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ECONOMIC DEVELOPMENT
- Malta's economy is projected to expand by 4.1% in real terms in 2025, with a similar rate of growth anticipated for 2026.
- Inflation is expected to stabilise at 2.2% in 2025, reflecting continued price moderation.
- The deficit is forecast to narrow to 3.3% of GDP by the end of 2025, and further decline to 2.8% in 2026.
TAX MEASURES
Personal Tax: Adjustments to Tax Brackets for Parents with One or Two Children
- Non-taxable income thresholds are set to increase, particularly benefiting individuals with two or more children. For those assessed under the parent computation and supporting at least two children, the tax-exempt threshold will rise from the current €13,000 to €30,000 by 2028.
- Individuals subject to the married computation with two or more children will see their tax-free threshold increase from €15,000 to €37,000 by 2028.
- For married filers with one child, the threshold will grow from €15,000 to €22,500 by 2028.
- Under the parent computation with one child, the non-taxable threshold will move from €13,000 to €18,000.
Business Tax Incentives
- A 175% tax deduction will be available on eligible research and innovation expenditure for all businesses undertaking such research and development.
- Under the Micro Invest Scheme, tax credits will be increased to €65,000, covering up to 65% of eligible costs. The additional 20% bonus for enterprises based in Gozo will remain in effect, enabling total aid for specified categories of enterprises to reach a maximum of €85,000.
- The Micro Invest Scheme will also introduce a new mechanism: For employees who have served with the same company for more than four years, the Government will cover 65% of any salary increase for two years, up to a maximum of €780 per year. In Gozo, recognising the challenges of island-based operations, this support will increase to 80%, up to a maximum of €960 per year.
- The two-year tax reduction for investment related to Artificial Intelligence, digitalisation, investment promoting modernisation, automation and cybersecurity will be accelerated.
- Companies can get a 60% tax credit on investment in machinery, tools, software, IT equipment or cybersecurity tools over a period of four years.
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