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5 Budget 2014 maltatoday, TUESDAY, 5 NOVEMBER 2013 rk pay BUDGET AT A GLANCE roof insulation. PILOT PROJECT IN SIGGIEWI PRIMARY SCHOOL • €1,000,000foranenergyefficientpilotprojectinSiggiewiPrimary School. rears also include those that are being appealed, and therefore not final and conclusive. The new 'tax in dispute' section in the VAT laws will ensure that payments are not offset against arrears that are being appealed. The VAT Act also does not consider a VAT declaration valid unless all arrears have been paid: this results in an accumulation of penalties for non-filing of VAT declarations, even if these declarations have actually been filed. This penalty will be removed, but the government said it will be encouraging businesses to conform with the new laws. Interest rates on proscribed payments, both on VAT and income tax, on payable and refundable taxes, will be reduced and "rendered flexible" – no further details available on this. Tax law breaches Pilot project for Valletta property Measures against tax evasion PHOTOGRAPHY BY CHRIS MANGION will be introduced so no abuse takes place: the Budget speech however does not mention what these safeguards will be. Under current laws, when a person is found guilty of a breach under the Income Tax Act and is not sentenced to prison for that crime, the court warns that taxpayer that the court sentence is suspended unless a similar crime is committed within the next five years – resulting in a three-day prison stay. This means that the law courts have no option but to sentence defaulting taxpayers to three days of prison if they are found guilty of a second breach. "We are looking at the selfemployed as essential partners in our economy. We are going to be tough on tax evaders, but we believe that the circumstances of the past years has put bona fide self-employed workers in difficult situations. We want this sort of imprisonment to be the exception, and not the rule. The law will be amended so that the courts, in the case of a second breach, will have the discretion to apply a €2,000 fine apart from retaining imprisonment as punishment." centivise the rental market by regulating it better. Anyone who has income from the rental of residential property will have the choice to apply a final withholding tax of 15% on rental income, calculated on gross rental income. The measure is intended at encouraging conformity on the rental market. The Inland Revenue Department will be carrying out enforcement on the payment of rental tax, and rental incomes not declared will be subject to a final 35% tax calculated on the 35% on gross rental income apart from penalties and interest on unpaid tax. "Everyone will have the opportunity to declare income from rent at a fair rate – tax evasion will not be tolerated." Exemption of duty for first-time buyers Government said it wants to help youths and young people buy their first homes, by applying a one-time concession – as demanded by the Malta Developers Association – on the removal of the 3.5% duty payable on the first €150,000 of the value of a house. That means they will have to pay only 5% duty on the value of the house above €150,000. The concession will apply for houses purchased both before and after 1 January 2014, but whose final contract will be executed within 2014. The measure is being intended as a push for the property industry and to help first-time buyers to save up to €5,250 on their first residence. Removal of government architect's valuation Upon purchase of a property, the IRD sends in a government-appointed architect to value the house and to see that this is in conformity with the value declared in the final contract, and estimate whether any property tax has been underpaid. Instead, the government will start accepting the valuation made by any private architect but new safeguards An interesting aspect of the Budget is that the government appears to have over 200 properties in the capital city which it was unaware of since no list or inventory exists of these properties. The project will gather all residential and commercial properties that the government owns in the capital city, so that it can safeguard heritage properties as well as those establishments that can be used for private investment. Simplification of VAT As part of the merger between the departments for taxation, new amendments will simplify various provisos in the VAT and Income Tax laws, of which the government hopes to simplify operational aspects. The present system of appropriation for VAT has led to high interest rates on balances for arrears and late payments, which Scicluna said has made it difficult for taxpayers who have fallen behind, to effect payment. As things stand, the first payments to be made are the set-off on old balances and are first paid against interest and penalties. So from next January, when VAT declarations are submitted on time, together with payment, the money that is actually paid is not set off against old balances, in a bid to encourage taxpayers' conformity with VAT dues and allow them to escape cash