Up to 28,000 small businesses could benefit from a new government investment scheme that would see their taxes slashed by €25,000 each over the next few years.
The Microinvest tax credit scheme will allow self-employed and businesses with less than 10 workers to receive a tax refund on expenses made to improve their operations or taking on new employees.
Businesses in Malta will benefit from a 40 per cent refund through tax credits that will increase to 60 per cent for Gozitan entrepreneurs.
"The small businesses' sector has potential to generate employment," Finance Minister Tonio Fenech said, adding that the government was committed to generating more jobs.
According to an EU survey released this week, there were 7,588 registered unemployed last November. The number could grow further this year before stabilising in 2011. Yet, Malta's unemployment rate of seven per cent remains one of the lowest in the EU.
"The tax credits will be given to businesses directly from taxes owed but the government feels it is an important incentive to increase investment and employment... Through launching this scheme, the government's message is that we do not only give importance to large investments," Mr Fenech said during the launch of the scheme this week.
The Microinvest scheme will be managed by Malta Enterprise and the tax credits will apply from the beginning of this year till the end of 2011. Businesses need not be registered companies but may be self-employed or sole traders so long as they did not employ more than 10 workers by November 10, 2009, when the scheme was announced in the Budget speech.
The amount of tax credits is capped at €25,000 per entity and there is no limit on the number of businesses that can benefit so long as they meet the eligibility criteria.
Malta Enterprise executive chairman Alan Camilleri explained that, to benefit from the scheme, businesses must not have an annual turnover exceeding €2 million and must be registered with the VAT Department and have all necessary permits in order.
The tax credits can be used to refurbish, upgrade or invest in premises; purchase or upgrade a commercial vehicle, new machinery or technology that would improve operations or generate energy; invest in enabling compliance with regulations, such as health and safety standards; or to meet new wage costs that need not be full time.
Businesses would apply for the tax credits after making the investment and upon producing receipts and an application form. If they do not register profits in the two years of the scheme, and therefore are not expected to pay tax, they can claim back the tax accumulated through the scheme until 2014.
A similar micro-credit scheme is expected to be launched in April. Through this scheme a €10 million fund will be set up to grant SMEs and self-employed loans of up to €25,000 at advantageous interest rates.
This scheme was announced after the European Commission last year launched a €100 million microfinance facility.
For more information visit http://incentives.maltaenterprise.com or call 2542 2020.