Malta Budget 2023 Implementation Bill

Following the Minister for Finance Malta Budget 2023 speech delivered on 24 October 2022, the 2023 Budget Measures Implementation Bill has been published.

All provisions in the Bill are still subject to Parliament approval and changes are expected prior to the eventual enactment. Unless otherwise stated, all articles come into effect with the enactment of the Budget Measures Implementation Act.

Proposed amendments to the Customs Ordinance

The definition of the word ‘container’ has been amended so as to also include a commercial road vehicle.
An article has been added empowering the Commissioner to, where deemed fit, examine a container which was declared to be empty. Moreover, every Customs official or Police officer may now, upon reasonable suspicion, stop and examine any means of conveyance, with a penalty not exceeding €232.94 applying where a person driving or conducting refuses to allow such examination.
An additional article has been added stating that no duty and taxes shall be collected on objects forfeited in accordance with the Ordinance.
The article relating to vessels, vehicles, etc. made use of in the importation, etc. of uncustomed goods to be forfeited has been substituted to include new tonnage ranges and condemnation levels.

Procedures when goods are withheld have been substituted with new articles, dealing with the official’s obligation when withholding goods and the treatment of goods following forfeiture.

Proposed amendments to the Income Tax Act

Article 27A relating to the tax treatment of companies and their members and other similar bodies or persons concerning mergers and divisions of companies, transfer of assets between companies and exchange of shares concerning companies shall be amended to include also reorganisation and restructuring of companies, liquidation and partial liquidation of companies.

Proposed amendments to the Social Security Act

A sub-article is added to include additional recipients of contributions under Article 16, being persons who are unable to engage in any gainful occupation, providing that they have been receiving treatment by a psychiatrist, subject to a number of conditions being satisfied.

A proviso is added in article 106 stating that as from 01/01/2023, a person who is entitled to a Carers Allowance or an Increased Carers Allowance but who fail to satisfy the conditions in Article 68, shall regardless be entitled to a total of 208 credited contributions.

As from 1st January 2023, a person who has been in receipt of Social Assistance and who partakes in insurable employment, shall continue to receive Social Assistance over the next 3 years, reduced accordingly.

The applicability of Carer’s Allowance and Increased Carer’s Allowance and Carer’s Grant shall be extended to a person who proves co-habilitation, civil union or registered co-habilitation for at least 10 years.

An additional article is added such that as from 1st January 2023 a parent who leaves its job to take care on a full-time basis of a child with severe disability shall by entitled to a Carer’s Grant calculated at 50% of the national minimum wage annually, that is eur 4,500.

Proposed amendments to Motor Vehicles Registration and Licensing Act

The definitions of ‘plug-in hybrid electric vehicle’ and ‘range extender electric vehicle’ have been amended to refer to vehicles with a battery autonomy of not less than 50km as opposed to 30km.

Proposed amendments to the Income Tax Management Act (ITMA)

Article 44 and 45 of the ITMA shall be amended to state that when a tax is payable in terms of the Income Tax Acts by the 31 August 2022 or a later date and such tax is not paid, an interest at the rate of 0.6% for every month or part thereof during which the tax remains unpaid shall be charged. The tax shall be treated as tax that was payable by not later than the relevant tax settlement date.

Article 48 of the ITMA relating to the repayment of tax by the CFR shall be amended to provide that in the case of tax refunds due by the Commissioner for any period or part thereof commencing on or after 1 September 2022, and which are not repaid within the prescribed period, an interest shall be charged at the rate of 0.6% instead of 0.75% previously charged. Furthermore, the Article now shall include a proviso allowing the Commissioner to extend the refund period of 14 days by another 12 months if the Commissioner requires to carry out further verifications for due diligence purposes.

Proposed amendments to the Excise Duty Act

Minor wording amendments have been introduced under Articles 2, 8, 9 and 10 of the Excise Duty Act mainly substituting the words "processing and holding of products" by the words "processing, holding and storage of products".

A new Article 16C is being introduced providing that when an object is forfeited in accordance with an article of customs legislation, the duty and taxes due on the forfeited object shall not be collected.

An important amendment is introduced under sub-article 3 of Article 17 determining the exact guarantee which may be required to be deposited to abide by the court decision with regards to vessels over 250 tons net registered tonnage which are used or intended to be used for importation, landing, removal, keeping, concealing or conveyance of any uncustomed or other goods liable to forfeiture depending on the net registered tonnage of the vessel.

Proposed amendments to the Value Added Tax Act

Sub-article (2) of Article 38 is being amended to specify further the amount of administrative penalties for default in the furnishing of a tax return or other declarations and statements. In particular, the amendment concerns:

1. The administrative penalty imposed on default in submitting recapitulative statements. Such penalty will amount to €50 for every month or part thereof that elapses from the date by which the statement should have been furnished, however capped at €600.

2. The administrative penalty imposed on default of furnish any information required in terms of Article 55A of the VAT Act whereby such penalty will also amount to fifty euro €50 for every month or part thereof that elapses from the date by which such information should have been furnished, again capped at a maximum of €600.

Presently, the above penalties amount to €10 for every month or part thereof, capped at €120. In addition, a new Article 55A is being introduced with respect to the information which may be requested to be provided by taxable persons in order to achieve the objective of combating VAT fraud.

Download BDO Malta Budget 2023 Highlights