Monthly Archives: September 2021

Issue date: 9^th September 2021

Incentive applicable as from 13^th September 2021

Applications to be submitted by 31^st October 2023

OVERVIEW

This measure is designed to support undertakings engage in plans aiming to :

• Launching new products or entering a new geographical market;

• Addressing environmental concerns and digitise processes;

• Undertakings may be supported through a soft loan covering part of the funding requirements of up to Eur1M (million).

WHO IS ELIGIBLE?

• Must be a limited liability company registered with the Malta Business Register and engaged in a manufacturing or service activity;

• The applicant company should have no dues related to VAT, Income Tax and Social Security;

• The applicant company must not be engaged in activities specifically excluded under the de minimis regulation;

• The applicant company must have at lease one (1) full time employee registered with Jobsplus, who is resident and pays income tax in Malta;

• The applicant company must not be subject to collective insolvency proceedings, nor fulfils the criteria under domestic law for being placed in collective insolvency proceedings at the request of its creditors;

• In the case of large undertakings, the beneficiary shall be in a situation comparable to a credit rating of at least B.

THE INCENTIVE

• Implementation period of the projects must not be longer than 18 months;

• The loan may cover up to seventy-five percent (75%) of costs related to the proposed project including the procurement of assets, wage costs, knowhow and other non-recurring costs;

• The loan shall, by way of collateral, be secured by a special hypothec covering at least fifty percent (50%) of the loan amount;

• The loan shall not exceed:
  • One million euro (€1 million) (or five hundred thousand euro (€500,000) for undertaking performing road freight transport and must be repaid over a five (5) year period.)
  • Five hundred thousand euro (€500,000) (or two hundred fifty thousand (€250,000) for undertakings performing road freight transport) and must be repaid over a ten (10) year period.

• Fixed interest rate charged by the Corporations shall not be lower than 0.5% per annum and which shall be established after considering the project and the current European Central bank reference rate;

• The Corporation may also agree to a moratorium of not more than 24 months;

•  Loans issued in line with the above terms shall be considered to have a gross grant equivalent of two hundred thousand euro (€200,000) (or one hundred euro (€100,000) for undertakings performing road freight transport). If the loan is for less than the amounts indicated in Section 1 and 2 above, and/or is granted for a period of less than five years or ten years as applicable, the gross grant equivalent of that loan shall be calculated as a corresponding proportion of the relevant de minimis ceiling;

• The amount not covered by the loan issued by the Corporation, must be financed through a loan issued through a commercial bank and/or through reserves of the undertaking (or other funds considered to be the undertaking’s own funds) which shall be specifically allocated to the project and deposited with a Commercial Bank;

• Drawdowns from the loan provided by the Corporation shall be effected pari passu with the drawdowns made for the loan issued through the Commercial Bank and/or the utilisation of the reserves of the undertaking specifically allocated to the project and deposited with a Commercial Bank;

APPLICATION PROCESS

• Applications must be submitted prior to the commencement of the project;

• The application form and other additional documentation required may be downloaded from the Corporation’s website and must be submitted through the Corporation’s client portal. First time applicants will be required to register on the client portal before they can submit their application. In addition to the application, the following documents must be submitted:
  • Business plan / Project Plan;
  • Detail on how the portion not financed by Malta Enterprise shall be financed;
  • Audited Accounts for the previous two years unless the undertaking has been established for less than 3 years;.
  • Audited consolidated accounts if available;
  • Details of Directors and Shareholders – Provide details of every Director and Shareholder and a profile of every Director holding 20% or more control in the applicant Enterprise;
  •  A duly completed and signed de minimis declaration form;
  • Applicant may be required to deliver a presentation to further explain their project and projections.

For further information kindly contact us on [email protected]

Eligibility

The scheme is open to all undertakings.

Applications are accepted if all the below criteria are satisfied:

• In the year when the costs were incurred, the undertaking did not employ more than 50 full time employees. Verifications are done with Jobsplus.

• In the fiscal year preceding the year when the application is submitted, the turnover or annual balance sheet total of the applicant did not exceed €10 million.

• At the date of application, the undertaking must at least employ 1 person on a full time or part time basis. Being registered as self-employed with Jobplus is considered to be sufficient to meet this condition.

• Unless exempted, the undertaking should be registered for VAT.

Incentive

A tax credit of 45% of the eligible expenditure is approved to the undertaking. An additional 20% is approved if the beneficiary operates from Gozo.

