalli announced that businesses which have performed better or suffered a loss of sales of less than 9% will no longer be eligible for the wage supplement, irrespective of what industry they are in.

“This is to have a fairer distribution of the wage supplement, so that those who really need it can be helped,” Dalli remarked.

The Chief Executive Officer of the Malta Enterprise Kurt Farrugia said that a comparison took place where businesses’ VAT returns were compared to the year prior to the pandemic.

“We looked at the VAT returns on a monthly, quarterly and yearly basis. A comparison took place where the March to October VAT returns were compared to the previous returns in the previous year. That way we could see the effect of the pandemic on businesses.”

Businesses which had to close down will receive wage supplement at full rate.

Farrugia also said that those which are VAT exempt will be following the previous wage supplement scheme.

“There is a category of businesses which are VAT exempt, so it is hard to compare. This will stay in the annex A, B and C since there is no basis to compare.”

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Photos: Giuseppe Attard