Bank employees, for now only HSBC’s, who as a performance bonus are given the option to purchase company shares, will have the fringe benefits tax on the discount given cut from 35 to 15 per cent following an agreement between the government and the Malta Union of Bank Employees.

Until now, only HSBC bank employees are given the shares option as a performance-based scheme. However, although between one-third and half the employees already chose to purchase shares at a reduced rate, the number of participants in this scheme was on the decrease.

Parliamentary Secretary Tonio Fenech explained that bank employees used to pay a 35 per cent fringe benefits tax on the discount given per share purchased. Following discussions with the union of bank employees, the government has agreed to reduce the tax on the discount to 15 per cent.

This, he said, would serve as an incentive for bank employees to save more and invest their money in HSBC UK shares. Moreover, it was expected to increase participation in these schemes.

He said only HSBC offered its employees this option until now but if another bank were to introduce it, the 15 per cent rate would apply, even for any other company which was publicly listed.

MUBE president William Portelli said the union has been discussing this issue with the government since 2004 because the 35 per cent tax was not encouraging employees to participate in these schemes. He said the union was also satisfied that the agreement was being backdated to 2006.