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Investment Aid Tax Credit

01.12.2014

The Incentive Guidelines for Investment Tax Credits covering the period from 1st July 2014 to 31st December 2020 has just been launched by Malta Enterprise. This incentive 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 its beneficiaries based on the level of investment conducted by such companies. The intensity of the tax credits depends on the size of the beneficiary, taking into consideration also related enterprises.

Eligibile Enterprises to the Investment Aid Tax Credit

Eligible enterprises can benefit from tax credits calculated as a percentage of the value which is set according to the enterprise size. The principle beneficiaries are enterprises engaged in:

  • Manufacturing;
  • Information and Communication Technology;
  • Research and Development, and Innovation;
  • Eco-Innovation, waste treatment and environmental solutions;
  • Biotechnology;
  • Facilities for Filming and Audio-visual productions;
  • Provision of Tertiary Education in the fields of ‘science and technology’;
  • Provision of private health care services;
  • Logistics operations by large undertaking;
  • Restoration of works of art and antiques but excludes restoration of buildings and structures;
  • 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:

  • Sale by retail;
  • 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
  • The preparation of food in the course of catering unless carried out as part of a hotel or guest house activity.

Ineligible enterprises to the Investment Aid Tax Credit

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

  • The fisheries and aquaculture sector;
  • The shipbuilding sector;
  • The coal industry;
  • The steel industry;
  • The transport sector;
  • The synthetic fibres sector; and
  • Activities linked to the primary production of agricultural products (processing and marketing of agricultural products is eligible).

Benefits and Thresholds

  • Small
  • Medium
  • Large
  • For Any Eligible Cost
  • 35% of the eligible cost
  • 25% of the eligible cost
  • 15% of the 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, investment aid shall never exceed 15% of the eligible investment for the part in excess of €50 million and 10.2% of the investment for the part exceeding €100 million.

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

Additional Rules for an expense to be considered qualifying for Investment Aid

To be considered qualifying expenditure the asset acquired shall be new, except in the case of micro, small and medium-sized enterprises and in the acquisition of an establishment.

Costs related to the lease of tangible assets as may be considered a qualifying expenditure if:

  • 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, medium-sized undertakings, for land and buildings; and
  • For plant and machinery, the lease must be in the form of finance lease and must contain 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.

An undertaking wishing to avail itself from the benefits of these regulations shall finance at least 25% of the project through its own resources or from external resources free from public support.

How we can assist

Nexia BT can assist you in the application process in relation to both schemes mentioned above. In addition, we can also provide you with advisory services in order to successfully obtain funding for your business investment and other tax benefits.

For further information please contact:
Karl Cini | Partner | karl.cini@nexiabt.com

Antoinette Scerri | Senior Manager | antoinette.scerri@nexiabt.com

Stephanie Bianco | Assistant Manager | stephanie.bianco@nexiabt.com

Click here to download Investment Aid Tax Credit.