flow problems during VAT payments. "In other words, we want to help those businesses who are really doing their best to pay their VAT dues without having to burden them with new payments." New provisos in the VAT Act will include a 'tax in dispute' clause. As things stand, when a new assessment is issued, the payments for VAT ar- Scicluna said the government will continue in its fight against tax evasion, which he said was undermining the government's own free services in health, education and social benefits. "Fiscal evasion is throwing excess burdens on honest taxpayers," the finance minister said. Scicluna announced a new campaign against fiscal tax evasion "in a bid to make people understand that there is no room for evasion in a democratic and developed society". Scicluna said the government wanted to assist the construction industry, on condition that the self-same industry pays the tax it owes the government. In a new measure, the construction industry will have to substantiate the estimates of the works it carried out construction as declared against bank loans taken out, and pay VAT on the actual estimates. Investment registration scheme Echoing previous measures by the Nationalist government to repatriate monies invested overseas that went undeclared, the new Labour government – availing itself of the tax exchange information rules from the EU – will be demanding information on hidden and undeclared cash and investments. The new Investment Registration Scheme will allow holders of undeclared monies to regularise their position and register undeclared cash, stocks and investments in Malta or abroad, on payment of a fine. The details are yet to be published. Online reporting of black economy In a bid to fight the illegal employment of usually foreign workers who are paid next to nothing, the govern- FREE CHILDCARE CENTRES • Freechildcarethroughaninvestmentof€3.8million,forfamilies that have both parents working or in the case of single parents thatareemployed. BREAK FAST CLUB FOR K IDS • Parentscouldtaketheirchildrentoschoolanhourbeforeitopens. Thestudentswillbegivenanutritiousbreakfast,thuspromotinga healthylifestyle. TAX CUTS ON CHILDCARE CENTRES • Areductionofbetween€1,300and€2,000forparentsthatmake useofchildcarecentres. LESS TAX FOR WOMEN WHO WORK • omenagedover40whohavebeeninactiveforoverfiveyears and whose salary does not exceed the minimum wage will be allowedtopayajointcomputationtax. YOUTH GUARANTEE • €1,440 in the form of an educational investment to provide individual attention to 350 youths who are inactive or seeking jobs. INCENTIVES FOR APPRENTICESHIPS • €350,000 to incentivise employers who offer work placements andapprenticeshipsschemes. • Anewtaxdeductionschemewillgiveemployers€600foreach workplacementand€1,200foreachapprentice. WORK FOR GOZ ITANS • A€1.1million orkandTrainingExposureSchemehasalready beenintroducedinGozo. YOUTH ENETREPRENEURSHIP SCHEME • €300,000allocatedforthisscheme. TRAINING FOR UNEMPLOYED WORK ERS • The training and employment of unemployed workers aged between 45 and 65 will be incentivized through a deduction of €5,800fromincometax. TRAINING FOR SINGLE PARENTS • €200 to €1,000 to be given to single parents who enter into intensive vocational training or take up a full-time educational course. TABLETS FOR SCHOOLCHILDREN • The use of tablets in education will be introduced in a pilot project. STIPENDS WITH PRO-RATA COLA • Asfrom1 anuary2014studentswillreceivetheCOLAincrease intheirstipends • aisingstipendsforveterinarymedicinestudentsto€300. I NDIVIDUAL INVESTOR PROGRAMME • Government forecasting an estimated €30 million from sale of citizenshiptowealthyapplicants. • SMEs • MicroInvest scheme to be re-introduced. SMEs stimulated to investthroughtaxcreditsof45%oftotalcosts 65%iftheSMEis establishedinGozo. • MFSAtoexaminepossiblerevisionsofthecurrenthighcharges andinterestratesonbankfacilitiestoSMEs FAMILY BUSINESSES • Government commits itself to legislate on family businesses to ensuretheirsustainabilityandfacilitatesthetransferofafamily businessfromonegenerationtoanother. VALLETTA MONTI • elocationofVallettahawkerstoOrdinanceStreetconfirmed. • Introductionofcommonuniformstands,hawkersnotadheringto re uiredstandardswilllosetheirlicence. INFRASTRUCTURE INVESTMENTS • Allocationsfornewroadinfrastructureinparticularforthe lata l-G oljaareainMosta • ApedestrianbridgetobebuiltinTri is-Seb ,wherenumerous residentslosttheirlivesinthepast. TRAFFIC • Governmenttoundertakeshort,mediumandlong-termmeasures toaddresstrafficproblems. • eavyindustrialvehiclesandhorsestobeprohibitedinarterial roadsduringrushhours. • apparafly-overprojecttostartbytheendofthisyear. • Government to apply once again for EU funds for a feasibility study of a tunnel linking Malta and Gozo, after the previous government'sapplicationwasturneddown. • Feasibilitystudyonnewtransportmethodssuchasunderground, monorailandseatransport. • Arriva's future dependent on outcomes of current discussions betweentheoperatorandthegovernment. CVA • From next December, CVA in Valletta will be removed on

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