Dalli announces tax credit on investment spending

‘No gimmick, this is a serious measure’ – Finance Minister

by Matthew Vella
Finance Minister John Dalli yesterday announced that all profits of the self employed and small enterprises pulling in sales of not more than Lm250,000 per annum in 2002 will be eligible for a tax credit when these profits are spent for investment purposes.
"This could be for the purchase of new machinery, for production innovation or even equipment used in the office," Minister Dalli said at the Finance Ministry in Valletta.
"This is a serious measure, it is no tax holiday gimmick. It was discussed with all the members of the Malta Council for Economic and Social Development, as all budget proposals were. Unfortunately, the Labour Party was not present for these meetings."
Dalli said all self-employed and small enterprises with a turnover of not more than Lm250,000 will be eligible for the tax credit on profits for investment purposes, covering the wider span of the local economy.
Dalli said this measure would increase competitiveness and serve to create more jobs in the long run.
"This measure has already been put into operation, with profits made in the 2002 base year already being taken into consideration. The tax due will be assessed normally as usual, but entrepreneurs who will be committing themselves to investment spending projects until 2009, will be eligible for this tax credit."
The tax credit and investment spending evaluation will be conducted through a joint-collaboration between the Institute for the Promotion of Small Enterprise and Inland Revenue.
IPSE will be assessing these proposals and asserting their worth and tax credit will be paid out when investment spending will be committed.
"These are not handouts," Minister Dalli said, "this is economic sense."
Dalli also announced that bad debts up to Lm500 per invoice and which are 24 months overdue will be made payable from the turnover of the debtor. Procedures are underway to ensure that such bad debts are repaid every year in the form of two per cent of the debtor’s turnover.
Following up from last week’s announcement on tax penalties, Minister Dalli said the Ministry had received positive feedback from taxpayers who today are benefiting from less stricter penalties.
"Today we have managed to instil a culture of prompt taxpaying, with 93 per cent filling in their tax returns. We have managed to collect Lm196 million in taxes, and only Lm40 million are arrears. All arrears since 1998 up till know have been paid. In 2002 we paid out Lm14 million in arrears and these are always decreasing."
Dalli said the additional tax paid on late tax returns or other mistakes in the tax return would start being decreased drastically, with up to 90 per cent of additional tax removed on genuine mistakes within the tax return.
Dalli however said that acts of carelessness or fraud would not be classified as mistakes and would not be eligible for a penalty reduction.
"With 93 per cent filling in their tax returns, this culture of punctuality is being rewarded by having these penalties decreased," Dalli said.