Budget Measures Implementation Act – ITA, Duty on Documents and Transfers Act, ITMA

On 2nd April 2024, the parliament enacted Act XIII of 2024 which includes amendments aimed at implementing certain Budget Measures for 2024. In the following article, we outline the key changes in Income Tax and Stamp Duty.

Amendments to the Income Tax Act.

• Article 5A(5)(i) provides for an exemption/reduction from property transfer tax on the first €200,000 of the transfer value of the immovable property upon transfers made on or after 1st January 2022. Such benefit can be availed of when the immovable was being leased for a period of not less than 3 years to tenants entitled to the Private Rent Housing Benefit Scheme administered by the Housing Authority. As from 1st January 2024, this benefit has been extended to two other schemes: the Nikru Biex Nassistu Scheme and the Rehabilitation of Vacant Dwellings for Rent Scheme, both administered by the Housing Authority. 
• Article 14(1)(m) provides for a deduction of any capital expenditure incurred with respect to intellectual property. Up to Year of Assessment 2023, companies were allowed to claim such deductions over a minimum of three years, however, as from Year of Assessment 2024, such deduction may be claimed in full in the year such expenditure has been incurred. 
• Article 14H provides for a deduction of up to €150 per child for school transport fees incurred for children under the age of 16. As per the budget Implementation Act such article will be deleted. 
• Article 56(26) provides for a reduction in tax rates of 7.5% for emoluments from sports activities either as a registered player, athlete or as a licenced coach. Such reduction in tax rates has also been extended to match officials and sports administrators, subject to limitations and conditions as may be prescribed by the Commissioner. 

Amendments to the Duty on Documents and Transfers Act. 

• Article 32G provides for an exemption/reduction from stamp duty on the first €200,000 of the transfer value of the immovable property upon transfers made on or after 1st January 2022.  Similar to the above, as from 1st January 2024, this benefit has been extended to two other schemes: the Nikru Biex Nassistu Scheme and the Rehabilitation of Vacant Dwellings for Rent Scheme. 
• Article 35(2)(v) provides for an exemption from stamp duty upon transfers causa mortis of immovable property to descendants in the direct line. An important condition to the above is that the transfer is made within 1 year from the succession. The Budget Implementation Act introduces a new proviso relevant to transfers of dwellings which has been subject to litigation. As such, in such cases, the 1-year period will start from when the decision was given by the court. 
• Article 35(9) will be introduced to exempt stamp duty upon the transfer of qualifying agricultural land which shall be defined as immovable property situated in Malta and certified by the competent authority responsible for agriculture land. Such land should either be undertaken by an heir who classifies as a professional farmer or is leased in accordance with the provisions of Agricultural Leases (Reletting) Act. 

Amendments to the Income Tax Management Act  

• Article 19(4)(a) requires companies registered in Malta to prepare a balance sheet and profit and loss account complying with the provisions of the Companies Act. Furthermore, the ITMA requires such statements to be accompanied by an audit report prepared by a certified public auditor. Notwithstanding the above, the article does not require such audit report for the first two accounting periods of newly registered companies, having an individual shareholder in possession of an educational qualification. The Budget Implementation Act removes such specific exemption and empowers the Minister to prescribe rules as deemed necessary.