Finance Minister Clyde Caruana’s speech in Parliament detailing the provisions included in the Maltese Government’s Budget for 2025 is likely to have left many employees with a smile on their face, with sweeping tax cuts estimated to leave between €345 and €675 in their pockets annually.

Business owners and managers might be forgiven for turning off the television with a slightly more bemused look, having spent over two hours listening to him rattle off measure after measure with little to nothing said about specific industries or general business needs.

Energy and fuel subsidies

The Minister would certainly give short shrift to any complaints that the business community is being ignored, pointing to the energy and fuel subsidies that seem to remain the Government’s main avenue of support for Maltese businesses.

His reasoning was on full display when attributing Malta’s economic growth – the highest in the EU – to the introduction of the energy subsidy in early 2022, additionally making the case that the social measures being announced in his speech are only possible because the burden of the subsidy has been cut by more than half as international energy prices stabilise.

In other words, Minister Caruana seems to be telling businesses: You’ve had your turn as a Government priority – now it’s time for our attention to turn elsewhere.

Pensions

One such direction is towards pensions, with employers set to be obliged to set up occupational pension schemes for their employees. The new measure, for which the kinks still need to be ironed out before it is launched, will allow employees to opt out, and employers will not be forced to match their workers’ contributions.

However, Government’s intention to incentivise employers to match contributions is clear, both with the continuation of existing tax credits for employers that do so, and by committing to lead by example, promising to introduce occupational schemes for public sector workers and to match their contributions by up to €100 per month.

This amounts to an up to €1,200 annual increase to all public sector workers’ pay packet, further positioning the Government as an employer of choice – despite repeated appeals by the private sector to stop competing for a diminishing pool of labour.

Labour

With regard to labour availability, Minister Caruana also announced a new policy for economic migration, to be launched in the coming weeks. Although details are scant, the policy will likely attempt to address the issues causing and caused by the increase of around 100,000 foreign national to Malta’s labour force over the last years.

These include a dearth of workers available to fill vacant positions, quick turnover of employees, the exploitation of migrant workers, and the social discontent arising from the rapid influx of foreign workers.

The Finance Minister stressed that the policy “must be based on respect for all workers, but above all on the needs of our nation and our people.” He added that the Government “will decide in favour of the common good, because we believe in politics that allow Maltese and Gozitans to live serenely in their own country.”

Corporate tax

There were no changes announced regarding corporate tax rates, whether for local businesses – a key demand by Malta’s business lobbies – or for foreign ones, which benefit from a rebate system that effectively makes Malta’s corporate tax rate for foreign firms the lowest in the EU.

An agreement between the Organisation for Economic Cooperation and Development (OECD) and the European Union is expected to introduce a new global minimum tax rate of 15 per cent, although Malta has deferred the implementation of this measure for the time being.

As previously revealed, Malta aims to retain its competitive edge, in part, through Qualified Refundable Tax Credits (QRTCs) that would allow companies reaching certain targets – such as environmental or social objectives – to reduce their effective tax rate.

The Maltese Government is currently in talks with the European Commission about the implementation of such credits to ensure that they are compliant with EU rules.

Although he previously stated that he hoped to be in a position to make announcements about these tax credits by Budget day, Minister Caruana’s speech did not include anything concrete, simply saying that “intensive discussions are ongoing.”

COLA and minimum wage

The Cost of Living Adjustment (COLA), that must be paid by employers to counter the effect of inflation on workers’ real wages, was announced to be €5.24 per week – a steep decrease from the €12.81 of the previous year and the €9.90 of 2023.

The minimum wage will increase to €221.78 per week, in line with an agreement agreed between Government and economic and social partners in 2023.

Family businesses

Family business will continue to benefit from a reduced stamp duty of 1.5 per cent (from five per cent) when transferring ownership to the next generation.

Startups

The Budget speech mentions that a new startup incubator is set to be set up in Ħal Far.

The Seed Investment Scheme, which gives tax credits to equity investors in Maltese startups, is also being renewed.

SMEs

Work has started on a project in the San Ġwann industrial area that will include laboratories and light industry.

An SME Park in Ħal Far is set to become a hub for panel beaters, sprayers, carpenters and other similar tradespeople, to move such activities away from residential areas.

The Minister also mentioned that preparations are ongoing to promote the Ta’ Qali Crafts Village in 2025.

Traffic

Minister Caruana said the Government will be investing in technology known as Intelligent Traffic Management System, which will contribute to optimising the flow of traffic.

Gaming

In the beginning of 2025, the Maltese Governnment will introduce a visa for esports athletes to facilitate the attraction of talent to Malta. The Minister pointed out that teams like Furia and Talon have already selected Malta as their European base.