4 - 10 April 2001
Business Promotion Act to ensure minimal taxation
By David Lindsay
A leading German bank recently published data that shows that Malta has the largest amount of foreign direct investment per capita among the applicant countries for European Union membership, Economic Services Minister Joseph Bonnici recently stated.
Prof. Bonnici cited the fact that the government is fully aware of the fact that that Malta's competitiveness must be ensured in order to be able to attract further foreign direct investment and to facilitate the expansion of those companies already operating in Malta.
As such the Industrial Development Act has been substantially revised, and renamed to the Business Promotion Act, to see that Malta adheres to its international obligations while simultaneously enhancing its competitiveness.
Prof Bonnici comments, "We have made sure that the new incentives available to industry encourage and reward ongoing investment in Malta. For this reason we have introduced a system of investment tax credits which, when coupled with the favourable rates of tax being offered to companies operating in our target sectors, can result in minimal taxation for a number of years."
Prof Bonnici added that other incentives include a value added incentive scheme, a soft loan and interest rate subsidy scheme, a special provisions for small businesses and incentives relating to training and job creation.
The new incentive package is expected to provide a a leg-up for both existing and new investment, primarily in the manufacturing sector which employs over 30,000 people and which, together with tourism and the services sector, constitutes a major pillars of Malta's economy.
Prof Bonnici elaborates, "The incentives we shall now be offering do not depend any more on whether one exports or not. They are meant to promote productivity growth regardless of where the product is sold.
"We are not only offering new tax incentives, with reduced rates of corporate tax which start from five per cent and move up to 15 per cent over a 15-year period, but also investment tax credits, a value added incentive scheme, special provisions for small businesses, and other incentives related to training and job creation.
"These incentives will not only be available to prospective investors, but also to existing ones, thus ensuring that existing companies, already benefiting from incentives under the old Industrial Development Act, can retain and increase their investment in Malta."
Prof Bonnici expressed his firm conviction that Malta is a good investment location, despite the strong competition from Central and Eastern European countries that are currently taking full advantage of their prospective EU membership.