State Government Incentives

Malta Enterprise is enabled by the Malta Enterprise Act (ME Act) to support the development of enterprise in Malta. Malta Enterprise has developed a new set of incentives for the promotion and expansion of businesses, covering a range of sectors and activities.

Malta Enterprise provides incentives for foreign direct investors and local enterprises demonstrating commitment towards growth and increase in value added and employment. Enterprises engaged in manufacturing, ICT development activities, Call Centres, Pharmaceuticals, Biotechnology, Filming and Audiovisual, among others, may benefit from these incentives.

The incentives available under the ME Act may be subdivided into six (6) separate themes, namely:

Investment Aid

The Investment Aid Regulations include tax incentives which are aimed to stimulate investment and job creation by attracting new investment projects and promoting the expansion or diversification of existing enterprises into certain targeted fields of business defined in these regulations as 'qualifying activities' The regulations provide an exhaustive list of activities, which may be eligible to receive tax incentives. In general, qualifying activities are those related to:

  • Manufacturing
  • Information and Communications Technology (I.C.T.),
  • Research and development and innovative start-ups
  • Eco-innovations, waste treatment and environmental solutions
  • Biotechnology
  • The provision of facilities directly required in the development or production of feature films
  • Science and technology private tertiary educational services
  • Private health-care services
  • Logistics services
  • Activities set out in Article 11 of the Malta Free ports Act

In general, the tax incentives under these regulations take the form of an investment tax credit. The regulations provide two bases over which the tax credit may be calculated. The tax credit may be calculated either as:

  • A percentage of the capital expenditure on the qualifying activity; or
  • A percentage of the wage costs for wages paid in connection with the jobs created as a result of the qualifying project.

The amount of credit varies in accordance with the size of the undertaking and is capped at the percentages prescribed in the Incentive Guidelines. Further, given that the regulations do not impose any conditions on the choice of basis over which the tax credit may be calculated, this implies that an undertaking is free to use the most favourable basis to maximise its tax credit.

SME Development

This incentive may be provided to support Small and Medium– sized Enterprises to help them develop and diversify their activities, penetrate new markets, increase competitiveness, develop new products and services, and consolidate their existing market share.

Through this incentive eligible enterprises may be provided with part financing for their first time participation in trade fairs, and subcontracting external experts in relation to new development projects.

Through this incentive ME will cover up to 50% of the total eligible costs. The total aid received by one enterprise may not exceed €10,000 in one calendar year.

Small Business and Self-employed

The 2010 budget has provided fiscal benefits to small businesses and the self employed in order to encourage them to invest, expand and increase their efficiency.

Self- employed persons and small businesses employing up to a maximum of 10 persons, and sole traders, making an investment, will be granted a tax credit of 40%, limited to Euro 25,000.

The said credit will be given to those making an investment in the coming two years and who:

  • Arrange their shop or facility
  • Invest in machinery, technology, apparatus or instruments enhancing their operations, such as systems helping to save energy or producing alternative energy
  • Invest in order to comply with health, safety, environment and physical access regulations
  • Create new jobs or recruit apprentices after 10 November 2009.

The said tax credits are increased to 60% for those who carry out these investments in Malta's sister island, Gozo.

Furthermore an incentive will be offered to those incurring expenses to increase workplace accessibility to new employees suffering from a disability.

Enterprise Support

This involves assistance to businesses to support them in developing their international competitiveness, improving their capabilities and networking with other businesses.

Different scheme are available according company's activity and project:

  • Business Advisory Services
  • Trade Promotion
  • ERDF International Competitiveness Grant Scheme
  • ERDF Energy Grant Scheme
  • Network Support: Business & Development Networks
  • Business Development Scheme

R&D and Innovation Programmes

The Legal Notice entitled Assistance for Research and Development and Innovation and Regulations, 2009, issued under the Malta Enterprise Act, provide the legal basis of this incentive.

