The business perspective

Reading through the budget speech, one gets the feeling that there are a lot of positive measures. 

However, when homing this reading solely for measures relating to the business sector, especially the employers, certain shocks will be registered. Any employer knew of the COLA increase for each employee. But none was prepared for the measure that where employees are on the minimum wage for at least a year, will the following year have to be paid a €3 per week increase, and thereafter another similar increase for the same category.

Additionally, all employers will lose one day’s production as all workers will have an increase in their vacation leave entitlement. 

After more than 18 years, the threshold for VAT registration has increased to €20,000. This should alleviate certain small enterprises, freeing from filing regular VAT returns. 

A lot of expectancy was on what would happen to the rent sector. Landlords can only get visibility of how this will evolve after the white paper mentioned in the budget speech will be issued. And more importantly, of what will end as law. 

An innovative market which the government is creating is the equity release facilities for persons aged 55 years and over. The private sector will embrace this opportunity as it will increase the rate of property acquisition. Financial institutions will acquire lived-in property, pay a lump sum or monthly payments, or a mix of both to the owner and thereafter the entity obtains the property which can be re-used for new earning opportunities.

The government is pushing further the agenda for more enterprises to purchase eco friendly vehicles with incentives being upped to €200,000 per company. From an environment point of view this is commendable. But the government will have to plan ahead from where eventually it will earn the equivalent it gets in excise duty on fossil fuels. 

The micro invest assistance scheme for enterprises has increased from €30,000 to €50,000. Gozo based enterprises, female self-employed and entities employing up to 50 workers, have a higher threshold of €70,000. Technically the definition of a micro enterprise to benefit from EU funding has been restated as entities employing up to 50.

The push to have more jobs in Gozo is being emphasized with a grant of 30% of a newly engaged employee’s salary capped at €6,000.

Entities that are owed dues from the government and at the same time owe the government for normal statutory dues, would surely register to participate in the “offset of dues” programme to be introduced by the exchequer. Such a measure will surely benefit cash flow management for this sector of entities.

Additionally, micro entities that employ up to 10 employees can benefit from the facility of online VAT return filings and social security returns filing.

The business sector would surely register as positive the expected economic growth forecast for Malta to be 5.6% next year and yet again another year with moderate inflation at 1.6%. The test will be finding employees, as the number of unemployed workers is constantly on the decrease. It is evident that the country is experiencing a cycle of full employment whilst growth forecast through private consumption will continue. This private consumption is coming from the extra funds to be gained by workers and pensioners next year.