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What to take from the Budget 2013?


Income Tax

In this year’s budget speech, the Finance Minister announced a number of tax measures, including a new transitory tax bracket designed to gradually reduce the income tax burden on income in the top tax bracket, under €60,000 per annum to 25% over three years; starting with 32% in the first year, 29% in the second and 25% in the third.

Cost of living Adjustment (COLA)

The cost of living adjustment (COLA) for 2013 has been announced at €4.08 per week.

Immovable Property

An extension of the current 7 year period during which a person selling immovable propery may opt between paying tax on the capital gains or the 12% final withholding tax is to be extended to 12 years as from 2013.

Tax incentives for the restoration of property

Tax credits equal to 20%, up to a maximum of €200,00, of expenditure for the restoration and development of property in zones outside of urban conservation areas.

Investment

Licensed hotels will benefit from investment aid on 15% of capital expenditure in the form of tax credits (no capping). Also a scheme of incentives to foster the increase of boutique hotels in Valletta, Mdina and the Three Cities including tax deductions on investments related to the purchas and development of these sites. €30,000 tax deduction to existing enteprises in relation to seed capital investment in a new enterprise approved the Malta Enterprise Corporation.

Duty on Documents and Transfers

A reduced rate of stamp duty of 2% upon the purchase of property outside of urban conservation areas, for the purpose of restoration and developement. a revision of the administrative practice of property valutation, including facilitating measures when it comes to home loans from banks and the valuation fo property for duty and tax purposes. As from 1 January 2013 duy upon the transfer fo immovable property by inheritance or donation between parents and their children shall be removed. A 3.5% duty ceiling for the purchase of any immovable property or any real right over such property for the purpose of estbalishing therin or constructiong theoreon one’s sole, ordinary residence will be raised from €116,468.67 to €150,000.

VAT

VAT exemption on diesel purchased by fishermen for the purposes of fishing to be extended to 2013. A similar scheme for farmers is also to be set up. A VAT refund on the purchase of sport equipment for personal use.

Excise Duty

Increases: 2c per litre on fuels; 6% on cigarettes; 8% on tobacco; €5 per tonne on cement.

Motor Vehicle Registration Tax

Up to 30% reduction for EURO standard V vehicles, increase of 12.5% for Euro Standard IV vehicles, 12.5% reduction for N1 commercial vehicles. Motorcycles under 250cc and classic cars aged 50years or over to be exempt from tax.