Incentives are offered to stimulate innovative enterprises to engage in research & development. These include:

  • Research and Development Tax Credits
  • European Regional Development Fund Research and Development Grant
  • EUREKA Projects Grant Scheme
  • Preparatory Technical Feasibility Studies Scheme
  • Loan of Highly Qualified Personnel
  • Innovative Clusters and Collaborations

The total aid for any project may not exceed Euro 350,000 over a period of 5 years. The undertaking receiving assistance shall be a legal entity in charge of managing the participation and access to the cluster's premises, facilities and activities.

Access to Finance

Maltese law provides for three types of financing under the Business Promotion Act. The three instruments, administered by Malta Enterprise, are: loan guarantees; soft loans and interest rate subsidies.

Loan Guarantees provide eligible businesses with the finance necessary for the acquisition of capital assets, to help with either their production or their supply of services. The maximum loan guarantee is 75% of the loan requirement - as stated in Article 10 of the Business Promotion Regulations.

A Soft Loan is a loan offered at low interest and is available for purposes specified in the Business Promotion Act. The maximum soft loan available is 75% of the loan requirement as stipulated in Article 8 of the Business Promotion Regulations.

Loan Interest Rate Subsidies aim to increase the competitiveness and innovative capacity of eligible enterprises. The subsidies support capital assets, leading to a more effective and efficient production and supply of service, and are offered under Article 9 of the Business Promotion Regulations.

Employment and Training (ETC Incentives)

The Employment & Training Corporation administers these incentives:

  • Enterprises are supported in recruiting new employees and training their staff.
  • Tax Credits are available to support enterprises financing the studies of employees at a post-graduate level and also to individuals who embark on such personal development on their own initiative. Further tax credits support the employment of additional employees holding an approved qualification (2nd degree, higher or equivalent) in a relevant role.
  • 17.5 % Tax Credits additional to standard deductions on tuition costs and wages of employees having their studies financed by the enterprise.
  • The company's share of the employee's social security contribution for the first 36 months of employment when recruiting additional highly qualified employees holding approved qualifications in a relevant post.

Within these thematic groups, there are more than 20 new incentives designed to support enterprises. These will aid enterprises to expand their business, invest in research & development, innovate their processes, tap into EU Funds, develop their international competitiveness potential, and to network with other enterprises.

Other Incentives

The Malta Enterprise Corporation is to offer the following new incentives to encourage foreign direct investment towards Malta:

  • An incentive for foreign investors already operating in Malta to increase the scope of their existing operations to such areas as legal, financial, back office, logistical, research and development, marketing and sales, and prototyping services
  • An incentive to attract new foreign companies to set up shared services centres in areas such as call centres, software development, digital gaming, human resources, accounts and finance management, market research and internet publication;
  • Fiscal benefits for qualifying costs spent on interactive digital media products and qualifying costs spent on sound recording houses, including costs incurred to bring productions to Malta.

Protection of Intellectual and Industrial Property

Copyright

Copyright is protected in Malta by the Copyright Act 2000 (CAP 415). "To make new provision in respect of copyright and neighbouring rights and certain "sui generis" intellectual property rights in substitution of the provisions of the Copyright Act, Cap. 196."

Trademarks

Trademarks may comprise shapes of goods or their packaging, letters, words, figurative elements etc (Trade marks Act, 2000). The Maltese Trademarks Act does not allow multi-class applications and a separate application must be filed for the same trademark under each separate class of goods/services. Under Maltese law, trademarks are registered for a period of ten (10) years and are renewable for consecutive periods of ten (10) years. For registration to be made in Malta, a trademark must be:

  • A sign capable of being represented graphically; and
  • A sign capable of distinguishing goods or services of one undertaking from those of other undertakings.

Patent

The Patents Act regulates the registration and protection of patents on a national level in Malta. This Act is based on European guidelines and has updated Malta's previous legislation that regulated this field.

The term of a patent shall be 20 years from the date of filing of the application (20 years is the norm in most countries). The maintenance of a patent is subject to a maintenance fee, which is due after the third year and each year subsequently.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.