Background information

The scheme aims to encourage undertakings (including start-ups, family businesses, and self-employed) to invest in their business, to innovate, expand, and develop their operations. Beneficiaries are selected following the submission of an official application with all the requested supporting documentation. Eligible applicants will be given a certificate that enables them to benefit from a tax credit.

Content of measure

The scheme is available for companies that during the year in which the costs were incurred, the undertaking did not employ more than fifty (50) full time employees (but have at least one employee) and whose annual turnover does not exceed €10 million. Applicants must be duly registered with the VAT department (unless exempted) and must not be engaged in activities specifically excluded under the regulations.

Eligible costs under the scheme include an increase in wage costs; furbishing and refurbishing of business premises; investment costs; and motor vehicles costs.

Successful applications are awarded a tax credit representing a percentage of the eligible expenditure and wages of newly recruited employees. A tax credit equivalent to 45% of the eligible expenditure may be approved for companies operating from Malta while a higher tax credit of 65% may be approved for companies operating from Gozo. The tax credit is capped at a maximum of €50,000 over three consecutive years. There is a higher capping set at €70,000 for companies established in Gozo and female-owned companies. The scheme was first implemented in 2011 and the current version was revised during the 2018 budget. The 2018 revision of this scheme increased assistance from €30,000 to €50,000 and now enterprises with 50 employees instead of 30 are eligible to apply. Since 2018 there was only a minor amendment to this scheme, this change allows applicants to claim more than one vehicle as long as the vehicle complies to the latest European emission standards.

This scheme has been successful in helping thousands of companies get access to financial assistance meant to contribute to their performance and growth. Considering that the large majority of enterprises in Malta employ fewer than 10 people, this scheme targets a very important employment sector in Malta. Besides, it facilitates entrepreneurship in a country which does not have a strong entrepreneurial culture. The extra financial assistance provided to companies operating from the island of Gozo is especially useful, since Gozo suffers from double insularity, and companies in Gozo tend to experience greater financial burdens. Besides, the extra assistance given to female entrepreneurs is also important as entrepreneurship is particularly low among women.

The main weakness of this scheme is its potential deadweight. Not all companies might need financial assistance from the government. However, these end up receiving the same benefits as companies with greater needs.

Use of measure

It was revealed in Parliament (through Parliamentary Question 22403 from 8 August 2016) that 897 and 1,193 companies benefited from this scheme in 2014 and 2015 respectively. The total number of beneficiaries from January 2014 to October 2017 was 4,695 (Parliamentary Question 1242 from 2 October 2017). Besides, in 2016 there were 1,538 applications for costs incurred in 2015, while in 2017 there were 2,026 applications for costs incurred in 2016 (data derives from private correspondence with Malta Enterprise). The financial assistance provided in 2014 amounted to €5,736,658, while in 2015 the assistance provided amounted to €9,285,657. The latest supplied figures show that in 2018 there were 2,377 applications, followed by 2,934 in 2019, these figures indicate that this scheme has gradually increased in popularity from year to year. Applications for 2020 are still being processed.

Examples: The enterprise Medical Plaza Pharmacy and Perfumery benefited from the Micro Invest scheme to set up a state of the art photovoltaic system which produces around 15,000kWh units per year. According to its managing director, 'Payback and return on investment have proved to be extremely attractive as I envisage a net return on investment of 30% when taking the tax credits into account, and effectively I will be saving 75% of my capital in due course. Apart from reducing my electricity bills, I also feel that I am doing my part in reducing the number of harmful gases being emitted into the atmosphere'.

Target groups

Workers	Businesses	Citizens
Employees in standard employment	SMEs	Does not apply to citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	No involvement
Form	Not applicable	Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Unknown

Involvement

Unknown

Views and reactions

Employer associations had expressed support for this scheme. For example, in 2013, the Malta Chamber for Small and Medium Enterprise (GRTU) pressured the government to reactivate the scheme which had been stopped after the general elections. When the government acceded to such demands and the scheme was announced in Parliament, this was welcomed by various social partners, including the GRTU and the Malta Employers’ Association (MEA).

Opinions from trade unios are unknown.

Sources

• 24 March 2011: Renewable energy solution facilitated by tax credit scheme (www.maltatoday.com.mt)
• 22 February 2016: Parliamentary Question 22403 on Incentive Schemes for SMEs (pq.gov.mt)
• 25 May 2017: Pro-business with a vision (timesofmalta.com)
• 05 November 2017: Gozo has the potential to become a clean energy island – Miriam Dalli (www.independent.com.mt)
• 09 October 2018: Malta Budget Speech 2018 (mfin.gov.mt)
• 06 September 2021: Micro Invest (maltaenterprise.com)