Malta Budget 2016

Perspectives

Income tax measures

Malta Budget 2016

Reduction in personal income tax rates

The Minister has announced a reduction in personal income tax by increasing the income on which no tax is payable from €8,500 to €9,100 (single computation), from €11,900 to €12,700 (married computation) and from €9,800 to €10,500 (parental computation).

Furthermore, through a change in the way an individual’s tax charge is computed, individuals with an annual income of up to €19,500 will save €90 tax per year (single computation), individuals with an annual income of up to €28,700 will save €120 tax per year (joint computation), and individuals with an annual income of up to €21,200 will save €105 tax per year (parental computation).

A couple opting for a joint declaration and who earn up to €28,700 will save €120 tax per year, while a couple opting for a separate computation will save up to €180 tax per year.

2016 Rates Single Computation Deduction
0% 0 - 9,100 0
15% 9,101 - 14,500 1,365
25% 14,501 - 19,500 2,815
25% 19,501 - 60,000 2,725
35% 60,001 + 8,725

 

2016 Rates Joint Computation Deduction
0% 0 - 12,700 0
15% 12,701 - 21,200 1,905
25% 21,201 - 28,700 4,025
25% 28,701 - 60,000 3,905
35% 60,001 + 9,905

 

2016 Rates Parental Computation Deduction
0% 0 - 10,500 0
15% 10,501 - 15,800 1,575
25% 15,801 - 21,200 3,155
25% 21,201 - 60,000 3,050
35% 60,001 + 9,050

 

 

Income tax on sports activities

The optional flat income tax rate of 7.5% chargeable on income derived by qualifying football or waterpolo players will be extended to players of other sports and will now also include income derived by sports coaches.

Incentive for research and innovation

In order to encourage more research and innovation, enterprises that employ persons holding a doctorate or who are studying for a doctorate in science, information technology, or engineering shall be entitled to a tax credit of up to a maximum of €10,000 when the employment of such persons is retained for a minimum of 12 months.

Donations to the Community Chest Fund

Companies that donate a sum of not less than €2,000 to the Community Chest Fund during 2015 will be entitled to a tax deduction equivalent to the amount donated.

Donations to the arts

In order to encourage donations to the arts, a tax deduction equivalent to 150% of the amount donated shall be introduced.

Tax on income earned by police officers

With effect from 1 January 2016, any income earned by police officers from the carrying out of ‘extra duties’ for organisations, individuals, and companies will be chargeable to tax as separate income and subject to a reduced rate of tax of 15%.

Fiscal consolidation

As a measure to facilitate the computation of taxable income, a fiscal consolidation regime will be introduced whereby companies under common ownership will be eligible to submit one consolidated income tax return.

Tax deduction on hybrid/electric vehicles

Businesses that buy hybrid or electric vehicles may avail themselves, in the year in which such vehicle is bought, of a tax deduction amounting to 50% of the cost of the vehicle.

NEXT : Incentives to industry

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Malta Budget 2016 Summary contents.

 

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