INVESTMENT AID 2021 REGULATIONS

SUBSIDIARY LEGISLATION 463.40

INVESTMENT AID 2021 REGULATIONS

1st January 2021

LEGAL NOTICE 156 of 2021, as amended by Legal Notices 390 of

2021 and 188 of 2024.

(1)

The title of these regulations is Investment Aid

2021 Regulations.

(2)

These regulations shall apply in respect of an eligible

initial investment in favour of carrying out of a qualifying economic

activity.

In these regulations, unless the context otherwise

requires

"Act" means the Malta Enterprise Act;

"aid intensity" means the gross aid amount expressed as a

percentage of the eligible costs, before any deduction of tax or other

charge;

"Corporation" means

the

Malta

Enterprise

Corporation

established under the Act;

"guidelines" means the Guidelines as may be published by the

Corporation from time to time in terms of the Act;

"large undertaking", "medium sized undertaking", "small

undertaking" and "micro undertaking" shall have the meaning

attributed to them by Annex I of the Commission Regulation (EU) No

651/2014 of 17 June 2014 declaring certain categories of aid

compatible with the internal market in application of Articles 107 and

108 of the Treaty;

"relocation" means a transfer of the same or similar activity or

part thereof from an establishment in one contracting party to the EEA

Agreement (initial establishment) to the establishment in which the

aided investment takes place in another contracting party to the EEA

Agreement (aided establishment). There is a transfer if the product or

service in the initial and in the aided establishments serves at least

partly the same purposes and meets the demands or needs of the same

type of customers and jobs are lost in the same or similar activity in

one of the initial establishments of the beneficiary in the EEA;

"start of works" means the earlier of either the start of

construction works relating to the investment, or the first legally

binding commitment to order equipment or any other commitment that

makes the investment irreversible. Buying land and preparatory works

such as obtaining permits and conducting feasibility studies are not

considered start of works. For take-overs, "start of works" means the

moment of acquiring the assets directly linked to the acquired

establishment;

"undertaking" shall have the same meaning as assigned to it in

the Act.

(1)

The initial investment project shall be considered

for support if the investment shall result in the development,

expansion, diversification or a fundamental change in the carrying out

of a qualifying economic activity.

(2)

(a)

Cash grants may only be awarded to eligible

projects for which an application is submitted and approved before

Start of Works and during the validity of the scheme.

Projects starting before 1 st January 2021 or having a start

(b)

of works prior to the approval of the Corporation may only be awarded

aid in the form of tax credits. Such projects shall only be considered

where the activity was covered by the scheme implemented on the

basis of the Investment Aid (July 2014) Regulations.

(c)

Eligible investments projects only be awarded aid in

respect of projects commencing after the 31 st December 2021 but in no

case later than 31 st December 2023 or later if the Start of Works was

delayed due to factors outside the control of the aid beneficiary as shall

be determined by the Corporation, as long as the beneficiary submits

an application for assistance and the aid in respect of such projects is

approved by the Corporation during the validity of the scheme which

in no case shall be later than 31 st December 2021.

(3)

The investment and the qualifying economic activity

shall be retained in Malta for a minimum period of at least five years

or three years in the case where the beneficiary is an SME, after

completion of the investment project.

(4)

The beneficiary is to provide a financial contribution of

at least twenty-five per cent (25%) of the eligible costs, either through

its own resources or by external financing, in a form, which is free of

any public support.

(5)

The applicant confirms that is has not carried out a

relocation to the establishment in which the initial investment for

which aid is requested is to take place, in the two (2) years preceding

the application for aid and gives a commitment that it will not do so up

to a period of two (2) years after completion of the initial investment

for which aid is requested is completed.

A qualifying activity in terms of these regulations shall

be an economic activity consisting of a trade or business the profits or

gains from which are chargeable to tax pursuant to article 4(1)(a) of

the Income Tax Act, carried on or intended to be carried out by an

undertaking in Malta which consists solely of one or more qualifying

activity as may be prescribed in the guidelines.

