Investment Aid 2021 Regulations

The Investment Aid 2021 Regulations, introduced by L.N. 156 of 2021, provide assistance in the form of tax credit or a cash grant to qualifying undertakings. The aim of the scheme is to encourage the setting up of new establishments and the expansion and development of existing businesses. The rules, which came into force as […]

Written By Elaine Camilleri

On April 16, 2021
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The Investment Aid 2021 Regulations, introduced by L.N. 156 of 2021, provide assistance in the form of tax credit or a cash grant to qualifying undertakings. The aim of the scheme is to encourage the setting up of new establishments and the expansion and development of existing businesses.

The rules, which came into force as of 1st January 2021, apply to an eligible initial investment in favour of the carrying out of a qualifying economic activity. Such initial investment shall result in the development, expansion, diversification or a fundamental change in the carrying out of a qualifying economic activity.

Qualifying Economic Activity 

A qualifying economic activity is one of the following activities which must be carried out by an undertaking in Malta that may contribute to the economic development of Malta:

  • Manufacturing
  • The Maintenance, Repair and Overhaul of a) any water craft (s.t.c) or b) aircraft or c) industrial engines or electromechanical equipment.
  • Industrial Services analogous and/or coincidental to manufacturing that require the operation of mechanical and/or electrical equipment
  • Computer Programming
  • Data Processing and Hosting Facilities
  • Call Centre
  • Activities of Research, Development and Design 
  • The Treatment of Waste
  • Environmental Solutions
  • Activities related to Life Sciences
  • Pharmaceutical Activities
  • Activities for the production of feature films, television films, advertisements, documentaries and similar audio-visual productions
  • Activities for the production of audio recording
  • Design and development of digital video games 
  • Education and Tuition
  • Human inpatient and/or day care services
  • Freeport Operations
  • Logistics
  • Industrial Packaging
  • Hotels and Guest Houses
  • Knowledge Intensive Services
  • Restoration and/or preservation of works of art and antiques
  • The operation of temporary or permanent facilities used for cultural events, trade shows, concerts, festivals, exhibitions or sporting activities and film projection.

Eligible expenditure

Eligible project expenditure shall be 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.

Assistance

The assistance is calculated as follows:

  • 30% of the qualifying expenditure for an undertaking which qualifies as a ‘Small’ undertaking;
  • 20% of the qualifying expenditure for an undertaking which qualifies as a ‘Medium-sized’ undertaking; 
  • 15% in respect to initial investment project carried out by ‘Small’ and ‘Medium-sized’ undertakings in the development of hotels, guest houses and their amenities as licensed by the Malta Tourism Authority;
  • 10% of the qualifying expenditure for an undertaking which qualifies as a ‘Large’ undertaking.

Other conditions

The investment and the qualifying economic activity shall be retained in Malta for the minimum period of at least five years or three years in the case where the beneficiary is an SME, after completion of the investment project.

The beneficiary must provide a financial contribution of at least twenty-five percent of the eligible costs, either through its own resources or by external financing, in a form, which is free of any public support.

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected]. 

Disclaimer: This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.