The Malta Independent 30 September 2022, Friday
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Chamber of SMEs ready to accept COLA adjustment, proposes tax reform

Marc Galdes Tuesday, 20 September 2022, 13:40 Last update: about 9 days ago

The Chamber of SMEs has made clear that it will accept the Cost of Living Adjustment (COLA) system for what it is, even if it rises significantly. However, to combat this, it is proposing a tax reform to support SMEs further.

The reform would include lowering corporate tax to 15% to incentivise business and increase the balance between local and foreign-owned businesses. The reform will also include the widening of the tax brackets for individuals, which will help lower the pressure related to the cost of living.

Furthermore, the chamber is asking to reduce the VAT percentage. It said that because of the rise in prices, the government can reduce VAT and still make the same amount of money as they were making before. It is also asking for the government to completely eliminate VAT on specific goods or services, such as locally manufactures crafts and works of art.

The chamber also said that "excise duty is an unfair hidden tax," therefore, it should be removed.

It is also asking for a pension system reform to be able to guarantee a reasonable state pension.

Through the tax reform, the chamber also wishes to address the 6/7 tax refund disparity. This refers to companies which are in possession of a foreign shareholder or have a holding company in Malta. They benefit from this disparity because they pay up to 30% less tax, the chamber said. Through the tax reform, the chamber would like to address this to have a level playing field.

The proposals also included a focus on taking the yachting industry to the next level. This would involve the recognition of the urgent need for a "fully-fledged yacht marina in Manoel Island, in order to draw more attention to super yachts." The Chamber praised the Midi Development "definitely stimulating the yachting business which will substantially help the Maltese economy."

The budget 2023 proposals that the chamber presented were all based on a survey that it conducted to understand the main problems SMEs are facing.

A survey conducted for these proposals revealed that over 40% of respondents had to increase wages over the last 12 months by up to 15%.

The survey also revealed that businesses were mainly struggling from a labour shortage and low-skilled workers.

It was further revealed that 49% of respondents lost employees over the last 12 months. The main reasons were either because there were better private sector offers or because they went to work for the government.

As a result, in its proposals, it is asking to limit public sector employment because it is "grossly overstaffed and lacks productivity." In addition, it is proposing to implement a secondment plan for more employees to work within the private sector.

It is also asking for trade programmes to be introduced. People who do not want to follow standard education can learn specific trades that would make them qualified and ready for the industry, it said.

It also highlighted the importance of foreigners working in the country. Therefore, the Chamber is proposing a rental voucher scheme that would run for a minimum of two years, to attract more foreign nationals.

Also, it is proposing an efficient Third Country Nationals recruitment system. This would involve digitising the Visa process to make it much more efficient.

As for business incentive schemes, it is proposing improving Micro Invest. This will include making 50% of the eligible tax credit convertible to a grant, up to €5,000 and extending the duration of the tax credit up to 5 years. It will also include increases in the incentive capping and including short continuing professional development courses as an eligible cost.

As for unfair competition, the chamber is asking for a scanner to be used at the exit of the Malta - Sicily catamaran, so that any goods which are being bought from Sicily that are taxable will be spotted.

It is also asking for a public procurement ombudsman that will be independent and will be able to examine tenders closely. Along with this, it is asking to remove tender financial requirements, they should only be required upon winning the tender, it said.

Also, it wants there to be more of an incentive to move away from cash and shift towards electronic payments for businesses.

As for import disruptions and challenges, the chamber is proposing that VAT and customs duty should be calculated on the cost of goods only, and not the shipping cost.

It is also proposing a Rent Subsidy Scheme reform. This will include the double aid capping from €25,000 to €50,000 and the removal of the 100-employee capping to make it more accessible to all business sizes.   

The chamber is also asking for an independent review of customs procedures and to address import costs and Brexit at an EU level.

The Chamber also wished to focus on export support by subsidising export costs through tax credits.

To combat bureaucracy, it proposes removing audit requirements on micro SMEs with under €500k turnover. It also proposes revising the Malta Business Registry fees. The Chamber said that, for example, if companies handed in their beneficial ownership document late, they face a €500 fine.

The chamber also wants to address banking dominance and increase its accountability. It said that certain banks take decisions against the interest of their users to make a profit.

It also pointed out that to combat the impact of the greylisting, Malta needs to work towards becoming a "centre of excellence" for its anti-money laundering sector.

The Chamber pointed out that the country's main problem is overdevelopment, which has uglified Malta. It believes that although Malta fairs well in tourism, Malta needs a more sustainable and competitive plan.

It is proposing a quality strategy for Malta which addresses development planning, traffic issues and safety and security.

To improve tourism, it is suggesting that Malta should work on a strategy.

As for scooters, it is proposing that technology to help govern scooters should be implemented.

In the case of education, the chamber is asking for updates to the curriculum and fully financed training schemes.

The chamber also showed its interest in a carbon neutral strategy which would include the implementation of electric vehicles and charging points even accessible to businesses, and the opportunity for companies to replace their vehicles to be more environmentally friendly.

As for renewable energy, the chamber is asking for residential green investment. Similar to grants, this will allow businesses to utilise energy-efficient infrastructure.

The Chamber is also proposing incentives for Gozo that would include improving transport and connectivity by re-starting the air link connection with Malta and reducing the cost for Maltese residents crossing to Gozo with electric vehicles. As for infrastructure, it is proposing a multi-storey car park in Victoria, the extension of Mgarr Harbour and a new hospital for the island to complement Queen Mary University of London campus in Gozo.


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