Investment Aid Tax Credits

Updated: July 30, 2020 | 4 minute read

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The Investment Aid Tax Credits 2014 - 2020 is aimed at sustaining the regional industrial and economic development of Malta by providing the basis of investment support.

Originally launched in 2008, this scheme aims at providing support to the industry in the form of tax credits to beneficiaries based on the level of investment conducted by such companies. The intensity of the tax credits depends on the size of the beneficiary, also taking into consideration related enterprises.

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Eligible Enterprises

Eligible enterprises can benefit from tax credits calculated as a percentage set according to the enterprise seize of the value of investment conducted by the company. The principal beneficiaries are enterprises engaged in:

  • Manufacturing;
  • Information and communication technology;
  • Call center activities;
  • Research and development, and Innovation;
  • Eco-Innovation, waste treatment and environmental solutions;
  • Biotechnology;
  • Facilities for filming and audiovisual productions;
  • Provision of tertiary education in the fields of science and technology;
  • Provision of private healthcare services;
  • Freeport and logistics operations;
  • Hotels, resort hotels, suite/apartment hotels or guest houses;
  • Restoration of works of art and antiques but, excluding restoration of buildings and structures;
  • Knowledge intensive business services;
  • Cultural restoration on works of art and antiques, but excluding immoveable property;
  • Facilities for large scale cultural, creative and trade events; and
  • Packaging on an industrial scale through automation.

Enterprises engaged in the following activities are disqualified from Investment Aid:

  1. Enterprises engaged in the sale of their products by retail;

  2. Non-value adding processes including dividing, sorting, packaging and mixing without changing the character of the good, drying, labelling, or other similar processes or any combination of such processes to goods which are acquired in bulk merely to prepare those goods for sale or distribution, unless such processes are analogous to a manufacturing activity; and

  3. Preparation of food in the course of catering unless carried out as part of a hotel or guest house activity.

Ineligible Enterprises

Companies engaged in the following industries are ineligible for tax credits under this incentive:

  1. Fisheries and aquaculture sector;

  2. Shipbuilding sector;

  3. Coal industry;

  4. Steel industry;

  5. Transport sector;

  6. Synthetic fibres sector; and

  7. Activities linked to the primary production of agricultural products (processing and marketing of agricultural products is eligible).

Benefits and Thresholds

Relative Tax Credit

  Small Medium Large
Applicable aid intensities for project where the ‘start of works’ is on or after 1 July 2014 but before 31 December 2017 35% of eligible cost 25% of eligible cost 15% of eligible cost
Applicable aid intensities for project where the ‘start of works’ is on or after 1 January 2018 but before 31 December 2020 30% of eligible cost 20% of eligible cost 10% of eligible cost

 

Tax credits are computed as a percentage of either the value of capital investment or the value of wages for 24 months covering new jobs created as a result of an investment project.

In the case of large investment projects exceeding €50 million other rates may apply but in any case, no aid is granted for investments exceeding €100 million.

Tax credits which are not utilised during a particular year are carried forward to subsequent years.

Qualifying Investment in Tangible Assets

For the purpose of Investment Aid, qualifying investments in tangible assets include:

  • Investments in land, buildings and structures in relation to industrial property;

  • Investment in machinery and equipment in relation to the project. To be considered as a qualifying expenditure, the asset acquired must be new, except in the case of micro, small and medium-sized enterprises in which case the assets have to be first used in Malta;

  • Assets of an establishment which has closed down or would have otherwise closed down had it not been purchased; and

  • Assets acquired under a lease contract as long as the lease continues for at least five years after the expected date of completion of the investment project for large undertakings, or three years in the case of micro, small and medium size enterprises, and where the lease is in the form of a finance lease and contains an obligation for the undertaking to purchase the asset upon expiry of the lease term.

Any investment on which a tax credit has been granted shall be retained by the beneficiary for at least five years, or three years if the beneficiary is a micro, small or medium-sized enterprise.

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