The Bill for the Budget Measures Implementation Act for Financial Year 2025

Following the Budget Speech by the Minister of Finance on 28^th October 2024, Bill No. 117 was published, which includes provisions to implement some Budget Measures for 2025 and other administrative changes.

The Bill (subject to possible further amendments) is expected to be enacted in the first quarter of 2025. The salient measures proposed in this Bill applicable to the Income Tax Act, the Income Tax Management Act, the Value Added Tax Act and the Social Security Act are highlighted below.

Amendments to the Income Tax Act

A new tax deduction is proposed in respect of expenditure of a capital nature incurred on or after 1^st January 2025 for the acquisition of a business permit or by way of a premium paid in terms of an agreement for the lease of immovable property, subject to a number of provisions. The deduction should be allowed in equal amounts over a period of 15 years, or over the period for which the permit is issued or the lease has been acquired if such period is shorter than 15 years.
An additional proviso to the applicability of the ‘own residence’ exemption upon transfers of immovable property situated in Malta is being proposed to cater for cases where a spouse ceases to occupy the property as a consequence of a divorce or a de jure or de facto separation. In terms of the proposed proviso, for the purposes of the ‘own residence’ exemption, such spouse will be treated as having vacated the property if and when the other spouse also ceases to occupy the property as his sole ordinary residence.

Amendments to the Income Tax Management Act

Changes to Articles 51 and 52 propose that the failure to furnish an income tax return will trigger further penalties including penalties which are currently applicable in the event of fraud, making incorrect returns without reasonable excuse, and the evasion of income tax.

Amendments to the Value Added Tax Act

A cosmetic change to Article 57 of Value Added Tax Act removes the list of special cases to which the Fourteenth Schedule applies, and instead includes a reference to the Fourteenth Schedule.
Article 62 is being amended to extend the special privilege the Commissioner for Tax and Customs has over assets of a person in respect of any tax due by that person under the Value Added Tax Act, to go beyond the assets which form part of the economic activity.

Amendments to the Value Added Tax Act

Persons born on or after 1^st January 1976 shall be entitled to the full rate of the Two-Thirds Pension if credited with a yearly average of 50 contributions over a period of forty-two years, up from forty-one years. The yearly average of contributions for such persons shall be assessed over a period of forty-two years accordingly.
Gradual increase of the maximum pensionable income for persons born on or before 31^st December 1961 to reach the maximum pensionable income of persons born on or after 1^st January 1962. The resultant maximum pensionable income for 2025 shall not exceed €23,500.
Persons who have reached pension age and who have retired from employment and are not entitled to a Contributory Pension but have paid between 50 and 519 social security contributions shall be entitled to an annual grant of between €550 and €1,000.
An increase in the one-time bonus payable upon the birth or adoption of the third and every subsequent child to €1,500.
Increase of the retirement pension up to the national minimum wage for persons in receipt of an Injury Pension or certain Disability Assistance before their retirement.
Increase in the weekly rate of social assistance in cases of certain decisions by the medical panel.