(1)

An undertaking carrying on or intending to carry

out a qualifying activity that may contribute to the economic

development of Malta, shall be assisted by means of a tax credit

(which may be claimed against future tax bills) or a cash grant

calculated as a percentage of the qualifying expenditure subject to the

terms and conditions of the guidelines.

(2)

Cash grants may only be awarded to eligible projects for

which an application is submitted and approved before start of works.

(3)

The assistance shall be calculated as a percentage of

(a)

the qualifying eligible expenditure as established

in the guidelines incurred by an undertaking in respect of an

eligible project for the carrying out of a qualifying activity; or

(b)

wage costs for jobs directly created as a result of

the eligible project as shall be further specified in the

guidelines.

(1)

The amount of investment aid that may be

awarded in terms of this regulation for a specific investment project

shall not exceed

(a)

thirty per cent (30%) of the qualifying expenditure

for an undertaking which qualifies as a "Small" undertaking;

(b)

twenty per cent (20%) of the qualifying

expenditure for an undertaking which qualifies as a "Medium-

sized" undertaking;

(c)

fifteen per cent (15%) in respect to initial

investment projects carried out by "Small" and "Medium-sized"

undertakings in the development of hotels, guest houses and

their amenities as licensed by the Malta Tourism Authority.

(d)

ten per cent (10%) of the qualifying expenditure

for an undertaking which qualifies as a "Large" undertaking.

(2)

For large undertakings the costs of intangible assets as

defined in the guidelines are eligible only up to a limit of fifty per cent

(50%) of the total eligible investment costs for the initial investment.

(3)

The maximum aid amount for a large investment project

shall be calculated as prescribed in the incentive guidelines.

Any tax credits awarded may only be utilised by the

beneficiary as long as the qualifying activity supported is still being

carried out. The applicant shall give consent in his tax return to the

Commissioner for Revenue to extract tax credits data from the

Corporation. The Corporation shall annually provide the beneficiary

with a statement of any tax credit balance until all allocated tax credits

are utilised.

(1)

Where an undertaking has benefited from the

provisions of regulations 5 and 6, the investment tax credit shall be

deemed to have relieved from tax so much of that undertaking’s

chargeable income which, when multiplied by the rates of tax at which

it was chargeable in that year, is equal to the investment tax credit and

where the undertaking or any subsequent undertaking distributes the

income which is so deemed to have been relieved from tax, such

undertaking or undertakings shall state in the dividend warrant

pertaining to any such distribution that such income has been relieved

from tax by an investment tax credit in accordance with regulations 5

and 6 and that tax which has so been relieved shall not be available for

refund for any purpose of the Income Tax Act.

(2)

The chargeable income which is deemed to have been

relieved from tax in accordance with sub-regulation (1) shall, for the

purposes of the Income Tax Act, be allocated to the respective tax

accounts of the company in question in accordance with the Tax

Accounts (Income Tax) Rules and any dividends, or part thereof,

distributed from such income shall be exempted from income tax in

the hands of the members of the company on receipt of such

distribution.

(3)

Where a dividend referred to in sub-regulation (1) is

distributed to a member which is also a company (in this sub-

regulation referred to as "the second company"), the said dividend

shall likewise be distributed by the second company to its members in

the form of dividends exempt from income tax in the hands of

recipients, and where a member of the second company is again a

company, the preceding provisions shall apply mutatis mutandis as

though references to the first company were references to the second

company, and as though references therein to the second company

were references to that member, and the principle set out in this sub-

regulation shall continue to be applied for as long as such income or

part thereof to which this regulation applies are distributed by way of

dividends.

The provisions of the Investment Aid (July 2014)

Regulations shall remain applicable for assistance awarded by the

Corporation prior to the coming into force of these regulations.

INVESTMENT AID 2021

No aid will be granted under these regulations by the

Deadline for

submission of

Corporation after 31st December, 2021.

applications for

assistance.

Renumbered by: 

L.N. 390 of 2021.