The MicroInvest Tax Credit Scheme: New Incentives for Micro Enterprises and the Self Employed

A tax credit scheme for small businesses, originally announced in the Budget was launched by Finance Minister Tonio Fenech on January 20th 2010. The scheme aims to encourage micro enterprises and the self-employed to invest in the development of their business and in the implementation of pertinent compliance. Through this scheme, which is expected to run until the end of 2011, micro enterprises and self-employed can avail themselves of a tax credit amounting to a percentage of the eligible expenditure and wages of newly recruited employees and/or apprentices.

This incentive is intended to benefit all micro enterprises, as well as micro start ups, whose annual turnover does not exceed €2 million. Moreover such enterprises should employ less than 10 full time employees and be duly registered with the VAT department. Crucially, applicants must not have any outstanding payments pertaining to VAT, Income Tax, Social Security and rent payments due to Government. This incentive is meant to support enterprises that carry out a trade or business, and consequently should not benefit voluntary organisations.

Eligible enterprises are allowed a tax credit equivalent to 40% of the eligible expenditure. A further additional bonus of 20% applies to Gozitan enterprises. The Scheme limits the maximum credit obtainable per enterprise to €25,000 for the duration of the scheme. The tax credit can be utilised to refurbish, upgrade or invest in premises; purchase or upgrade new machinery and technology that would improve operations or generate energy, or on new wage costs that need not be full time. Wages costs fall within the remit of the Scheme subject to specific conditions.

Further investment which qualifies under the Scheme includes investment necessary for the compliance with regulations including Health & Safety and Physical access and investment in one motor vehicle utilised for the carrying of goods.
Malta Companies and Taxation