Factsheet for measure
MT-2020-24/937
–
Updated
– measures in Malta
Microinvest Cash Conversion
Background information
Microinvest is a scheme that was in existence prior to COVID-19. It "encourages undertakings (including start-ups, family businesses and self-employed) to invest in their business, so as to innovate, expand and develop their operations. Undertakings benefiting from this measure will be supported through a tax credit calculated as a percentage of eligible expenditure and wages costs." In order to be eligible for this scheme (since January 2018), applicants must have employed at least one person (full or part time), must not have employed more than 50 full time employees and their turnover did not exceed €10 million in the previous fiscal year.
In view of COVID-19 and the impact it has had upon organisations' cash flows, Government announced that a percentage of these tax credits would be converted into grants.
The updating of this scheme is in line with scheme's documentation that was issued prior to COVID-19 which states that "Malta Enterprise Corporation may issue and publish updates to the official Incentive Guidelines covering this aid scheme in terms of Article 8 (3)(a) of the Malta Enterprise Act, Chapter 463 of the Laws of Malta. The Tax Credits for Micro Enterprises and Self-Employed Regulations as subsidiary legislation 463.09 to the Malta Enterprise Act, forms the national legal basis of this aid scheme."
Content of measure
The measure aims to provide support to those who invested in 2019 in their organisation and benefited from Malta Enterprise’s tax credit scheme, Microinvest. Instead of solely providing tax credits, 30% of these will be converted into grants, thus providing a grant of up to €2,000 for any business. Furthermore, organisations in Gozo, family-run businesses, and those run by female entrepreneurs will receive a grant of €2,500. Costs covered by this scheme include refurbishment and upgrading of offices & factories, and investment in machinery and other assets. In total this measure will provide around €5 million to small and medium enterprises in our country.
Full guidelines and applications for this scheme are yet to be published.
Updates
The following updates to this measure have been made after it came into effect.
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06 December 2022
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It was announced that the eligibility of the wider Microinvest scheme had been extended and that organisations that invest in making their computer systems and websites more accessible to clients with a disability could apply for a tax credit equivalent to 45% of the expenditure
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24 October 2022
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During the 2023 Budget speech, it was announced that the Microinvest scheme would be extended to social Enterprises. Whilst details remain limited, it was stated that social enterprises may be eligible for a tax credit of up to €70,000 over 3 years.
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01 October 2021
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Malta Enterprise provided clarifications as to the additional costs enterprises can claim under the Microinvest scheme, these included costs for attaining certification (including SO 14001 Environmental Management System, and ISO 50001 Energy Management), refurbishment costs for certain institutions (including schools, hospitals and care homes), the purchase of a hybrid or electric vehicle for passenger transport, and the replacement of old appliances with ones which are more environmentally friendly, amongst others.
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27 April 2021
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An extension of the period by which tax credits already awarded could be used by was announced. Tax certificates due for expiry in 2021, 2022 and 2023 will be extended by 3 years respectively i.e. 2024, 2025, 2026. This is expected to provide an injection of €78.4 million to 8,861 businesses.
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Use of measure
During a 5 August 2021 press conference on the Microinvest scheme, Malta Enterprise CEO Kurt Farrugia stated that since January 2019, €84 million was provided to businesses through this scheme.
During a December 2022 press conference, it was announced that the Microinvest scheme received 3,852 applications in 2021, and €35 million was invested through this scheme that year.
Target groups
Actors and funding
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Actors
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Funding
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National government
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National funds
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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Consulted
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Consulted
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Form
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Direct consultation outside a formal body
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Direct consultation outside a formal body
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Social partners' role in the
implementation, monitoring and assessment phase:
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No involvement
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Main level of involvement: Unknown
Involvement
Through a tripartite agreement, a package of measures to save jobs and organisations was agreed on 24 March 2020. This was the third and most significant package of measures announced by the government. Following this agreement, social partners remained in direct contact with the government highlighting their proposals of what was felt was still necessary to save the Maltese economy and jobs. In view of this, on the 8 June 2020, the government announced a 'mini budget' to help the Maltese economy to recover from the effects of the COVID-19 pandemic. This was the fourth package of measures announced by the government. The current measure formed part of this package. The measure is administered by the Malta Enterprise.
Views and reactions
The fourth package of measures, of which the current measure is part of, received public support from an array of social partners. Those positive and vocal about it were primarily business associations, including the Chamber of Commerce, the Chamber of SMEs, the Malta Employers' Association, the Malta Hotels and Restaurants Association, and the Association of Catering Establishments. Also, the General Workers' Union supported the package. The feedback on the overall package from unions was more mixed; The Union Ħaddiema Magħqudin (UHM) Voice of the Workers argued that only 6% of €900 million mini-budget will end up benefiting workers directly.
In May 2021, the Malta Chamber, an Employers' Association, highlighted that the extension of the Tax Credit Certificates, issued through the Microinvest Scheme until 2026, was a positive step because it allowed organisations to use pre-pandemic tax credits that cannot be availed of before businesses become profitable again.
In September 2021, the Malta Chamber of SMEs suggested changes to this scheme, while also highlighting its importance. It was suggested that 50% of the tax credit should be convertible to a grant of up to €5,000, that the duration to use the tax credit should be extended from three to give year, and that the current incentive capping should be increased by €20,000.
Sources