The maximum tax credits awarded to each undertaking is capped at €50,000 over a period of 5 consecutive fiscal years. The capping is increased by €20,000 for undertakings that: operate from Gozo; registered as Family Business, having more than 50% of ownership attributed to female persons.

The Micro Invest incentive scheme falls under the de minimis regulations.

Eligible costs

Increase in wage costs

An eligible undertaking may apply for a tax credit on an increase in wage costs that exceed 3%, calculated by deducting from wage costs incurred in the relevant fiscal year, the highest annual wage cost incurred in the preceding two (2) fiscal years.

Furbishing and refurbishing of Business Premises

Costs incurred for material and services procured from a third party to carry out furbishing, refurbishing and upgrading (including extension and modifications) of Business Premises.

When the works are carried out by the undertaking itself or its employees, the undertaking can apply for the purchase of material if it provides photographic evidence of the works carried out.

For works incurred in 2021, Malta Enterprise will only approve costs incurred on business premises covered by one of the following Planning Authority licences:

CLASS 3A – Guest Houses, Palazzini, Boutique Tourism

CLASS 3B – Hotels

CLASS 3C – Assembly and Leisure

CLASS 4A – Financial, Professional and Other Offices

CLASS 4B – Retail

CLASS 4C – Food and Drink Establishments where no cooking is allowed

CLASS 4D – Food and Drink Establishments where cooking is allowed

CLASS 5A – Light Industry

CLASS 5B – General Industry

CLASS 5C – Specialised Industry

Applications for refurbishment of short-term accommodation facilities is only supported if the premises is covered by a valid permit issued by the Malta Tourism Authority.

Investment costs

• Acquiring new (or first time used in Malta) machinery, technology, apparatus and instruments.
• Systems intended to produce alternative energy or improve energy efficiency unless receiving other state aid support (including non-market based feed in tariffs).
• Tangible and intangible assets required for digitisation of the business operation. Eligible costs may include:
  • Computer hardware
  • Development costs for new software systems, websites and digital applications. In these cases the undertaking must submit the agreement with the supplier specifying the parameters and functionality of the systems/website/application being developed. Maintenance costs are not eligible.
  • Costs incurred in relation to the undertaking’s websites developments, updates and enhancement. In these cases the undertaking must submit documentation specifying the additional functionality being acquired indicating the cost of such development. Applicants must submit an agreement with the supplier specifying the parameters and functionality of the systems/website/application being developed and agreed upon prior the start of the development.

Motor Vehicles costs

Undertakings may claim on purchase of any commercial vehicle which is new or first time registered in Malta, having a European Emission Standard rating of at least Euro 5. If an undertaking had not claimed the cost of commercial vehicles in 2019 and 2020,  it may in 2021 claim the cost of 1 commercial vehicle which is new or first registered in Malta even if such vehicle does not comply with the Euro 5 standard.

The commercial vehicle should be:

• involved in the carrying of goods (category N1, N2 or N3 motor vehicle);

or

•  Special Purpose Motor Vehicles – any vehicle that is designed specifically to support or enable an economic activity.

or

• any vehicle that is designed specifically for the carriage of ten (10) or more persons.

Certification Costs

An undertaking can claim costs incurred in 2021 to attain certifications relevant to its business. This includes the advisory provided by unrelated parties and the actual certification costs. The certifications shall result in the attainment or the extension (if applicable) of any of the following certifications:

i. CE Markings

ii. ISO 9001 Quality Management Systems

iii. ISO 14001 Environmental Management System

iv. ISO 50001 Energy Management

v. ISO 22000 Food Safety Management

vi. HACCP

Important documentation

Tax invoice OR Fiscal receipt.

Application deadlines for cost incurred in 2021

	Primary deadline	Late submissions deadline
Self-employed	23rd March 2022	14th December 2022
Companies	25th May 2022	14th December 2022

Tax certificates validity

Tax credits awarded in 2022 may be utlised up to YA 2025. In all other cases, unless extended through other provisions, the tax credit may be utilised by the third year of assessment commencing from that specified on the Incentive Entitlement Certificate.

With regards to start-ups, unless extended through other provisions, the tax credit must be utilised by the fifth year of assessment commencing from that specified on the Incentive Entitlement Certificate.

Subject to other specific provisions, a start-up is defined as an undertaking that has been established for less than four (4) years as determined from date of registration with the Malta Financial Services Authority (MFSA) or the date the person registered with Jobsplus as self-employed.

Extension of previous years tax credit certificates

Due to COVID implications, those beneficiaries that have unutilised tax credits certificates that expire in YA 2021-2023, can request Malta Enterprise to extend the certificates to YA 2024-2026.