Investment Aid 2021

Deloitte Malta Tax Alert

26 January 2021

The Malta Enterprise has issued the Investment Aid Guidelines 2021 (the ‘Guidelines’) on the Investment Aid 2021 scheme (the ‘Scheme’). The Scheme is applicable from 1 January 2021 until 31st December 2021.

Eligible undertakings carrying on a qualifying economic activity may be awarded aid under the Scheme in the form of a tax credit and/or a cash grant equivalent to a percentage of qualifying expenditure incurred on an eligible investment project.

Qualifying expenditure refers to the acquisition of qualifying tangible and intangible assets required for the implementation of an eligible Initial Investment Project, or the estimated wage costs arising from job creation as a result of an initial investment. Qualifying tangible assets consist of land, buildings (including fittings and furnishings), plant, machinery and equipment. Qualifying intangible assets, such as patents, licences, know-how or other intellectual property, shall only be considered if they are used exclusively in the undertaking receiving the aid, regarded as amortisable assets, and are purchased under market conditions from third parties unrelated to the buyer.

With respect to SMEs, the Initial Investment Project in tangible and intangible assets shall result in:

a) the setting-up of a new establishment;

b) the extension of the capacity of an existing establishment;

c) a fundamental change in the overall production process of an existing establishment;

d) a diversification of the output of an establishment into products not previously produced in the establishment; or

e) the acquisition of assets belonging to an establishment that has closed or would have closed had it not been purchased, and is bought by an investor unrelated to the seller.

Aid under the Scheme shall be awarded to large enterprises in relation to initial investments in favour of a new economic activity/activities.

Eligible investment projects may only be awarded aid in respect of projects commencing after 31st December 2021 but in no case later than 31st December 2023, if the commencement of work was delayed due to factors outside the control of the beneficiary, provided an application for assistance is submitted and approved during the validity of the scheme, which in no case shall be later than 31st December 2021.

In order to benefit from the Scheme, an application must be submitted for each investment project. The application shall be required to determine that the project is eligible within the parameters established in these Guidelines and should be submitted on the appropriate application form. The new application form will be made available in the coming weeks.

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