In addition to the two financial aid packages announced in recent weeks, yesterday evening the Prime Minister unveiled the third financial aid package, which was unanimously agreed with employers and social partners involved, aimed at supporting the business community in a more direct manner against the negative effects of the COVID-19 pandemic.
First financial aid package
In order to ease pressure on the cashflow of businesses arising from the economic impact of the coronavirus pandemic, the Government of Malta introduced the following two incentives:
- Postponement of payment of certain taxes; and
- Call for the Facilitation of Teleworking Activities.
Both schemes are administered by Malta Enterprise
Postponement of payment of certain taxes
A deferral from the payment of provisional tax, employee taxes, maternity fund payments and social security contributions, social security contributions of self-employed persons and value added tax.
Companies and self-employed persons operating in specific sectors and who, as a result of the economic constraints arising from the coronavirus pandemic, suffer a significant downturn in their turnover and therefore, face substantial cash flow difficulties, may benefit from this measure.
Companies and self-employed persons not adversely hit are advised and encouraged not to avail themselves of this scheme.
The period covered by this incentive are those eligible taxes which fall due in March and April 2020.
Eligible taxes (excluding VAT) are to be settled in four equal monthly instalments in the four-month period between May and August 2020. On the other hand, VAT dues are to be settled in two equal instalments with the two quarterly returns immediately following the quarter in which the dues would have been deferred.
Call for the Facilitation of Teleworking Activities
Employers and self-employed persons are being called upon to provide teleworking arrangements to their employees who can carry out their work from their home. The call shall support employers/self-employed in all sectors to invest in teleworking equipment.
In order to be eligible to benefit from support in terms of this incentive a formal teleworking agreement must be in place which connects the employee to the workplace.
The support shall be awarded in the form of a cash grant which shall be awarded against 45% of eligible costs. The total support under this call is limited to €500 per teleworking agreement and €4,000 per undertaking, capped at €2 million at a national level.
This call covers costs incurred between 1st March and 30th March 2020, covering:
- Purchasing and/or leasing of computer hardware (included operating systems) which are considered portable including installation and setting up of connectivity software.
- Communication solutions (hardware and software) that allows different users to connect to their place of work (VPN, Point-to-point connection etc.)
This call is being extended to 8 May 2020.
Second financial aid package
In the second financial aid package, the Government of Malta announced an initial €1.8 billion package of measures, which is equivalent to circa 12.9% of Malta’s GDP in 2019, with a view to help businesses struggling to cope with the impact of coronavirus.
The following is a summary of the announced measures
General economic measures
- Liquidity injection and bank guarantees of up to €1.6 billion consisting of:
- Deferral of tax payments as announced earlier, i.e. covering VAT, provisional tax, maternity fund and social security contributions
- €150m worth of bank guarantees
- €750m worth of soft loans
- Provision of Government guarantees of up to €900m thereby making credit of €4.5billion available.
- Option to request a 3-month moratorium on business and personal loans.
- €210m of funds to be made available to cover COVID-19 related expenditure.
- An additional €35m injection into the Health budget to fund health related equipment and supplies required to fight the virus, with said budget to be augmented further if necessary.
Measures linked to employment
- A capped €350 grant per employee to businesses that have had employees on mandatory quarantine (quarantine leave scheme).
- Government will cover 2 days’ salary per week (based on a monthly salary of €800) of employees of businesses that have suffered from a complete suspension of operations (e.g. hospitality, language schools, entertainment venues).
- Self-employed individuals operating in these said industries will also receive a grant equivalent to 2 days’ salary per week (based on an assumed monthly income of €800). Self-employed individuals who are also employers shall, however, receive a grant equal to 3 days’ salary per week (based on an assumed monthly salary of €800).
- Employees of businesses whose operations have suffered a minimum 25% decline are to benefit from a grant equal to 1 day’s salary per week (based on a monthly salary of €800).
- Individuals whose full-time employment is terminated with effect from 9 March 2020 shall benefit from a temporary increase in unemployment benefits of up to €800 monthly.
- Measures relating to employment of third-country nationals:
- Businesses terminating active employment contracts of said nationals shall not be permitted the possibility of recruiting additional third-country nationals;
- Going forward only applications for highly skilled third-country workers shall be considered;
- In the event of job termination of third-country nationals residing in Malta, assistance shall be provided to find alternative employment.
Other social measures
- €800 Government benefit per month (for up to 2 months) for families with school-aged children where both parents work in the private sector and are unable to work remotely and who require additional leave to take care of the children.
- Persons with disabilities, being particularly vulnerable to COVID-19 and having had to stop working following the outbreak, shall be given a €800 monthly benefit for a period of time should they be unable to work remotely.
- Increased in rent subsidies by Government where a family member living in subsidised accommodation has his/her employment terminated.
Third financial aid package
In the latest financial aid package, the Government of Malta, has introduced further measures to help minimise the effects of the current instability in relation to COVID-19 and encourage the retention of employees.
All measures announced are applicable as from 9 March 2020. Furthermore, Malta Enterprise is set to launch a dedicated online portal to help businesses identify, according to the VAT registration number and NACE code, the measures which are applicable to them.
The following is a summary of the measures introduced:
Wage Supplement to critically hit business sectors
- All employees and self-employed individuals working on a full-time basis in sectors who were hardest hit by the Coronavirus outbreak or had to temporarily suspend operations on the order of the Superintendent of Public Health, will receive €800 monthly Government subsidy through their employers. This Government subsidy is calculated on a five days’ salary based on a monthly wage of €800. Part-time employees will be eligible up to €500 per month.
- The list of business sectors who were critically hit can be accessed through this link.
- Furthermore, in cases where the employee’s salary is in excess of €1,200 per month, employers will guarantee a minimum payment of €400 per month per employee, thereby ensuring a minimum monthly payment of €1,200. If an employer is not able to sustain the additional payment so that the particular salary reaches at least €1,200, then an agreement has to be reached with the involvement of the unions, the employees and the Department for Industrial and Employment Relations.
- Employers who can provide the full salary to the employees, in cases where the employee salary exceeds €1,200 per month, are encouraged but not obliged to do so.
Wage Supplement to less critically hit business sectors
- Full time employees of enterprises in other adversely effected sectors, including wholesale, manufacturing and warehousing will be entitled to one day’s salary per week (instead of five day’s salary), equivalent to €160 per month. Part-time employees will be eligible to one day’s salary per week, equivalent to €100 per month.
- The list of business sectors who were less critically hit can be accessed through this link
Gozo
- Companies and self-employed businesses established in Gozo operating in other adversely effected sectors, will have two day’s salary per week covered immediately (equivalent to €320 per month), extended to three days for those self-employed businesses who employ people with them (equivalent to €480 per month).
How can we help?
The details of these measures are still being communicated and further clarifications will need to be sought. We will continue to provide updates as more information becomes available. Meanwhile, should you require any assistance relative to any of the above financial aid packages, please do not hesitate to contact us.
For more information, please contact William Cassar, on taxenquiries@fenlex.com
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Disclaimer │ The information provided on this Update does not, and is not intended to, constitute legal advice. All information, content, and materials available are for general informational purposes only. This Update may not constitute the most up-to-date legal or other information and you are advised to seek updated advice.
